The Washington Report

In This Issue
Realtor Insider DC News and Events Report
The Obama Housing Plan: Making Home Affordable
Fannie Mae and Freddie Mac Release Refinancing Guidelines; Freddie Slashes Fees for Refinancings

Business Report
Patent Reform Bills Introduced in House and Senate
Genachowski to Chair FCC
FTC Publishes Notice of Proposed Changes to Guides for Endorsements and Testimonials in Advertising
HUD Warns Housing Counseling Agencies Not Take a Fee Split from Real Estate Brokers/Agents
HUD Delays “Required Use” RESPA Rule

Conventional Residential Lending Report
How Can Borrowers Find Out Whether They Have a Fannie Mae or Freddie Mac Loan?
Freddie Mac Launches Post-Foreclosure Rental Initiative for Tenants and Owner-Occupants
Ensuring that Seller-Financing Is Exempt from the S.A.F.E. Act

The Obama Housing Plan: Making Home Affordable

On February 18, 2009, President Obama announced his housing plan designed to help 7 to 9 million families avoid foreclosure by refinancing or modifying their mortgages. The plan also strengthens the federal commitment to Fannie Mae and Freddie Mac (the government sponsored enterprises, or GSEs).

On March 4, 2009, the administration released detailed guidance on the Making Home Affordable Program.

Here are the key elements of the Obama plan:

1. The Home Affordable Refinance Program. Under this program, eligible borrowers may refinance loans that Fannie Mae or Freddie Mac (the government sponsored enterprises, or GSEs) own or guarantee. The program can help homeowner-occupants who are current in making loan payments and have loan-to-value ratios (LTVs) above 80 percent but not more than 105 percent. Cash out refinancings are not permitted. The program ends in June 2010.

2. The Home Affordable Modification Program. This is a $75 billion program with lender, servicer, investor, and borrower incentives to make it work. The program is limited to homeowner-occupants who are at risk of default or already in default and who have loans at or below the maximum GSE conforming loan limit of $729,750 (or higher for 2-, 3-, and 4-unit properties). Loan modifications under the program may be made until December 31, 2012.

3. More Support for the GSEs. President Obama also announced more support for the GSEs, including doubling of potential Treasury investment from $100 billion to $200 billion for each GSE, to maintain their positive net worth. The plan also raises the cap on mortgages that the GSEs may hold in their portfolios by $50 billion to $900 billion.

NAR's Detailed Summary of the Obama Plan
NAR’s Webpage on the Obama Plan

Jeff Lischer 202-383-1117, Tony Hutchinson 202-383-1120

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Fannie Mae and Freddie Mac Release Refinancing Guidelines; Freddie Slashes Fees for Refinancings

On March 4, 2009, Fannie Mae and Freddie Mac released guidelines on refinancing and loan modification options that implement President Obama's Making Home Affordable Program. The guidelines go father, however, to provide more flexible refinancing opportunities.

Fannie Mae Announcement 09-04 implements the Obama Home Affordable Refinance program but provides even greater flexibility for refinancing Fannie Mae mortgages under new Refi Plus programs. One significant additional flexibility is that Fannie is allowing refinancing of eligible second home and investor loans. In addition, mortgages that do not have private mortgage insurance in force are not required to obtain it even if the new loan-to-value ratio exceeds 80 percent. The Announcement states that Fannie Mae is not permitting the refinanced mortgage to be a jumbo conforming loan (a loan above $417,000 up to $729,750 in high cost areas), but accompanying Frequently Asked Questions state that the new loan may be a jumbo conforming loan (either under the original 2009 permanent limits or under the new higher 2009 temporary limits once Fannie announces eligibility criteria for the temporary limits later this month). Fannie has lowered fees for some borrowers between 25 and 50 basis points, but is under pressure to slash fees as Freddie has done. The program begins on April 1, 2009.

Freddie Mac Bulletin 2009-5 establishes Freddie's Relief Refinance Mortgage program that also provides even greater flexibility for refinancing Freddie mortgages. Like Fannie Mae, Freddie is also allowing refinancing of eligible second home and investor loans and is not requiring private mortgage insurance if the mortgage being refinanced does not have insurance in force. The Freddie Mac announcements this week appear to conflict on whether jumbo conforming mortgages are eligible for refinancing, and NAR has asked for clarification. Freddie has slashed fees for the refinanced mortgages and is only charging the 0.25% market condition fee but not additional fees based on the borrowers' credit scores and loan-to-value ratios. This is a huge advantage for borrowers with Freddie Mac mortgages, and Fannie is under pressure to match the fee cuts. The program begins on April 1, 2009.

Fannie Mae Press Release/Highlights

Fannie Mae [Servicer] Announcement 09-04 (3/4/09), Home Affordable Refinance - New Refinance Options for Existing Fannie Mae Loans

Freddie Mac Announces Two Initiatives Supporting President Obama’s Making Home Affordable Plan (Relief Refinance Mortgage program and Home Affordable Modification)

Freddie Mac: Relief Refinance Mortgages Fact Sheet

Freddie Mac [Servicer] Bulletin 2009-05: Relief Refinance Mortgage Program

Jeff Lischer 202-383-1117, Tony Hutchinson 202-383-1120

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Patent Reform Bills Introduced in House and Senate

This week marked the beginning of the latest effort by Congress to reform the nation's patent system. Legislation was introduced in both the House and the Senate this week that would significantly reform the way in which patents are granted and patent infringement lawsuits are conducted.

NAR supports patent reform legislation because the real estate industry is increasingly dependent on the use of information technology to market properties and manage business transactions. Recently, unsuspecting Realtors and Multiple Listing Services have been dragged into expensive and time consuming patent infringement lawsuits that could ultimately put all Realtors at risk. Realtors support common sense patent law reforms because they understand that reforms will enhance the technological innovation that is critically important to the future of the real estate industry.

NAR supports these proposals becasue they will strengthen the patent system by improving patent quality, reducing litigation expense and making the patent system more fair and balanced. NAR is a member of the Coalition for Patent Fairness, a coalition of technology, financial services and other companies and groups supporting comprehensive patent reform legislation.

Melanie Wyne 202-383-1234, Scott Rinn 202-383-7508, Ken Wingert 202-383-1196

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Genachowski to Chair FCC

President Obama has nominated Julius Genachowski as the new Chairman of the Federal Communications Commission (FCC). Genachowski is a Harvard law school classmate of Obama and was the chief architect of his campaign's technology agenda. He was an FCC staffer during the Clinton Administration and more recently, he co-founded LaunchBox Digital, a Washington, D.C.-based venture capital firm. He worked at Barry Diller's IAC/InterActive Corp. in various executive positions for eight years after leaving the FCC.

Genachowski's expected priorities include the expansion of broadband service fueled by the recent economic stimulus package and "net neutrality" to prevent Internet service providers from giving preference to certain content.

NAR welcomes Chairman Genachowski and looks forward to working with him on technology and communications issues of importance to REALTORS®.

Melanie Wyne 202-383-1234, Scott Rinn 202-383-7508, Ken Wingert 202-383-1196

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FTC Publishes Notice of Proposed Changes to Guides for Endorsements and Testimonials in Advertising

On November 28, 2008, the FTC published in the Federal Register a Notice of proposed changes to Guides on the use of endorsements and testimonials in advertising. On March 2, 2009, NAR filed comments with the FTC which seek clarification on the reach of definitions as they apply to certain NAR activities including product reviews where NAR does not offer endorsements or testimonials of products.

Notice of Proposed Changes to Guides
NAR Comment Letter

Scott Rinn 202-383-7508, Marcia Salkin 202-383-1092

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HUD Warns Housing Counseling Agencies Not Take a Fee Split from Real Estate Brokers/Agents

A real estate trade publication recently reported that HUD's Office of Single Family Housing has warned housing counseling agencies that it is not permissible to take a fee split from real estate brokers or agents to defray the cost of counseling and that fee splits may violate the Real Estate Settlement Procedures Act (RESPA). All HUD-approved housing counseling agencies, their affiliates, and branches were ordered to stop the practice immediately. The warning came in response to reports that some housing counseling agencies were receiving a share of real estate broker or agent commissions on short sales to pay for clients' foreclosure counseling sessions.

Scott Rinn 202-383-7508, Marcia Salkin 202-383-1092, Kenneth Trepeta

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HUD Delays “Required Use” RESPA Rule

On March 6, 2009, the U.S. Department of Housing and Urban Development (HUD) announced that it will delay the planned implementation of the Real Estate Settlement Procedures Act (RESPA) "required use" regulation for 90 days, until July 16, 2009. HUD is inviting public comments on whether it should withdraw the definition in the final RESPA rule that was published on November 17, 2008, and prohibits home builders from giving customers incentives in exchange for using the home builder's affiliated mortgage lender or other company. The delay in the effective date is in response to a lawsuit filed by the National Association of Home Builders in December 2008 seeking to enjoin the "required use" rule. All other effective dates for HUD's RESPA regulation remain unchanged.

HUD's Press Release

Scott Rinn 202-383-7508, Marcia Salkin 202-383-1092, Kenneth Trepeta 202-383-1294

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How Can Borrowers Find Out Whether They Have a Fannie Mae or Freddie Mac Loan?

In last week's Washington Report, there was an item on the February 24, 2009, Fannie Mae Announcement instructing its servicers not to negotiate commissions on short sales below the amount negotiated by the listing agent (unless the commission exceeds 6 percent). NAR has also asked Freddie to confirm it has the same policy. See last week's report for more details.

Many members have asked how borrowers can learn whether or not they have a Fannie Mae or Freddie Mac loan. The easiest way is often just to ask the loan servicer. If that does not result in a reliable and prompt answer, you can contact Fannie or Freddie directly.

For Fannie Mae 1-800-7FANNIE (8am to 8pm, EST)
www.fanniemae.com/homeaffordable

For Freddie Mac
1-800-FREDDIE (8am to 8pm EST)
www.freddiemac.com/avoidforeclosure

Fannie Mae Announcement 09-03 (2/24/09)

Jeff Lischer 202-383-1117, Tony Hutchinson 202-383-1120

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Freddie Mac Launches Post-Foreclosure Rental Initiative for Tenants and Owner-Occupants

On March 5, 2009, Freddie Mac announced its official launch of its new post-foreclosure (REO or real estate owned) Rental Initiative. Qualified tenants and former owners have the option to stay in their home on a month-to-month basis after foreclosure. The program will be implemented through "several national property management firms."

Freddie also announced it will continue its suspension of all evictions until April 1, to give occupants time to consider their options. To qualify, the tenant or former owner must occupy the property and demonstrate sufficient income to pay the rent based on local market rents. The home must be in good condition and meet local codes. Relocation assistance continues to be available for occupants who move.

Freddie Mac Press Release

Jeff Lischer 202-383-1117, Tony Hutchinson 202-383-1120

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Ensuring that Seller-Financing Is Exempt from the S.A.F.E. Act

Over the last several weeks, a number of REALTORS® from across the country have reached out to the National Association of REALTORS® regarding their state's enactment of mortgage licensee legislation as mandated by the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act), enacted as title V of the Housing Economic Recovery Act (HERA) of 2008. The SAFE Act requires loan originators to be licensed under a state system meeting federal requirements or, if any state fails to enact legislation for such a system, under a system established by the U.S. Department of Housing and Urban Development (HUD). Section 1503 defines "loan originator" but does not include an explicit exemption for a seller who finances all or a portion of the sale of real property. NAR does not believe that it was Congress' intent, when crafting this bill, to license sellers providing financing of property they own. In fact, as the language for the legislation was being crafted, NAR worked hard to achieve an exclusion from the definition of loan originator for individuals and entities that only perform real estate brokerage activities and are licensed under state law, unless they are compensated by a lender, mortgage broker, or other loan originator.

NAR is now working with Congress to fix the language, so that the seller financing coverage is removed and the intent, to protect consumers against mortgage fraud, can still be pursued. In the interim, many states are in the process of adopting model legislation based on the Federal standards as a minimum standard.

Tony Hutchinson 202-383-1120, Jeff Lischer 202-383-1117

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Last Updated: 03/13/2009 Bira de Aquino