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 In This Issue Business Report NAR Supports House Net Neutrality Bill House Education & Labor Committee Holds Hearing on H-2B Temporary Worker Visa Program HUD extends RESPA Comment Period to June 12, 2008 Conventional Residential Lending Report Freddie Mac Eases Declining Markets Policy Fannie Mae Announces Keys to Recovery Initiatives Freddie Mac Responds to Concerns Raised by President-Elect Charles McMillan Federal Tax Report House Passes Tax Credit Housing Report NAR Provides Comments to Fannie Mae and Freddie Mac on Appraisal Deal with NYS Attorney General Houses Passes Foreclosure Prevention and Homeowner Rescue Act Business Report  NAR Supports House Net Neutrality Bill On May 6 the House Energy and Commerce subcommittee on the Internet and Telecommunications held a hearing on H.R. 5353 the Internet Freedom Prevention Act of 2008. This bill would codify the Federal Communications Commission's (FCC) network non-discrimination principles established in 2005. NAR submitted a statement in support of the bill stating that: "NAR believes that H.R. 5353 will maintain the freedom to use for lawful purposes broadband networks without unreasonable interference from or discrimination by network operators. We believe this measure will preserve and promote the open nature of broadband networks enabling consumers, including real estate professionals, to access lawful content, applications, devices and services of their choice." NAR' Statement Melanie Wyne 202-383-1234, Jamie Gregory 202-383-1027, Scott Rinn 202-383-7508 back to top House Education & Labor Committee Holds Hearing on H-2B Temporary Worker Visa Program On Tuesday May 6, the House Education & Labor Committee held a full committee hearing on the H-2A & H-2B visa programs for temporary workers to discuss whether these programs effectively ensure that local workers are hired first. Resort communities that have seasonal spikes in demand for workers have come in recent years to use the H-2B visas as a means of filling seasonal jobs. Witnesses from the Dept. of Labor, small businesses, labor and immigrant advocates discussed many of the benefits and pitfalls of these programs. While the hearing focused on the agriculture industry, there was a brief discussion of the hospitality industry and the bona fide need that resort communities such as Cape Cod have for seasonal labor. There was no specific mention of reauthorizing the program. Marcia Salkin 202-383-1092, Scott Rinn 202-383-7508 back to top HUD extends RESPA Comment Period to June 12, 2008 On May 7, 2008 the Department of Housing and Urban Development (HUD) announced a 30-day extension, to June 12, 2008, for the public to comment on the proposed Real Estate Settlement Procedures Act (RESPA) rule. The announcement came just six days before the initial comment period was to end on May 13, 2008 and two days after HUD received a Congressional written request for a 60-day extension signed by 149 members of Congress. The Congressional letter, organized by Rep. Ruben Hinojosa and Rep. Judy Biggert, referred to the extensive nature of the RESPA reform proposal and the fact that some aspects had not previously been the subject of public comment. In addition, the letter stated that further analysis was needed on the proposed rule's interaction with state and federal laws and regulations including the Federal Reserve Board's proposal to amend its Truth in Lending Act (TILA) regulations. NAR worked closely with the offices of Representatives Hinojosa and Biggert to help collect signatures for the letter. The fact that HUD provided a 30-day extension rather than the 60-days requested by Congress will be revisited in the future and another extension request may be made if warranted. NAR has been working with its members and industry partners to analyze and determine the proposal's impact on NAR members and the settlement service industry. NAR's Gary Thomas, along with other settlement service industry representatives participated in a Small Business Roundtable on April 24, 2008 and expressed NAR's concerns about the proposed rule, including the comprehensive nature of the proposal which goes well beyond the anticipated reform narrowly focused on improved disclosures, the timing of provisions requiring significant changes to the real estate settlement process, and comments directed at specific provisions including volume discounts, average cost pricing, price tolerances, a new definition of "required use" and a new "closing script" which must be read aloud at closings. NAR will submit comments to HUD on these and other aspects of the proposed rule and encourages NAR members to submit their own comments to HUD by June 12, 2008. RESPA Proposed Rule Proposed GFE Proposed HUD-1 Proposed Instructions for Closing Script Scott Rinn 202-383-7508, Marcia Salkin 202-383-1092 back to top Conventional Residential Lending Report Freddie Mac Eases Declining Markets Policy On May 2, 2008, Freddie Mac announced changes that ease the impact of its declining markets policy. As a general rule, under this policy, if a property is located in a declining market, the maximum loan-to-value ratio (LTV) is reduced by 5 percentage points. Under the revised policy, for mortgages with maximum LTVs equal to or more than 95%, lenders are not required to reduce the maximum LTV ratio below 95% if the following requirements are met:
The announcement also reminds affected parties that the following types of mortgages are exempt from the declining markets policy: FHA/VA, section 184 Native American, and section 502 rural housing mortgages. Fredde Mac Bulletin Jeff Lischer 202-383-1117, Marcia Salkin 202-383-1092 back to top Fannie Mae Announces Keys to Recovery Initiatives On May 6, 2008, Fannie Mae President and CEO Dan Mudd announced Fannie's new Keys to Recovery Initiative to promote liquidity, stability, and affordability in the housing and mortgage markets. Here are the highlights: First, Fannie is working to reduce the cost to consumers of jumbo conforming loans (loans above $417,000 up to $729,750) and make it easier to qualify for these loans. NAR expects these steps to significantly lower mortgage costs and give more choices for many families living in high cost areas. Second, Fannie is allowing up-to-date borrowers to refinance Fannie Mae-owned mortgages even where current value of the home is significantly less than the existing mortgage. This innovation should help keep thousands of families in their homes and prevent foreclosures that are a disaster not only for families but whole communities. Finally, Fannie has entered into an agreement with the state housing finance agencies to provide $10 billion in financing for first-time homebuyers and entered into a new partnership with the Self-Help Credit Union to minimize the harm caused by foreclosures and help families become homeowners in rehabilitated foreclosed properties. NAR's Press Release Jeff Lischer 202-383-1117, Marcia Salkin 202-383-1092 back to top Freddie Mac Responds to Concerns Raised by President-Elect Charles McMillan On May 9, 2008, Freddie Mac Executive Vice President and Chief Business Officer Patti Cook wrote to NAR President-Elect Charles McMillan thanking him for meeting with her on April 30 and responding to REALTOR® concerns that Charles raised during the meeting about Freddie's declining markets policy. Freddie's declining markets policy requires that the maximum loan-to-value ratio (LTV) for a property in a declining market is, as a general rule, reduced by five percentage points. However, under a revision announced May 2, for products allowing LTVs of 95 percent or higher, the maximum LTV is 95 percent. In her letter, Ms. Cook reviewed Freddie Mac's declining markets policy, including guidance to lenders on the use of the Office of Federal Housing Enterprise Oversight (OFHEO) housing price index to help identify declining markets. The letter states that Freddie Mac does not intend lenders to use the OFHEO index as a "hard-and-fast rule or conclusive evidence" for determining whether a particular property is in a declining market. It also acknowledges that at least some lenders are incorrectly applying the policy. In response to concerns raised by Mr. McMillan in the meeting and a concern shared with NAR that credit not be unnecessarily limited, Freddie has decided to develop a "job aid" to help lenders implement the declining markets policy appropriately. The job aid is expected to be available within a few weeks. Freddie Mac's Letter Jeff Lischer 202-383-1117, Marcia Salkin 202-383-1092 back to top Federal Tax Report House Passes Tax Credit The House has passed a major housing and tax bill, H.R. 3221. The housing and tax sections of the bill were voted on separately; the tax section passed on a vote of 322 - 94. The bipartisan vote was not unexpected, as this tax package passed the Ways and Means Committee on a vote of 35 - 5 in early April. Prominent among the relief provisions is a tax credit for first-time homebuyers. (For a summary of the housing program changes, see related report.) The House-passed package creates a $7500 tax credit that would be taken in full on the tax return for the year of purchase. Any principal residence would be eligible for the tax credit, but only first-time homebuyers with incomes of $70,000 ($140,000 on a joint tax return) would be eligible to use it. NAR data show that more than 95% of first-time homebuyers fall within that income level. The Ways and Means tax credit would be available between April 8, 2008 and April 1, 2009. H.R. 3221 will be sent back to the Senate. The Senate version of H.R. 3221 is very different from the House-passed package. It is not yet known whether the Senate will further revise H.R. 3221 or whether it will move to a House-Senate conference to resolve the many differences in the bills. Unfortunately, this process may drag well into June. Other provisions in the House tax package include revisions that modernize the low-income housing tax credit, permit state housing agencies to issue bonds and use the proceeds to refinance subprime mortgages, allow a limited property tax deduction for individuals who do not itemize their tax returns and that change the Social Security number disclosure requirements for real estate settlements. A side by side chart comparing the House and Senate tax provisions is available. View a side by side chart comparing the House and Senate tax provisions Linda Goold 202-383-1083, Helen Devlin 202-383-7559 back to top Housing Report NAR Provides Comments to Fannie Mae and Freddie Mac on Appraisal Deal with NYS Attorney General On April 30, 2008, NAR submitted comments to both government sponsored enterprises (GSE), Fannie Mae and Freddie Mac, on the Home Valuation Protection Code and the Independent Valuation Protection Institute (IVPI). NAR appreciates the efforts of the New York State Attorney General and GSEs to combat appraisal fraud in the mortgage industry by entering into their recent agreement on appraisal issues. NAR does have concerns, however, with the implementation of the newly created code of conduct and IVPI. Comments were also provided to the regulator of Fannie Mae and Freddie Mac, the Office of Federal Housing Enterprise Oversight (OFHEO). On March 3, 2008, government sponsored enterprises (GSE), Fannie Mae and Freddie Mac, reached an agreement with New York State Attorney General Andrew M. Cuomo aimed at eliminating conflicts of interest on mortgage appraisals. According to the agreement, the GSEs will no longer purchase mortgages from lenders that utilize internal appraisers. The Home Valuation Protection Code establishes standards on compensation and appraiser independence. The IVPI will be a clearinghouse of appraiser information, with a separate board of directors, charged with monitoring complaints from appraisers and consumers. All lenders will be required to provide post-purchase copies of appraisal documents to the clearinghouse. OFHEO and the Office of the Comptroller of the Currency were involved in the negotiations. NAR Cuomo-GSE Summary and FAQ NAR Comments to Fannie Mae NAR Comments to Freddie Mac Jerome Nagy 202-383-1233 back to top Houses Passes Foreclosure Prevention and Homeowner Rescue Act The House last week passed H.R. 3221, the "Foreclosure Prevention and Homeowner Rescue Act." This bill included a number of provisions aimed at slowing the housing crisis. The bill included both GSE and FHA reform similar to legislation that passed the House last year. Included was an NAR-supported amendment by Reps. McNerney (D-CA) and Miller (R-CA) to make permanent the economic stimulus loan limits (of 125% of median home price, capped at $729,750). The bill also included a $7500 tax credit for homebuyers (discussed in more detail elsewhere in this document). The main focus of the bill is an expansion of the FHA mortgage insurance program to help people avoid foreclosure. The voluntary program would allow lenders to write down the current mortgage to 85% of the current appraised value, discharge all fees and penalties and resolve any second liens. In return, the borrower would get a new FHA mortgage at 90% LTV (FHA would take the 5% equity difference), and borrowers would share any appreciation with FHA. Loans and borrowers would have to meet certain criteria, and the program would expire in two years. The bill now goes to the Senate. Senate Banking Chairman Dodd (D-CT) is expected to introduce similar FHA foreclosure prevention legislation this week. Megan Booth 202-383-1222 back to top Go to archived weekly reports >> Last Updated: 05/12/2008 Bira de Aquino |
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