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 In This Issue Business Report HUD Announces 120-day Period of Restraint in Enforcement of New RESPA Rule House Commerce Subcommittees Hold Hearing on Data Privacy Senate to Begin Consideration of a Final Senate Health Reform Bill Saturday NAR RESPA Seminar Available on Realtor.org HUD Releases 19 new FAQs on New RESPA Rule Housing Report FHA Removes Second Appraisal Requirement FHA Releases Actuarial Report, Falls Below Reserve Requirements FHA Releases Condominium Approval Process Business Report  HUD Announces 120-day Period of Restraint in Enforcement of New RESPA Rule On Friday, November 13, 2009, the Department of Housing and Urban Development (HUD) announced a period of "restraint" in enforcing the new Real Estate Settlement Procedures Act (RESPA) rule, which will go into effect on January 1, 2010. The period of restraint will last for 120 days. Enforcement restraint will be shown for FHA approved lenders acting in good faith to comply with the new rule, including the mandatory Good Faith Estimate and the HUD-1. HUD also asked other federal and state enforcement agencies to exercise restraint. HUD Secretary Shaun Donovan stated: "While we will not delay implementation of RESPA's new requirements, we are sensitive to the concerns of the industry as it integrates the new rules into their day-to-day business practices." HUD Press Release Scott Rinn 202-383-7508, Marcia Salkin 202-383-1092, Kenneth Trepeta 202-383-1294 back to top Business Report House Commerce Subcommittees Hold Hearing on Data Privacy On November 19, the House Energy and Commerce Subcommittees on Commerce, Trade, and Consumer Protection and Communications, Technology and the Internet held a joint hearing to probe how companies collect, use and store information about consumers both online and offline. Rep. Rick Boucher (D-VA) is expected to introduce general privacy legislation by early next year. This legislation is expected to establish "baseline" consumer protections. Rep. Boucher believes consumers should be given clear, concise information about what data is collected, how it is used, how it is stored, how long it Is stored, what happens to it when it is no longer stored, and whether it is given or sold to third parties. He has also called for the ability of consumers to opt-out of websites collection of their data and to opt-in to the sharing of their data with unrelated third parties. NAR continues to monitor the drafting process and will work with policymakers to ensure that new data use rules are narrowly tailored and do not overly burden REALTORs®. Melanie Wyne 202-383-1234, Ken Wingert 202-383-1196 back to top Business Report Senate to Begin Consideration of a Final Senate Health Reform Bill Saturday On Wednesday, November 18, 2009, Senate Majority Leader Harry Reid (D-NV) released the text of a final Senate health reform bill. The bill merges the provisions of the Senate Finance Committee bill, S. 1796, with those of the Senate Health, Education, Labor and Pension Committee bill, S. 1679. An initial review of the bill text indicates that the Finance Committee's bill served as the basis for much of the merged bill's provisions. Most importantly for the self-employed, including Realtors, the Finance Committee bill's provisions reforming the currently dysfunctional individual and small group health insurance markets are included in the merged bill. These rules would require insurers to treat individuals and small employer groups with the same rules which currently are characteristic of larger group plans, i.e. guaranteed issue, guaranteed renewal, no preexisting condition exclusions, no health status or gender rating factors, etc. It is expected that the Senate will vote on whether to begin debate of the bill, known as the "Patient Protection and Affordable Care Act of 2009" on Saturday, November 21, 2009 at 8:00pm. (For procedural reasons, the bill will be referred to as HR 3590.) Sixty votes will be required to begin debate. If the Senate votes to proceed, it may begin debate at that time or wait until after the Thanksgiving recess. Any further votes on amendments or the bill itself will not occur until after the holiday break. A summary of the access and affordability provisions and the text of each of the various reform bills are available on www.realtor.org/healthreform. www.realtor.org/healthreform Marcia Salkin 202-383-1092, Ken Wingert 202-383-1196, Scott Rinn 202-383-7508 back to top Business Report NAR RESPA Seminar Available on Realtor.org NAR's RESPA Realities seminar, recently presented at the NAR 2009 Annual Convention and Expo in San Diego, is now available on Realtor.org. National RESPA expert, Phil Schulman, a partner at the Washington, D.C. law firm of K&L Gates, discussed the new RESPA rule with a focus on what practitioners will need to know to comply with the new mandatory Good Faith Estimate and HUD-1 forms which go into effect on January 1, 2010. NAR members may log-in to Realtor.org and go to the "RESPA Realities" page to download Mr. Schulman's PowerPoint slides. An audio recording of the session will also be available on the RESPA Realities page in the near future. HUD FAQs dated November 19, 2009 Scott Rinn 202-383-7508, Marcia Salkin 202-383-1092, Kenneth Trepeta 202-383-1294 back to top Business Report HUD Releases 19 new FAQs on New RESPA Rule On November 17th and 19th, 2009 the Department of Housing and Urban Development (HUD) released a total of nineteen new FAQs concerning the new RESPA rule and the Good Faith Estimate and HUD-1 forms which go into effect on January 1, 2010. The new FAQs fall under numerous categories in HUD's FAQs Table of Contents, including "GFE — General", "GFE Blocks 2 and 3", "written list of providers", "changed circumstances", "right to cure and tolerance violations", HUD-1 series 100, 200, 1100, 1200 and 1300", and "HUD-1 — Page 3." HUD RESPA FAQs Scott Rinn 202-383-7508, Marcia Salkin 202-383-1092, Kenneth Trepeta 202-383-1294 back to top Housing Report FHA Removes Second Appraisal Requirement On Saturday, November 14, 2009, Federal Housing Administration (FHA) Commissioner Dave Stevens spoke before a group of Realtors at the National Association of Realtors (NAR) annual convention in San Diego, CA. During the speech, the Commissioner noted that FHA, based on input from NAR, would soon remove the requirement for a second appraisal on certain loans. Earlier this week, FHA released Mortgagee Letter 2009-48: Second Appraisal Reporting Requirements, which eliminates the need for a second appraisal on loans that exceed $417,000, have a LTV equal or greater than 95 percent, and are secured by properties located in declining markets. This Mortgagee Letter rescinds Mortgagee Letter 2008-09: Second Appraisal Requirements/Limits on Cash-Out Refinances. ML 2009-48 also eliminates the need for a second appraisal on cash-out refinances, as described in ML 2009-08. FHA retains a second appraisal requirement per Mortgagee Letter 2006-14. This policy requires a second appraisal when a property is resold between 91 days and 180 days following acquisition by the seller. This is part of their property flipping prohibition policy. Mortgagee Letter 2009-48: Second Appraisal Reporting Requirements Mortgagee Letter 2009-08: Limits on Cash-Out Refinances Mortgagee Letter 2008-09: Second Appraisal Requirements/Limits on Cash-Out Refinances Mortgagee Letter 2006-14: Property Flipping Prohibition Amendment Jerome Nagy 202-383-1233, Chere LaRose-Senne 312-329-8455, Megan Booth 202-383-1222 back to top Housing Report FHA Releases Actuarial Report, Falls Below Reserve Requirements The Federal Housing Administration (FHA) released its annual, independent actuarial review. Under the report's assumptions FHA's Mutual Mortgage Insurance Fund's (MMIF) capital declined to $2.7 billion and its capital ratio decreased to .53 percent, which is below the 2 percent required by law. The capital reserve was 3 percent in FY 2008. The $2.7 billion reflects the capital remaining after paying claims over the next 30 years. "There are real risks to the FHA and we are aggressively addressing those real risks with real reforms," Commissioner Dave Stevens said. "FHA will not tolerate fraudulent or predatory lending practices and we have enforced tighter standards and taken action against lenders who violate FHA origination and underwriting requirements. The FHA has also implemented several reforms to strengthen its credit policies, which will ultimately help shore up the reserves and reduce risk." FHA also introduced Robert Ryan as the agency's new Chief Risk Officer, the first-ever in the FHA's history. The actuarial review takes a "snapshot" of the portfolio at a particular point in time and then uses economic projections to estimate reserves necessary for the "remaining lifetime" of the existing portfolio. FHA auditors state that an actuarial review "reflects projections of events more than 30 years into the future." The audit states: "the house price appreciation rate is the most important economic factor influencing FHA mortgage claim and loss rates". The actuarial review is tied to economic factors over which FHA has no control. The Fund is expected to return above the 2 percent capital ratio when house prices stabilize. While some have suggested that FHA will require a federal bailout data indicates this may be unnecessary. A significant portion of loans performing poorly in the FHA portfolio are from seller-funded down payment assistance programs, which are no longer permitted. FHA's loans with loan-to-value (LTV) ratio's 95 percent or greater have decreased from 72 percent to 68 percent. At the same time, loans with a LTV ratio at or below 80 percent increased from 1 percent to 9 percent. In Fiscal Year (FY) 2009, 44 percent of FHA loans had FICO scores above 680, which is up from 28 percent in FY 2008 and 19 percent in FY 2007. HUD Press Release on FHA Finances Jerome Nagy 202-383-1233, Megan Booth 202-383-1222 back to top Housing Report FHA Releases Condominium Approval Process FHA recently released Mortgagee Letter (ML) 2009-46 A: Temporary Guidance for Condominium Policy and ML 2009-46 B: Condominium Approval Processes for Single Family Housing. The temporary guidance 1) increases FHA concentration requirements to 50 percent, 2) requires 50 percent of units in a project to be owner-occupied but vacant and REO property are not considered in the calculation of the owner-occupancy percentage, 3) reduces the pre-sale requirement to 30 percent, 4) all projects in Florida are required to be reviewed under the HUD Review and Approval Process (HRAP), and 5) Spot Loans are extended through February 1, 2010. The temporary guidance is effective for all FHA case numbers assigned on or after December 7, 2009 through December 31, 2010, except for the Spot Loan Approval Process. The guidance in ML 2009-46 B is effective for all case numbers on or after December 7, 2009 and replaces ML 2009-19, which was the initial guidance for condominium projects insured in FHA's 203(b) Singe Family Program. The new rules outline specific condominium project requirements for FHA approval. Projects may be approved through HRAP or by the lender through the Direct Endorsement Lender Review and Approval Process (DELRAP). FHA will continue to maintain a list of approved projects. The site condominium and manufactured housing condominium project changes were implemented on June 12, 2009. On July 31, 2009, NAR President Charles McMillan sent a letter to FHA Commissioner David Stevens recommending enhancements to the new condominium rule. Mr. McMillan also discussed NAR's recommendations at a meeting with the Commissioner on September 8, 2009. NAR is calling for: 1) a reduction in the owner-occupancy requirement, 2) eliminating or increasing the FHA concentration limit, 3) reducing the pre-sale requirement, and 4) clarification of the reserve study requirement. NAR Letter to FHA on New Condominium Rule Enhancements Mortgagee Letter 2009-46 A: Temporary Guidance for Condominium Policy Mortgagee Letter 2009-46 B: Condominium Approval Process for Single Family Housing Jerome Nagy 202-383-1233, Megan Booth 202-383-1222 back to top Go to archived weekly reports >> Last Updated: 11/20/2009 Kara Beigay |
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