FRONTLINES

Congress hands NAR 11th-hour victory on FHA loan limits

By Robert Freedman

WASHINGTON, D.C.—NAR chalked up a deft lobbying victory when Congress paused long enough in its adjournment rush to pass legislation that will increase FHA loan limits.

The 11th-hour vote lets NAR take home a victory on a top legislative priority that few would have been willing to bet on last spring. The higher limits are popular among real estate professionals as a way to expand homeownership opportunities to underserved households. But it took an all-out grassroots effort by REALTORS® to reassure Capitol Hill leaders that the increase would effectively help more low- and moderate-income households without unreasonably expanding FHA's reach into the conventional lending market.

“It was grassroots members that got the word out to Congress that this increase in loan limits really makes sense,” says Robert Kulick, committee liaison for NAR’s Federal Housing Policy Committee.

“Congress has done the right thing and made a good program even better,” says NAR President R. Layne Morrill.

The legislation raises limits on FHA-insured single-family home loans from 75 percent to 87 percent of the Fannie Mae and Freddie Mac conforming loan limits, from $170,362 to $197,620 in high-cost areas, and from $86,317 to $109,032 in lower-cost areas. Up to 175,000 more households will be able to buy a house as a result of the increase, NAR estimates.

By expanding a simplified downpayment plan that has been getting high marks under its test run in Alaska and Hawaii, the legislation will also make it easier to calculate downpayment amounts on FHA loans.

President Clinton is expected to approve the increase, which is included in the fiscal 1999 appropriations bill for the U.S. Department of Housing and Urban Development and the Department of Veterans Affairs.

Lobbying innovations built support
How NAR got from where it was last spring, when leaders on both sides of Capitol Hill pronounced the increase dead on arrival, to where it is today is a testament to the effectiveness of the association’s grassroots lobbying program, say NAR analysts. The REALTORS® Political Action Committee and NAR’s government affairs staff were equally key to the come-from-behind win, they say.

HUD originally proposed increasing the FHA loan limits to $227,150—100 percent of the conforming loan limit—in its fiscal 1999 budget request. NAR adopted an increaseas its No. 1 legislative priority for the year.

But House and Senate leaders needed to be convinced that the higher limits would target mainly low- and moderate-income households.

The issue became a test case for NAR’s beefed-up grassroots lobbying program, which succeeded beyond expectations, analysts say. In changes made to the program last year, the number of REALTORS® assigned as federal coordinators to each House and Senate member was increased from one to seven or more, and a toll-free hot line that lets staff monitor responses to NAR Calls to Action was put in place.

More than 225 lawmakers signed letters and made phone calls after the lobbying drive was launched at NAR’s 1998 legislative conference last spring.

With this success under its belt,NAR has its sights set on raising the FHA limits to 100 percent of the conforming limit, as originally proposed by HUD. It also wants to simplify the process further by replacing the two-tiered system with a single limit.

“Gaining parity with the Fannie Mae and Freddie Mac limits is something we’ll continue to look at,” says Kulick. “But we can be very happy with what we’ve achieved this year.”