FRONT LINES: Washington Report
More money, fewer barriers to affordable housing
President George W. Bush’s fiscal year 2005 federal budgetseeks $31.3billion for the U.S. Department of Housing and Urban Development, a 3 percent increase over current funding levels.
The budget, proposed in February, includes two FHA initiatives to expand homeownership opportunities. The first is a subprime loan for borrowers with low credit ratings. The second is a zero-down loan that allows borrowers to fold downpayment and closing costs into their loan.
There’s also $200 million in the budget for the NATIONAL ASSOCIATION OF REALTORS®-backed American Dream Downpayment program, enacted in late 2003. Eligible buyers receive up to $5,000 in homeownership assistance through the program. Multifamily development gets a boost with a $10 million increase in FHA loan commitment authority, to $35 million, and reduced insurance premiums on FHA multifamily development loans, from 50 to 45 basis points.
In its budget presentation, HUD touts its Real Estate Settlement Procedures Act reform proposal, though the initiative continues to generate widespread concern. REALTORS® in February sent 30,000 letters to their members of Congress and to the Bush administration, calling on HUD to withdraw its draft rule because of its bias toward lenders.
Congress has until Sept. 30 to pass its appropriations bills to have funding in place before the start of the next fiscal year.
Meanwhile, HUD is engaged in the competitive funding process for 2004, evaluating requests from state and local governments and private entities to fund affordable housing and community development programs, among others.
The department is seeking ways to factor in—through its usual point system—localities’ efforts to reduce regulatory barriers to affordable housing. In early 2004, NAR submitted comments to HUD on ways to reduce such barriers as impact fees, transfer taxes, land development regulations, stringent building codes, zoning and subdivision regulations, burdensome permitting processes, and rent-control restrictions. The association also commented on barriers created by HUD rules.
EPA: Owner effort needed on next-door contamination. To be protected from Superfund liability, owners of property contaminated by a neighboring site must show they’re taking steps to stop contamination from spreading, the U.S. Environmental Protection Agency says in new guidance.
Lease flexibility for servicepersons. Members of the armed services can terminate commercial leases without liability for breach of contract if, after signing a lease, they receive orders to relocate, a new federal law says.
Financial institutions in farm management. The U.S. Farm Credit Administration has proposed giving certain financial institutions authority over farm management and agriculture trust services. NAR opposes the move because it would allow financial institutions to engage in property management activities. In late 2003 NAR submitted comments to FCA and launched efforts to educate and obtain views from NAR members and congressional staff. NAR regulatory analysts met with FCA officials in early 2004. FCA hasn’t set a timeframe for action.
