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 In This Issue Business Report FTC Announces Limited Forbearance of Enforcement Actions for FACT Act Red Flag Guidelines - No Enforcement Forbearance for FACT Act Address Discrepancy Rules Commercial Finance Report NAR Writes to Secretary Paulson Urging Him to Take Advantage of Realtor® Expertise in Implementing TARP Conventional Residential Lending Report NAR Writes to Treasury Secretary Paulson Urging Him to Take Advantage of Realtor® Expertise in Implementing TARP Federal Housing Finance Agency (FHFA): 2009 Conforming Loan Limits to Be Announced by November 7, 2008 NAR Urges Congress to return for a Lame Duck Session and Craft a Stimulus Package focused on Housing NAR Urges Congress to Request that Secretary Paulson Take Action to Reduce Mortgage Interest Rates Fannie Mae and Freddie Mac Provide Guidance on 2009 Conforming Loan Limits Housing Report VA Loan Limits in 2009 to Raise as High as $1,094,625 Beware of Downpayment Programs Not Permitted by HUD Business Report  FTC Announces Limited Forbearance of Enforcement Actions for FACT Act Red Flag Guidelines - No Enforcement Forbearance for FACT Act Address Discrepancy Rules On October 22, 2008 the Federal Trade Commission announced it will forbear from bringing any enforcement action for violation of the Identity Theft Red Flags Rule, 16 CFR 681.2, against a financial institution or creditor that is subject to administrative enforcement of the Fair Credit Reporting Act by the FTC, for a period of six months following the mandatory compliance date of November 1, 2008. The delay is limited to the Identity Theft Red Flags Rule and does not extend to the rule regarding address discrepancies applicable to users of consumer reports (16 CFR 681.1). FTC website announcement FTC enforcement policy NAR FAQs Scott Rinn 202-383-7508, Marcia Salkin 202-383-1092 back to top Commercial Finance Report NAR Writes to Secretary Paulson Urging Him to Take Advantage of Realtor® Expertise in Implementing TARP On October 21, 2008, NAR President Dick Gaylord wrote to Treasury Secretary Hank Paulson asking that in implementing the Troubled Asset Relief Program (TARP), the Treasury Department and its contract managers take advantage of the extensive experience of local commercial and residential real estate professionals in the management and disposition of real property. For more detail and a link to the letter, see the Conventional Residential Lending Report elsewhere in this weekly report. Lisa Brechtel 202-383-1090, Jeff Lischer 202-383-1117 back to top Conventional Residential Lending Report NAR Writes to Treasury Secretary Paulson Urging Him to Take Advantage of Realtor® Expertise in Implementing TARP On October 21, 2008, NAR President Dick Gaylord wrote to Treasury Secretary Hank Paulson asking that in implementing the Troubled Asset Relief Program (TARP), the Treasury Department and its contract managers take advantage of the extensive experience of local commercial and residential real estate professionals in the management and disposition of real property. Residential and commercial REALTORS®, including commercial affiliate members of SIOR, IREM, CRE, RLI, and the CCIM Institute, and associated technology and data management providers have the necessary tools to value and market properties and their underlying mortgages. Where the assets being valued, managed, disposed, and recast are secured by real property, it is essential that experienced local firms play a central role. Using REALTORS® will ensure that taxpayers receive the greatest returns possible on assets acquired and/or disposed through TARP. In the S&L crisis and aftermath two decades ago, REALTORS®, including SIOR, IREM, and CRE, played a central role in helping the Resolution Trust Corporation (RTC) manage and dispose of real property assets. Residential and commercial appraisers who know the local market will also be crucial to determine appropriate valuation of properties that will be disposed of under the TARP. NAR Letter to Secretary Paulson Jeff Lischer 202-383-1117, Lisa Brechtel 202-383-1090, Tony Hutchinson 202-383-1120 back to top Federal Housing Finance Agency (FHFA): 2009 Conforming Loan Limits to Be Announced by November 7, 2008 On October 17, 2008, FHFA, the regulator and conservator of Fannie Mae and Freddie Mac, announced that it plans to announce 2009 conforming loan limits by November 7. Unless Congress acts during the lame duck session, limits in some high cost areas will go down. For 2008, the loan limit is 125% of the area median house price, up to $729,750, but not less than $417,000. Starting in 2009, the limits are slated to be 115% of area median, up to $625,5000, but not less than $417,000. NAR supports making the 2008 limits permanent. For 2009, FHFA will once again use HUD-determined median home values. FHFA will continue to base the loan limit for the MSA based on the median price for the highest-cost county in the MSA. A 30-day appeals process will be allowed. The appeal will be to HUD, since HUD determines the median house prices. FHFA intends to consider the feasibility and desirability of different approaches for the future. Any change will be made after an opportunity for public comment. OFHEO Announcement NAR 4-Point Housing Stimulus Plan (including support for making 2008 limits permanent) Jeff Lischer 202-383-1117, Tony Hutchinson 202-383-1120 back to top NAR Urges Congress to return for a Lame Duck Session and Craft a Stimulus Package focused on Housing On October 21, 2008, NAR President Dick Gaylord wrote to members of Congress indicating the need for members to return to Washington immediately after the Presidential election to craft a stimulus package that focuses on housing. As a foundation for any forthcoming stimulus package, NAR forwarded Congress its 4-Point Housing Stimulus Plan that includes features such as eliminating repayment of the first-time homebuyer tax credit and expands it to all homebuyers, making the higher mortgage loan limits permanent, pushing banks to extend credit to Main Street, and prohibiting banks from entering into real estate. Letter from NAR President Dick Gaylord to Congress regarding NAR's 4-Point Plan Tony Hutchinson 202-383-1120, Jeff Lischer 202-383-1117 back to top NAR Urges Congress to Request that Secretary Paulson Take Action to Reduce Mortgage Interest Rates On October 16, 2008, NAR President Dick Gaylord wrote to Treasury Secretary Henry Paulson urging him to take action to reduce mortgage interest rates. On October 22, 2008, in an effort to increase the visibility of this important issue, NAR also forwarded a letter to the leadership of the House of Representatives and the Senate, as well as, members of the House Financial Services Committee and the Senate Banking, Housing and Urban Affairs committee. NAR President Dick Gaylord has requested that Congress contact Treasury Secretary Henry Paulson and Federal Housing Finance Agency Director, James Lockhart, to ask them to take aggressive action that will resolve the significant spread in interest rate between GSE MBS and Treasury bonds that has caused an increase in mortgage interest rates. NAR President Dick Gaylord's Letter to Select Members of Congress Addressing the need for Aggressive Action to Resolve the MBS Interest Rate Issue. Tony Hutchinson 202-383-1120, Jeff Lischer 202-383-1117 back to top Fannie Mae and Freddie Mac Provide Guidance on 2009 Conforming Loan Limits Fannie Mae and Freddie Mac have each released guidance on conforming loan limits for high cost areas that are scheduled to take effect in 2009. Unless Congress acts during a possible lame duck session after the election, conforming loan limits in some high cost areas will go down. For 2008, the loan limits are 125% of the area median house price, up to $729,750, but not less than $417,000. Starting in 2009, the limits will be 115% of area median, up to $625,5000, but not less than $417,000. NAR supports making the 2008 limits permanent. On October 16, 2008, Fannie Made issued Announcement 08-27 providing detailed guidance on what it calls "high-balance mortgages" under the statutory authority that takes effect in 2009. On October 17, 2008, Freddie Mac issued a Bulletin explaining how it would treat the conforming loan limits for high cost areas that take effect on January 1, 2009 (these policies were previewed in a Freddie Mac email dated October 3, 2003). Freddie is using the term "super conforming mortgages" instead of high-balance mortgages. Chart Comparing Highlights of Fannie's and Freddie's Policies Fannie Mae Announcement 08-27: Permanent High-Cost Area Loan Limits (October 16, 2008) Freddie Mac Bulletin (October 17, 2008) Freddie Mac Advisory E-mail to Seller/Servicers (10/3/2008) NAR 4-Point Housing Stimulus Plan (including support for making 2008 limits permanent) Jeff Lischer 202-383-1117, Tony Hutchinson 202-383-1120 back to top Housing Report VA Loan Limits in 2009 to Raise as High as $1,094,625 The Department of Veterans Affairs has published a notice implementation the provision of S. 3023, the "Veterans' Benefits Improvement Act of 2008" - now Public Law 110-389. S. 3023 made significant changes to the VA home loan guarantee program. Among these were permanent increases to the VA loan limits. The law provided VA with the economic stimulus limits through 2011. The economic stimulus limits are equal to 125% of local area median home price, capped at 175% of the gse limit (or $729,750). However, in their notice, VA has determined that beginning January 1, 2009 they can calculate the high cost loan limit price off the new GSE limit of $625,500. Therefore, the loan limit for VA in high cost areas like California, Washington, DC and others will be $1,094,625. Furthermore, for those states defined in statute as "high costs states", including Alaska, Hawaii, Guam and the USVI the limit will go up as high as $1,641,937.50. For more information see VA Circular 26-08-19 Megan Booth 202-383-1222, Jerome Nagy 202-383-1233 back to top Beware of Downpayment Programs Not Permitted by HUD On October 1, 2008, the Federal Housing Administration (FHA) no longer accepts seller-funded downpayments as required by the Housing and Economic Recovery Act of 2008. Other programs are being created in an attempt to get around this new requirement. Some are being set up as earned-income programs where a buyer asks a seller to enroll in a "property alliance" for a fee. After an administrative cost is paid to the program, the fee goes to the buyer as a commission that can theoretically be considered as earned income. While HUD does recognize earned income, these programs are not considered legitimate means of earned income for meeting the downpayment requirement for FHA-insured mortgages. Jerome Nagy 202-383-1233, Megan Booth 202-383-1222 back to top Go to archived weekly reports >> Last Updated: 10/27/2008 Bira de Aquino |
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