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 In This Issue Business Report Federal Trade Commission Chair to Leave Post NAR Urges FCC to Apply Non-Discrimination Rules to Text Messages Commercial Finance Report IRS Considers Modifying REMIC Rules NAR Submits Comments on Basel I-A and Basel II Proposed Rules Conventional Residential Lending Report OFHEO Response to NAR Letter Urging Prompt Implementation of Higher GSE Limits OFHEO Lifts Retained Mortgage Portfolio Caps on Fannie Mae and Freddie Mac Diversity and Fair Housing Report April Marks the Fair Housing Act's 40th Environment Report House Passes Bill Extending Commerical Energy Tax Credit Housing Report Fannie Mae and Freddie Mac Negotiating Deal on Appraisals VA Announces New Reporting Application, VALERI NAR Comments on USPAP and USPAP Education REALTOR® Testifies on VA Home Loan Guarantee Program Business Report  Federal Trade Commission Chair to Leave Post On February 29, the Federal Trade Commission (FTC) announced that Chairman Deborah Platt Majoras plans to step down next month. Majoras will join Procter & Gamble in June as Vice President and General Counsel. During her nearly four-year tenure, Majoras focused on ensuring data security and protecting citizens against identity theft, computer spyware and deceptive commercial e-mail. While no successor has been named yet, it is likely to be one of the two other Republican commissioners, William E. Kovacic or J. Thomas Rosch. Scott Rinn 202-383-7508, Melanie Wyne 202-383-1234, Marcia Salkin 202-383-1092 back to top NAR Urges FCC to Apply Non-Discrimination Rules to Text Messages In a comment letter dated February 28, NAR urged the Federal Communications Commission (FCC) to apply its non-discrimination rules to text messages transmitted on broadband networks. The letter was in response to a Petition for a Declaratory Ruling filed by several consumer groups. In its letter, NAR stated that "We believe that text communications should enjoy the same non-discriminatory protections that content carried by cable and DSL operators enjoy." The letter also warned that unless the FCC exercises proper regulatory authority on a case-by-case basis, additional overly broad or burdensome legislation may result. Read NAR Comment Letter to FCC Melanie Wyne 202-383-1234, Jamie Gregory 202-383-1027, Scott Rinn 202-383-7508 back to top Commercial Finance Report IRS Considers Modifying REMIC Rules The IRS is in the process of deliberating what if any changes to the real estate mortgage investment conduit rules should be made. REMICs are a vehicle by which commercial mortgages are securitized. Currently, borrowers with loans securitized through a REMIC are unable to significantly modify their property to meet changing market trends -- for example attracting a new anchor tenant for a retail center may require extensive renovation and expansion of a property. These constraints limit the attractiveness of securitizing commercial loans and limits the flexibility of borrowers to meet debt obligations as market trends change. NAR has joined an industry group coalition, that include the Mortgage Bankers Association, the Real Estate Roundtable and others to urge the IRS to modify the REMIC rules to to allow common modifications to collateral so long as the basic terms of the securitized loan do not change. On April 30th, the REMIC coalition submitted comments to the IRS in response to notice 2007-17 on how the REMIC regulations can be improved. The coalition made the case that current regulations do not reflect the dynamic nature of commercial real estate and that the proposed changes would make the securitization of commercial mortgages more attractive to borrowers. On November 9, 2007 the IRS issued its proposed regulations related to REMIC rules. In response to this, NAR and its industry partners sent another comment letter on February 7, 2008, outlining concerns with this proposal. The Coalition seeks further clarification and exceptions for issues related to loan modification. Lisa Brechtel 202-383-1090 back to top NAR Submits Comments on Basel I-A and Basel II Proposed Rules On March 26, 2007, NAR's Chief Economist and Senior Vice President David Lereah submitted NAR's comments to the federal banking regulators on their proposed rules to change the capital rules for banks and thrifts. Two new capital standards are being developed. The Basel II standard would only apply to the 10-20 largest banks and is intended to align bank capital to risk through complex formulas and each bank's own historical data on loan performance and losses. The Basel I-A standard would be a new optional capital standard for all other banks that could remain under the existing Basel I standard. The Basel I-A standard would be more advanced than the existing Basel I rules but not as complex as Basel II. NAR supports the goal of improving the current capital standards to make them more risk sensitive and to ameliorate potential competitive disparities between the largest banks and other U.S. banks, and between the largest U.S. banks and large international banks. The letters make many suggestions for improving the capital rules as they affect commercial and residential real estate lending. On December 7, 2007, the federal banking agencies (Federal Reserve, FDIC, OCC, and OTS) published a joint final regulation implementing the new capital framework under Basel II. The new risk-based capital rules, which seek to better reflect banking organizations' risks, will be effective on April 1, 2008. However, core or mandatory banking organizations will have up to three years after that date to begin utilizing the new rules to classify and formulate regulatory capital. The new Basel II rule does take into account several of NAR's suggestions. For example, NAR had requested that the agencies consider permiting pre-sold residential construction loans to be assigned a risk-weight of less than 50%. The agencies agreed with the rationale of lowering the capital charges on these loans and the risk-weights for these loans will be established under the Basel II advanced approach. NAR's Basel I-A Comment Letter NAR's Basel II Comment Letter Lisa Brechtel 202-383-1090, Jeff Lischer 202-383-1117 back to top Conventional Residential Lending Report OFHEO Response to NAR Letter Urging Prompt Implementation of Higher GSE Limits On February 25, 2008, Jim Lockhart, Director of the Office of Federal Housing Enterprise Oversight (OFHEO), responded to NAR President Dick Gaylord's letter of February 13, 2008. President Gaylord wrote the Director to urge prompt implementation of higher conforming loan limits mandated by Congress in the economic stimulus legislation. OFHEO is the federal agency charged with overseeing the safety and soundness of Fannie Mae and Freddie Mac (government sponsored enterprises or GSEs). Lockhart continues to believe that the new category of loans above $417,000 (capped at $729,750) for high cost areas presents new risks to the GSEs, arguing that the new authority makes it critical to enact GSE reform legislation to create a stronger regulator important. NAR supports that goal. But Lockhart reports that OFHEO is already working with the GSEs as they gear up to purchase the new higher value loans so the new limits can be implemented both quickly and in a way that is safe and sound. NAR has also met with both Fannie and Freddie to emphasize the importance of acting on the new authority promptly, and both have assured us that they intend to do just that. Dick Gaylor's Letter to OFHEO on Conforming Loan Limits Director Lockhart's Response Jeff Lischer 202-383-1117, Lynn King 202-383-1156 back to top OFHEO Lifts Retained Mortgage Portfolio Caps on Fannie Mae and Freddie Mac On February 27, 2008, the Office of Federal Housing Enterprise Oversight (OFHEO), the regulator of Fannie Mae and Freddie Mac, announced it had decided to lift the caps on their retained mortgage portfolios, effective on March 1, 2008. OFHEO took this step recognizing that Fannie and Freddie had become current in publishing timely, audited financial statements. The announcement also recognized the significant progress the GSEs have made to comply with the requirements of the Consent Orders related to their accounting problems. Once the GSEs have fulfilled all of the requirements of the Consent Orders, OFHEO will lift the Consent Orders, assuming the GSEs continue to file timely, audited financial statements. OFHEO did not estimate a date for this step. As for the ongoing capital surcharge of 30 percent above the statutory minimum that is part of the Consent Orders, OFHEO will discuss with each GSE gradually decreasing the 30 percent capital surcharge. OFHEO will take into account the condition of the companies and current market conditions, plus the importance of keeping the GSEs soundly capitalized. OFHEO Announcement Jeff Lischer 202-383-1117, Lynn King 202-383-1156 back to top Diversity and Fair Housing Report April Marks the Fair Housing Act's 40th April is just around the corner and it marks the 40th Anniversary of the 1968 Fair Housing Act, as well as Fair Housing Month. In addition to receiving the annual Fair Housing FOCUS newsletter and commemorative poster, state and local associations will receive a $150 savings if they sponsor or become sponsors of the popular At Home with Diversity Certification Course in April. For more information on activities you can host for Fair Housing Month or information on offering the At Home with Diversity Certification, go to www.realtor.org/diversity Kyle Lambert London 202-383-1203, Ted Wright 202-383-1206 back to top Environment Report House Passes Bill Extending Commerical Energy Tax Credit Last week the House passed H.R. 5351, the "Renewable Energy and Energy Conservation Tax Act of 2008" by a vote of 236 - 182. This bill would extend the tax incentives for energy efficiency in commercial buildings (which expired at the end of last year) through 2013. The bill also extends the credit for energy efficient retrofits to existing residential homes through 2014. Lastly, it includes tax credits for the purchase of certain energy efficient household appliances produced after 2007, and allows a five-year recovery period for the depreciation of qualified energy management devices. Similar legislation has not been introduced in the Senate. The bill passed largely along party lines, which indicates that passage in the Senate will be difficult. Mark Washko 202-383-7526, Russell Riggs 202-383-1259, Ken Wingert 202-383-1196 back to top Housing Report Fannie Mae and Freddie Mac Negotiating Deal on Appraisals Fannie Mae and Freddie Mac have been negotiating with New York State Attorney General Andrew M. Cuomo that will help eliminate conflicts of interest on mortgage appraisals. If the agreement is reached, Fannie and Freddie will no longer purchase mortgages from lenders that utilize internal appraisers. A home valuation protection code would be developed to set standards on compensation and appraiser independence. A clearinghouse of appraiser information will be created, with a separate board of directors, to monitor complaints from appraisers and consumers. All lenders will be required to provide post-purchase copies of appraisal documents to the clearinghouse. The Office of Federal Housing Enterprise Oversight and the Office of the Comptroller of the Currency have also been involved in the negotiations. NAR will continue to monitor the negotiations and provide updates as the information becomes available. Jerome Nagy 202-383-1233 back to top VA Announces New Reporting Application, VALERI The US Department of Veterans Affairs (VA) launched a new web-based reporting application for mortgage servicers. The program, called Veterans Affairs Loan Electronic Reporting Interface (VALERI) was developed in collaboration with Fidelity National Information Services, Inc. (FIS), to enable servicers to eliminate many manual processes and work in real-time with lenders, service providers, and investors. With VALERI, VA clients can send and receive data that was previously transmitted manually. According to FIS, mortgage servicers can report significant events and milestones through their servicing system or the servicer's web-based user-interface of VALERI. US Veterans Affairs Megan Booth 202-383-1222, Jerome Nagy 202-383-1233 back to top NAR Comments on USPAP and USPAP Education On February 25, 2008, NAR provided comments to the Appraisal Foundation on the Uniform Standards of Professional Appraisal Practice (USPAP) and on USPAP education. The purpose of USPAP is to maintain a high level of public trust in appraisal practice. Appraisal services then must be credible and the communication of the appraisal must be clearly written and meaningful. The Foundation asked for comments as a part of its efforts to proactively engage a wide array of appraisers and users of appraisal services in the future development of these industry standards. NAR believes that USPAP is a living, dynamic document and that each version of the document is but the latest on a continuum of standards with the stated goal of continuously striving for improvement. While noting that significant portions of USPAP are well-written, NAR encourages the Appraisal Qualifications Board (AQB) and Appraisal Standards Board (ASB) to reduce redundancy and improve clarity. Further, it is incumbent on the appraisal industry to continually educate users of appraisal services to enhance the users understanding. A user of appraisal services that properly understands an appraisal will better appreciate the service provided and gain a better understanding of the appraisal product. Ultimately this will benefit appraisers and users of appraisal services. NAR Appraisal Committee Chair Richard J. Koestner will provide these comments to the joint public hearing of AQB and ASB on March 3, 2008, in Los Angeles, California. NAR Comment Letter on USPAP and USPAP Education The Appraisal Foundation Jerome Nagy 202-383-1233 back to top REALTOR® Testifies on VA Home Loan Guarantee Program REALTOR® Tony Agurs of El Cajon, CA testified last week before the House Veterans Affairs Subcommittee on Economic Opportunity. The hearing focused on the Subprime Mortgage Crisis and America's Veterans. Tony, a 21-year veteran of the U.S. Marine Corps, focused on needed enhancements to the VA home loan guarantee program - including increasing the loan limits in high cost areas, easing restrictions on refinancing into a VA loan, and permanently authorizing the VA ARM and Hybrid ARM programs. The Subcommittee plans additional hearings on the VA home loan program in the coming weeks. View the testimony Megan Booth 202-383-1222, Jerome Nagy 202-383-1233 back to top Go to archived weekly reports >> Last Updated: 02/29/2008 Bira de Aquino |
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