The Washington Report

In This Issue
Realtor Insider DC News and Events Report
With Foreclosures on the Rise, NAR Program Providing Aid to REALTORS®

Conventional Residential Lending Report
Freddie Mac Announces Guidelines for Super Conforming Mortgages in High Cost Areas

Environment Report
Home Energy & Climate Bill Unveiled

Federal Tax Report
NAR asks IRS to Help States Make Credit Available at Closing

With Foreclosures on the Rise, NAR Program Providing Aid to REALTORS®

Foreclosures are expected to increase in the coming months, according to an article in the April 15, 2009 Wall Street Journal, http://online.wsj.com/article/SB123975395670518941.html for subscribers. The story cites the lifting of foreclosure moratoria put in place by major lenders and servicers as a major reason for a forecasted increase in foreclosures. These lenders and servicers also point to increased and improved efforts to reach and work with troubled borrowers, thus insuring that only the worst cases are put through foreclosure.

REALTORS® continue to need both the tools to help homeowners avoid foreclosure and the expertise to deal with troublesome transactions such as short sales. The NAR Foreclosure Prevention and Response (FPR) program is a funding source for state and local REALTOR® Associations to develop and implement strategies to address these needs. In fact, NAR has just awarded the first four grants under the new program, for a statewide foreclosure hotline, short sales training seminars, and a statewide website and comprehensive partnership among REALTORS® and state and local officials and community groups.

Visit www.realtor.org/foreclosure
Wall Street article (for subscribers)

William Gilmartin 202-383-1102

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Freddie Mac Announces Guidelines for Super Conforming Mortgages in High Cost Areas

On April 10, 2009, Freddie Mac announced implementation of the 2009 conforming loan limits for high cost areas (loans higher than $417,000 are called "super conforming" mortgages by Freddie Mac and "high-balance" loans by Fannie Mae). The American Recovery and Reinvestment Act (ARRA) raised loan limits for high cost areas to the higher of the permanent limits in effect for 2009 or the temporary limits in effect for 2008. In most cases the 2008 limits are higher and are subject to a cap of $729,750.

The Freddie Mac announcement specifies eligibility requirements for high-balance loans, including:

One to four unit primary residences properties are eligible.
Second homes and 1- to 4-unit investment properties are eligible.
Ineligible loans include balloon mortgages, adjustable rate mortgages with initial periods of less than five years, 40-year mortgages, and many other categories.
Loans must meet complex loan-to-value (LTV) requirements. For purchase money mortgages for one unit primary residences with qualifying fixed rate or adjustable rate mortgages, the maximum LTV is 90%. For second homes and one unit investment properties, the maximum LTV is 80%. For 2- to 4-unit investment properties, the maximum LTV is 70%. Other rules apply to other categories.
Different LTV and minimum credit score requirements apply to super conforming mortgages with loan amounts greater than $1 million and certain others.
Limited cash out refinancing is permitted.

Freddie Mac Announcement (April 10, 2009)

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

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Home Energy & Climate Bill Unveiled

House Energy Chair Henry Waxman (D-CA) and Subcommittee Chair Ed Markey (D-MA) unveiled 648-page draft climate and energy legislation, the "American Clean Energy and Security Act." Among the many provisions, the bill would provide funding to states that:

Increase the energy efficiency of new and renovated buildings by 30-50% over latest model codes. The Energy Department could develop future models which states must adopt to receive bill funding.
Implement energy labels (like mileage/gallon labels for cars) on homes and buildings. The label must be accessible so it is "more fully factored into market transactions," but states could provide it at times other than the property's sale (e.g., when an energy audit is conducted).

The Waxman-Markey bill would also:

Direct the EPA to issue regulations for states to implement labeling and building codes, and assure that citizens can bring lawsuits to force action; and
Bar EPA from regulating carbon emissions under the New Source Review program, which effectively prevents regulation of tens of thousands (EPA numbers) of office and apartment buildings. If Congress fails to enact this provision, EPA will have to require permits and installation of energy saving measures (such as solar panels) in order for owners to build, maintain or operate buildings with 20 or more units. This is the result of a Supreme Court ruling that carbon dioxide is an air pollutant within the meaning of the Clean Air Act.

Chairman Waxman has vowed to move the bill out of his committee by Memorial Day so the House could consider it later this year. The Senate is also developing legislation but the energy and climate provisions are being drafted by different committees on separate tracks, so the timing is less clear.

Austin Perez 202-383-1046, Helen Devlin 202-383-7559, Megan Booth 202-383-1222

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NAR asks IRS to Help States Make Credit Available at Closing

A number of state housing finance agencies (HFAs) have developed or are developing programs to provide bridge loans to first time homebuyers eligible to receive the First Time Homebuyer Tax Credit. However, due to budget constraints many states are finding it difficult to institute or fund such programs. This obstacle can be alleviated to some degree by ensuring a prompt stream of repayment for bridge loans.

NAR President Charles McMillan wrote to IRS Commissioner Douglas Shulman and Taxpayer Advocate Nina Olson asking that the IRS lay out a framework whereby a refund from an amended 2008 tax return (associated with the homebuyer tax credit) could be assigned to the relevant state housing finance agency. HFA's receiving the assignment of the refund would be able to make more loans quicker and with less risk, improving the effectiveness of the credit.

NAR continues to work with National Council of State Housing Agencies (NCSHA) and other industry partners to improve access to the tax credit for downpayment purposes. Nearly a dozen states have implemented or are working on programs to make the value of the credit available at closing. NCSHA has launched a webpage with the latest updates on programs at the state level and links to state programs.

NCSHA Page
Read the letter

Linda Goold 202-383-1083, Megan Booth 202-383-1222, Kenneth Trepeta 202-383-1294

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Last Updated: 04/20/2009 Bira de Aquino