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 In This Issue Business Report Congress Approves Bill to Improve Broadband Access Conventional Residential Lending Report Freddie Mac Short Sales Webinar Emergency Economic Stabilization Act of 2008 Signed Fannie Mae and Freddie Mac Drop Increase in Adverse Market Delivery Fees and Announce Other Pricing Changes Environment Report Flood Insurance Extended till March 2009 Federal Tax Report Leasehold Improvements Renewal Housing Report HUD Announces Hope for Homeowners Program for Troubled Homeowners Veterans Home Loan Program Reform To Be Signed by the President HUD Announces Reverse Mortgage Limits Business Report  Congress Approves Bill to Improve Broadband Access Congress has approved legislation that will improve the collection of broadband data and provide $40 million in grants for public-private partnerships to improve broadband adoption in rural and other high-cost areas. Now, the Federal Communications Commission (FCC) will be required to conduct surveys of broadband use in suburban and rural areas. In addition, the Government Accountability Office (GAO) will now be required to study broadband speeds and costs and to compare the availability and quality of broadband offerings in the US to other industrialized nations. This new reporting will help policymakers better identify areas of the country that are falling behind when it come to high-speed internet access and lay the groundwork for a national broadband policy that will strengthen communities and expand opportunities for home sales. Melanie Wyne 202-383-1234 back to top Conventional Residential Lending Report Freddie Mac Short Sales Webinar Freddie Mac has developed a Webinar entitled "Introduction to Short Sales for the Real Estate Professional." Freddie Mac staff consulted with NAR extensively in developing the Webinar. The program covers the following topics: Freddie Mac's mission to homeowners; key statistics on delinquencies and workouts; understanding the real estate professional's perspective on the current environment; retention and liquidation workout options; and the short sales process. This information will be extremely valuable for members who are relatively new to short sales. Freddie Mac Webinar Jeff Lischer 202-383-1117, Tony Hutchinson 202-383-1120 back to top Emergency Economic Stabilization Act of 2008 Signed On Friday, October 3, the U.S. House of Representatives voted 263 to 171 to enact the Emergency Economic Stabilization Act of 2008 into law. After being rejected earlier in the week, the legislation received a number of enhancements in the areas of consumer and taxpayer protection which made the bill more palatable for congressional leaders initial opposed to the bill. Included in the revised bill language is an increase in the amount of deposit insurance provided by the Federal Deposit Insurance Corporation (FDIC), legislation that will shield many of taxpayers from the ravages of the Alternative Minimum Tax (AMT), and strengthened directives to lenders to work with borrowers to prevent foreclosures and to provide timely responses to short sales. To review the Bill in more detail, below is a link to the House Financial Services Committee website that contains the complete bill language and a section-by-section summary for your convenience. House Financial Services Committee EESA Web Page Tony Hutchinson 202-383-1120, Jeff Lischer 202-383-1117 back to top Fannie Mae and Freddie Mac Drop Increase in Adverse Market Delivery Fees and Announce Other Pricing Changes Fannie Mae (on October 2, 2008) and Freddie Mac (on October 3, 2008) each announced they will not implement 25 basis point increases in market condition delivery fees scheduled to take effect in early November. The decisions were made less than a month after the Director of the Federal Housing Finance Agency (FHFA), Jim Lockhart, placed both enterprises into conservatorship. In recent congressional testimony, Lockhart informed Congress that he had instructed the enterprises to review underwriting standards and pricing. The decision to cancel this fee increase will lower costs for homebuyers and increase mortgage market liquidity. The two companies also each announced other upcoming changes to their mortgage pricing (some up, some down). Freddie Mac has provided a preview of what it calls "super conforming" loan limits (the loan limits that take effect after the 2008 "jumbo conforming" loan limits expire at the end of the year). Starting in 2009, the permanent high cost area limits are the lesser of 115 percent of the area median or $625,500, but not less than $417,000. Freddie will limit super conforming loans to purchase transactions (no cash-out refi's). It will permit their use for primary residences, second homes, and 1- to 4-unit investment properties. ARMS will eligible (5/1, 7/1, and 10/1), as will fixed rate mortgages (15-, 20-, and 30-year terms). The maximum debt-to-income ratio will be 45 percent. Other rules also apply. On October 1, 2008, NAR President Dick Gaylord wrote to Director Lockhart urging FHFA to reexamine the pricing and fee policies of Fannie Mae and Freddie Mac consistent with their mission to make affordable mortgages available to homebuyers. Fannie Mae Announcement 08-24 (10/2/2008) Freddie Mac Advisory E-mail to Seller/Servicers (10/3/2008) NAR Letter to FHFA (October 1, 2008) Jeff Lischer 202-383-1117, Tony Hutchinson 202-383-1120 back to top Environment Report Flood Insurance Extended till March 2009 President Bush signed into law a continuing resolution that extended authority for the National Flood Insurance Program through March 6, 2009. Also included was flood map funding at the 2008 level for 2009. Congress has been debating long-term reauthorization of the flood insurance program with many reforms supported by NAR, but no agreement had been reached before the program was scheduled to expire. Had it expired, no flood insurance policies could have been issued, effectively barring property owners from getting a mortgage in federally designated flood zones. As part of insurer and commercial coalitions NAR weighed in and backed an extension until Congress could more fully consider long-term re-authorization and reform. Austin Perez 202-383-1046, Ken Wingert 202-383-1196, Russell Riggs 202-383-1259 back to top Federal Tax Report Leasehold Improvements Renewal For much of 2008, the Senate has struggled with legislation that would renew and extend the 15-year life for leasehold improvements. No controversy surrounds the provision itself, but this provision is part of an enormous package of expired and expiring provisions that have passed the House several times but that, until last week, have remained mired in the Senate because of fundamental disagreements over the proper method for "paying for" extensions of current policy. On September 24, the Senate passed a huge, partially paid-for package (H.R. 6049) on a vote of 93 - 2. None of the "pay-fors" would affect real estate. Now the entire extenders package has been added to the credit and banking relief legislation (Emergency Economic Stabilization Act) that passed the Senate on October 1 on a bipartisan vote of 74 - 25. The House passed the bill 263 - 171 and President Bush signed it on October 3. The high stakes issue in the tax portion of the emergency legislation is the extension of the so-called "patch" that would prevent moderate income individuals from falling subject to the alternative minimum tax (AMT). This one provision carries a revenue "cost" of more than $60 billion for just one-year extension. This substantial cost is a major factor in the debate. Debate over the AMT patch is something of an exercise in brinksmanship because of the urgency of resolving that problem in a timely way. The AMT patch was included in the rescue package. Linda Goold 202-383-1083, Helen Devlin 202-383-7559, Lisa Brechtel 202-383-1090 back to top Housing Report HUD Announces Hope for Homeowners Program for Troubled Homeowners On October 1, 2008, the US Department of Housing and Urban Development (HUD) unveiled the HOPE for Homeowners Program (H4H) for borrowers facing difficulty paying their mortgage. The program allows homeowners of single family, owner-occupied units to refinance into an affordable FHA-insured, 30 year, fixed-rate mortgage. The H4H Program is effective October 1, 2008, through September 30, 2011. H4H requires that all liens be extinguished for participation in this loan program. The mortgage loan limit is $550,440 and the loan-to-value (LTV) is capped at 90 percent. Lenders will pay an upfront mortgage insurance premium of 3 percent (making the write down effectively 87 percent). The annual premium is 1.5 percent. At origination of an H4H mortgage, the borrower and HUD will share equity created by the write down. Initial equity is calculated as the difference between the H4H mortgage original balance and the appraised value at the time of the H4H loan origination. A Shared Equity note and mortgage (SEM) for initial equity sharing will be executed. The borrower will also execute a Shared Appreciation note and mortgage (SAM) for future appreciation of the mortgage property. Upon sale or distribution of the property, the shared appreciation is divided between the borrower and FHA on a sliding scale with 100 percent going to HUD in the first year and 50 percent going to HUD after five years. HUD may share its 50 percent interest in future appreciation with a subordinate lien holder(s) who meet specific criteria for the H4H mortgage. NAR Statement of Support for H4H Program Hope for Homeowners Web Page Jerome Nagy 202-383-1233, Megan Booth 202-383-1222, Scott Rinn 202-383-7508 back to top Veterans Home Loan Program Reform To Be Signed by the President S. 3023, the "Veterans' Benefits Improvement Act of 2008" has passed both the House and Senate and is expected to be signed by the President shortly. This bill provides many enhancements to VA services, including the home loan guarantee program. The bill will reform the VA loan program so that it is able to adequately serve the many deserving veterans who could use its benefits. The bill does 3 major things - 1) extend the Economic Stimulus increase the VA loan limits to 175% of the Freddie/Fannie limits (currently that would be equal to $729,750) through 2011; 2) streamlines refinances for veterans by eliminating the equity requirement and raising the refinancing loan limits to the same level as the purchase loan limits; and 3) extend the authority of VA to offer Adjustable Rate Mortgages (ARMs) through 2012. View the testimony Megan Booth 202-383-1222, Jerome Nagy 202-383-1233 back to top HUD Announces Reverse Mortgage Limits On October 3, 2008, the US Department of Housing and Urban Development (HUD) announced the Home Equity Conversion Mortgage (HECM) loan limit. HUD determined that there will be one national loan limit of $417,000. A mortgagee letter will be issued with details the week of October 6, 2008. Jerome Nagy 202-383-1233, Megan Booth 202-383-1222, Scott Rinn 202-383-7508 back to top Go to archived weekly reports >> Last Updated: 10/06/2008 Bira de Aquino |
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