We are pleased to bring you the inaugural edition of the Real Estate Services Newsletter. The purpose of these newsletters is to bring you some of the latest information on NAR activities as they affect your business.

In this edition:

1. RESPA Reform
2. Home Warranties and RESPA
3. FHA, Freddie Mac and Fannie Mae Loan Limits
4. Declining Market Policies
5. Broker Involvement Program
6. Library / Archive
7. NAR/Harris Interactive Survey on One-Stop Shopping
8. Announcements

RESPA Reform

The United States Department of Housing and Urban Development (HUD) issued a proposal to amend the rule for the Real Estate Settlement Procedures Act (RESPA.) RESPA was enacted in 1974 to address problems in the real estate settlement process including curbing abusive practices that increased costs to homebuyers and to reduce the lack of understanding about the settlement process and its costs among consumers. The new proposal has a number of features that will negatively impact the industry including adding complications to the closing process, the interaction between real estate firms and other settlement service providers, restrictions on the ability to offer even the most minor incentives, and a more complicated GFE that does not match the HUD 1 and is confusing.

A recent NAR report, "The Estimated Cost of HUD's Proposed RESPA Regulations" by Dr. Ann B. Schnare, shows that the regulatory impact analysis used by HUD significantly underestimates the costs of implementing the new requirements by leaving out numerous cost factors. The report found that closing costs could be four times or more than what HUD estimates.

NAR provided comments on the proposal to HUD on June 12. In its letter, NAR addressed five areas of concern with the proposed rule change:

1. The proposed rule fails to strike the right balance between simplification and understanding.
2. Provisions in the proposed rule on cost reduction are anti-competitive and will reduce the quality of settlement services.
3. Required use and average cost pricing provisions have negative unintended consequences.
4. The rule should not be finalized until TILA and RESPA disclosures are harmonized.
5. The proposed rule underestimates the cost of implementation and overestimates the benefits.

In addition to the comment letter, NAR issued a "Call for Action" urging members from the largest brokerages to write to HUD and appeal for a withdrawal of the rule and a reissue of a new GFE. The new, simplified GFE would track the HUD 1 so that consumers could be aware of their loan terms and anticipated closing costs. As a result of the "Call for Action", more than 6,000 letters were sent to HUD.

NAR Weighs in on Home Warranties and RESPA

NAR's Real Estate Services and Regulatory & Industry Relations have weighed in with HUD's RESPA enforcement division on the appropriateness of compensation for the sales of home warranty contracts. NAR made the case that REALTORS® and brokers may legitimately be compensated for sales and marketing of home warranties under RESPA since the compensation is for actual marketing and services rendered. HUD, in a brief informal letter, created much confusion, implying that marketing agreements with Home Warranty firms violated RESPA. NAR and industry partners moved quickly to get HUD to understand the actual operation of these agreements. HUD is reviewing NAR's submission. NAR is also working to get similar clarification on administrative fees.

FHA, Freddie Mac and Fannie Mae Loan Limits

In the bipartisan Economic Stimulus Act, signed by President Bush last February, FHA, Fannie Mae and Freddie Mac loan limits legislation raised the maximum loan limits in high cost areas. This legislation raised the maximum loan limits to $729,750, but it expires on December 31, 2008. Currently, the House-passed housing stimulus bill, H.R. 3221, makes the $729,750 limits permanent, while the Senate bills cap the limits at $550,440.

The national mortgage market meltdown dramatically raised the cost and reduced the availability of mortgages in the market. Higher limits are helping to revitalize local housing markets, providing safe, fair and affordable mortgages for homeowners. The limits are also helping to stabilize the nation's entire economy. Higher limits simply reflect market realities in higher cost areas. A lower limit unfairly penalizes citizens based simply on geography. These insights were presented to Congress at a hearing on May 22, 2008 held by the House Financial Services Committee.

It is expected that the House and Senate will conference on H.R. 3221 shortly, including all the provisions. NAR has issued a "Call for Action" which urges members to contact their Senators and ask them to accept the House language and make the higher loan limits permanent.

Declining Market Policies

Due to NAR pressure, Fannie Mae and Freddie Mac withdrew their declining markets policies which had reduced the maximum loan amount (and increased the minimum down payment) by five percentage points for properties in declining markets, with some exceptions. However, mortgage insurers continue to have their own declining market policies that limit eligibility of borrowers for mortgage insurance. On May 20, 2008, NAR President Dick Gaylord wrote to Kevin Schneider, President of the Mortgage Insurance Companies of America (MICA), which represents the private mortgage insurance industry, asking them to follow Fannie Mae and Freddie Mac's lead. In its letter, NAR recognized the need to account for risk, but noted it opposes the declining markets approach that unfairly stigmatizes communities, hurts homeowners, and does not help home buyers. NAR is seeking a meeting with MICA to discuss these concerns in greater detail.

Broker Involvement Program

NAR has discovered that when brokers alert their agents to key issues, agents listen and respond. The new Broker Involvement Program is designed to give you, the principal broker, a quick tool to enlist your company's agents in bringing to Congress' attention issues of concern to you and your business. The Program provides your agents a direct communication link to their lawmakers and in just seconds allows your agents to express their opinions on those business issues with a personal letter that's ready for them to sign and send. Specifically, the Broker Involvement Program offers:

• An efficient and easy to use web-based function, called the Broker Portal, to personalize messages to each of your agents from you requesting their participation in federal "Calls for Action." NAR writes and sends the message on your approval.
• Your agents receive a special message from you with a pre-written letter to their federal lawmaker(s) ready for their signature.
• An opportunity to bring a strong and united REALTOR®voice to members of Congress.
• Your involvement will strengthen REALTOR®influence in determining outcomes of legislation.

By urging your people to respond to NAR's "Calls for Action", we can shine a very bright light in Congress on important real estate issues. For more information about this program or to register to participate, please contact Erin Murphy at 202-383-1179 or emurphy@realtors.org.

Library /Archive

Consumers can increasingly discover rich, detailed real property-related information online. This can present a challenge when a consumer references information that an agent cannot easily locate or verify. To ensure that REALTORS®know more than consumers, NAR has proposed creating a property or parcel-centric national library or archive that has robust, unique, useful information on virtually every property in the United States. This information would be password protected so only NAR members get access.

The Library/Archive will include active and off-market listings licensed from local MLSs but will go further, containing other important information not generally found in the MLS. It will contain every parcel of property possible including commercial, industrial, residential, resort and rental, and include detailed community, school, demographic and amenity information on local neighborhoods. The Library/Archive will also include: commentary and unique input by REALTORS®, unlisted property information, mortgage information, lien and foreclosure information, disclosure documents and property value estimates.

The Library/Archive will complement, not compete with NAR's most trusted partners: brokers, agents and MLSs. A quick synopsis of what the Library/Archive is and is not is shown below:

NAR/Harris Interactive Survey on One-Stop Shopping

NAR and Harris Interactive recently partnered to conduct a public opinion survey of consumer preferences when it comes to real estate services. The survey looked at 1,400 recent and future home buyers and found that consumer interest and satisfaction with one-stop shopping for real estate services is growing.

Numerous real estate firms have made considerable efforts to develop a menu of services for their clients over the past decade. The data concluded that these efforts are paying off as more home buyers are turning to firms that can offer a variety of services, thereby having a better home-shopping experience. Some of the key findings included:

• More than three-fourths of respondents would consider a firm that offers one-stop shopping.
• Some 96% think that receiving all services from one provider would make purchasing a home easier.
• Use of one-stop shopping has increased 45% since 2002.
• The advantages of using one-stop shopping include making the transaction:
  • Less expensive – 77%
  • More manageable – 73%
  • Convenient – 73%
  • Prevent issues from falling through the cracks – 73%
    

Findings from the survey were published in the May issue of RISMedia's Real Estate magazine and on REALTOR.org.

Announcements

Communications Effort

As announced last month, Real Estate Services has added a new member to the team to help better coordinate communications. Kara Beigay, whom some of you may have met at the mid-year conference and expo, is our new Communications Manager overseeing this effort and will work to implement communications efforts that address the unique needs of diversified firms. Specifically, she will work with the various NAR departments' communications entities (Public Affairs, Regulatory & Industry Relations, Government Affairs and others) so that valuable information flows in both directions and provide additional value to you. In order to implement this component and develop broader
information sharing, please provide us with the information for whom you would like to be your communications contact or forward Kara's details to them so that we can start developing this new channel and find out how best we can serve you. Her information is: Kara Beigay, 202-383-7520, kbeigay@realtors.org.

Real Estate Advisory Board Meeting

The next meeting of the Real Estate Advisory Board will take place at the St. Regis Hotel in New York City on September 3rd. The official program will begin on Tuesday, September 2nd with a Welcoming Reception and Dinner. On Wednesday, September 3rd the meeting will start at 8:30am and conclude at 2:30pm.

This meeting is being held in conjunction with the RISMedia Leadership Conference which is scheduled to begin with a half day session on Wednesday, September 3rd and conclude with a networking reception on Thursday, September 4th.

The meeting agenda is under development and we encourage you to send topic suggestions or recommendations to Ken Trepeta, RES Director at ktrepeta@realtors.org. For more information on logistics for the meeting, please contact Patricia Tarhon, ptarhon@realtors.org.