ONLINE FEATURE

NAR, On Top Of Your Issues

BY ROB FREEDMAN

From policies on mold to settlement services to immigration policy, NAR fights for your every day in Washington, D.C. Its new Regulatory and Industry Relations division stays on top of the issues that could impact your business.

The Regulatory and Industry Relations (RIR) group advocates NAR’s positions and policies regarding regulatory issues, and develops and manages NAR’s relations with federal regulators by enhancing the REALTOR® presence at regulatory agencies that most directly have impact on the real estate industry. The RIR group is also the central point for creating and managing coalitions and alliances with key industry groups.

The most important regulatory issue that NAR has faced is the Federal Reserve Board’s and U.S. Treasury Department’s proposal to allow banks to broker, lease and manage real estate. NAR’s major regulatory effort opposing this proposal led to a postponement of the final regulations and moved the debate to the U.S. Congress where legislation has been introduced to prevent banks from entering real estate.

Other Top Issues:
· FHA Flipping Regulation: The U.S. Department of Housing and Urban Development (HUD) issued proposed rules governing the prohibition of property flipping in the single-family mortgage insurance program. NAR submitted written comments expressing concerns that the rule, while well intentioned, could discourage investors from participating in a property rehabilitation/marketing process utilizing FHA mortgage insurance. NAR also stated that the vast majority of appraisers are competent and as such HUD should do a better job of enforcing the appraisal regulations already in existence. HUD received many comments on this controversial rule. Therefore, it is uncertain when HUD will issue a final rule. Staff is actively working with HUD officials to make sure our concerns are addressed when the Department issues a final rule.

· Forced Access: NAR opposes all government-mandated building access proposals. Owners and managers of residential and commercial buildings should maintain the right to negotiate, select and control the telecommunications systems serving their tenants and facilities. Working with a real estate coalition, The Real Access Alliance (RAA), NAR has aggressively lobbied the Federal Communications Commission and Congress on the negative consequences of government-mandated access and will continue to work with policymakers to ensure the constitutionally protected rights of property owners to operate and manage their buildings without entry by unauthorized parties.

· Real Estate Settlement Procedures Act (RESPA) Transaction Fees: In October 2001, HUD interpreted RESPA's Section 8(b) as prohibiting any person from giving or accepting any unearned fees, i.e. charges or payments for real estate settlement services other than for goods or facilities provided or services performed. NAR opposes HUD’s interpretation of Section 8(b).Due to the increased costs of the real estate brokerage business, many brokers are charging a combination of percentage-based commissions and a flat fee for their services. There is much concern that the flat fee may be scrutinized by HUD as an unearned fee and therefore may be a violation of RESPA. NAR is seeking a clarification from HUD that the Statement of Policy does not apply to the up front disclosed fees a real estate broker charges its customers.


· RESPA Reform: NAR supports the preservation of the current RESPA rules and opposes any broad regulatory relief for lenders who will package services. Lenders can package today without the exemption from Section 8. There has been no evidence that such a regulatory structure will result in lower costs to the consumer. NAR supports improved disclosures to ensure consumers have the information necessary to make informed decisions. HUD has announced it will undertake sweeping RESPA reform. This could include mortgage broker fee disclosures as well as packaged services. Much attention has also been focused on predatory lending and efforts to curb these abusive practices. NAR has taken a position against predatory lending practices, and emphasized that RESPA reform by itself will probably not address that situation.

· Mold: Mold has always been present in buildings. Recently, however, homeowners and apartment residents across the country are filing lawsuits in increasing numbers claiming that indoor mold has harmed their health. As a result, REALTOR® liability is a concern. In addition, insurers are taking steps to limit coverage for mold damage. Currently, there are no established standards for acceptable levels of indoor mold and scientific research on the relationship between mold and health problems is inconclusive. The Environmental Protection Agency (EPA) has recently published an online guide that covers the basics of the residential mold issue. NAR is working with EPA on a longer residential guide. To access the brief guide online, click here.

· Endangered Species Act (ESA): Designation and protection of a species can negatively impact land use and the regional economies in areas, which encompass the protected species' habitat. Currently, the Department of Interior (DOI) is proposing guidelines to encourage landowner incentive programs. NAR will be filing supportive comments. In addition, DOI has formed an internal task force to address administrative reforms to the ESA.

· Flood Insurance: For REALTORS® who sell property near rivers, lakes and streams, determining whether or not a property is in the floodplain is critical to the real estate transaction. FEMA’s flood insurance rate maps show whether or not a property is in a floodplain, which determines whether or not the owner is required to purchase flood insurance. Unfortunately, these floodplain maps are inaccurate and out-of-date, due to natural changes in the floodplain, or new development in the watershed. NAR is working closely with FEMA to improve these maps, through administrative changes within the agency and by encouraging Congress to appropriate additional funds to improve the maps.

· Immigration and Naturalization Service (INS): The INS proposed changing the rules regarding reducing the length of stay for nonimmigrants who are here on business or pleasure. Extensions of up to six months may be granted for some reasons, such as if the nonimmigrants own a home in the United States that they visit occasionally or seasonally. NAR submitted comments expressing concern about the negative impact that the proposed rule may have on small businesses in the U.S. and the possible negative impact on the resort and vacation real estate markets as well as other real estate segments. As a result of the 10,000 comments that were received on this very controversial rule, it is unlikely that the INS rule will finalize the rule before the fall. Instead the INS may need to rewrite the proposed rule.

· Commercial Mortgage Liquidity: NAR is involved in an industry coalition that works with Financial Accounting Standards Board (FASB) and certain Federal Financial Institutions Examination Council's (FFIEC) oversight groups to build liquidity in commercial mortgage markets. Long-term liquidity is essential to ensuring that commercial mortgage financing can be as predictable as residential mortgage financing.

NAR is strongly committed to ensuring that REALTORS® are represented at the Federal Agencies. The RIR group will continue to advocate aggressively the REALTOR® point of view in the face of potential federal regulations and other proposals that may affect the commercial and residential real estate markets and transactions.