FRONT LINES: Washington Report
Real estate on their minds?
Step back, NAR says

Real estate on their minds?
The leadership changes at the u.s. department of the treasury and in the U.S. Senate could create a very different environment for REALTORS^® as they move on the banks-in-real-estate issue.

The Treasury’s effort to finalize a proposed rule it published two years ago with the Federal Reserve to define real estate brokerage and management as financial activities, and thus permissible lines of business for national banking companies, could take a back seat to the priorities of the Treasury Secretary-designate, John Snow. His nomination was expected to be approved by the Senate in early 2003. Snow, who comes to Treasury from CSX Corp., a transportation company, was nominated by President Bush to replace Paul O’Neill, who announced his resignation in November.

Given continued sluggish growth in the economy and the national terrorism insurance law enacted late in 2002, the new Treasury administration’s priorities are likely to revolve around stimulating the economy and publishing rules for the new insurance program, say NAR analysts. The insurance law, strongly backed by NAR, requires the Treasury to help primary insurers pay terrorism-related claims for three years ending Dec. 31, 2005.

Against these pressing issues, it’s not clear how high a priority the department’s new leadership will place on the banking rule, which NAR opposes. At a meeting between NAR and Treasury representatives in late December, top department officials said publication of a final rule wasn’t “imminent,” say NAR analysts.

Even so, NAR will seek reintroduction of the Community Choice in Real Estate Act, which would prohibit Treasury from finalizing the rule. The bill received widespread support in the House and Senate in 2002 but never made it to a floor vote.

NAR is expected to have the support of Richard Shelby, R-Ala., the new chairman of the Senate Banking, Housing, and Urban Affairs Committee, who told REALTORS^® last November at the 2002 REALTORS^® Conference & Expo that “in large part, the thrift crisis of the 1980s and 1990s can be attributed to the mixing of banking and commerce. That’s not something I want to see happen ever again.”

More uncertain is the position of Sen. William Frist, R-Tenn., who in December replaced Trent Lott, R-Miss., as the Senate majority leader. Although a solid supporter of private property rights, Frist isn’t among the 15 senators who last year co-sponsored the NAR-backed banks-in-real-estate bill.

Yet neither has he opposed NAR’s efforts. Indeed, speaking before the NAR Board of Directors last May, he noted REALTORS^®’ effectiveness on the issue. “Your impact has been heard,” he said.

That impact is sure to be tested again in the new Washington political environment.

Step back, NAR says

More research and discussion are needed before proposed changes to the federal Real Estate Settlement Procedures Act are put into place, NAR has told the U.S. Department of Housing and Urban Development.

It’s not clear, says NAR, that homebuyers will save $10.3 billion a year in closing costs as HUD estimates. Nor has HUD made a case that its proposals won’t concentrate mortgage business in the hands of the country’s largest lenders.

Under HUD’s proposal, released in mid-2002, settlement providers could offer a prearranged settlement services package at a single, guaranteed cost. Also, the Good Faith Estimate and HUD-1 settlement forms would be simplified and new rules would constrain how much lenders’ final settlement costs could differ from estimates. HUD hasn’t identified a date for making its proposed changes final. More: Click here .