The Washington Report

In This Issue
Realtor Insider DC News and Events Report
Talking Points for the 2008 Midyear Legislative Meetings Available on REALTOR.ORG

Conventional Residential Lending Report
NAR, AREAA, NAHREP, and NAREB Raise Concerns with Fannie and Freddie

Federal Tax Report
Baucus Introduces Bill to Renew, Extend Leasehold Improvement Provisions

Housing Report
VA Home Loan Reform Bill Passes House Subcommittee
House Committee Supports Housing Recovery Bills

Realtor Insider DC News and Events Report
Talking Points for the 2008 Midyear Legislative Meetings Available on REALTOR.ORG

Preparing for a visit to Washington, D.C. for NAR Midyear Meetings? Visit REALTOR.org for comprehensive materials to help get you ready for visits with your Member of Congress.

View/Print Talking Points

John DiBiase 202-383-1037

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Conventional Residential Lending Report
NAR, AREAA, NAHREP, and NAREB Raise Concerns with Fannie and Freddie

NAR, the Asian Real Estate Association of America (AREAA), the National Association of Hispanic Real Estate Professionals (NAHREP), and the National Association of Real Estate Brokers/REALTISTS� sent joint letters to Fannie Mae CEO, Dan Mudd, and Freddie Mac CEO, Dick Syron, raising concerns about the impact of policies implemented in response to the current credit and mortgage market disruptions. The central concerns raised in the April 22, 2008, letter to Fannie Mae and the April 23, 2008, letter to Freddie Mac are:

Higher fees and tighter underwriting diminish the ability of Fannie and Freddie to meet their affordable housing goals and make mortgages less affordable.
Policies reducing maximum loan-to-value ratios (LTVs) by five percentage points for homes in declining markets hurt communities and erode home values.
Extremely tight underwriting standards and a higher pricing structure for jumbo conforming loans authorized by the Economic Stimulus Act of 2008 run counter to the congressional intent of creating greater credit availability.

The letters ask Fannie and Freddie to carefully review their current policies and ease them to the maximum extent possible.

NAR raised similar concerns in letters sent by President Dick Gaylord to Mr. Mudd and Mr. Syron on April 11, 2008, and transmitted to Treasury Secretary Henry Paulson on April 15, 2008.

Joint letter to Fannie Mae
Joint letter to Freddie Mac
NAR letter to Treasury Secretary Paulson (enclosing NAR’s letters to Fannie and Freddie)

Jeff Lischer 202-383-1117, Marcia Salkin 202-383-1092

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Baucus Introduces Bill to Renew, Extend Leasehold Improvement Provisions

Senate Finance Committee Chairman Max Baucus (D-MT) has introduced legislation in hopes of preventing a year-end snafu over deferring the impact of the Alternative Minimum Tax (AMT) and renewing and extending a host of expired tax provisions. The bill, S. 2886, is cosponsored by a bipartisan majority of the Committee's members.

For more than 5 years, Congress has struggled with the Alternative Minimum Tax. When the provisions were enacted in 1986, the thresholds for application of the tax were not indexed for inflation. Over time, the natural erosion of the dollar value of these thresholds, combined with the reduction of tax rates in 2001 has resulted in a situation in which more than 20 million taxpayers could become subject to the AMT. In order to prevent this from occurring, Congress has enacted a so-called "patch" each year. That legislation has also become the legislative vehicle for annual extensions of temporary provisions, including the 15-year cost recovery period for leasehold improvements. In 2007, disagreement over whether and how to "pay for" the AMT patch and the extension of expiring provisions resulted in a stalemate. Congress enacted the AMT patch without "paying" for it. All other expiring provisions were allowed to expire.

Senator Baucus will make every effort to move the extenders package before Congress breaks in August for the political conventions. Most observers believe that Congress will pass very little legislation once the campaign season has begun.

Linda Goold 202-383-1083, Jeff Lischer 202-383-1117, Helen Devlin 202-383-7559

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VA Home Loan Reform Bill Passes House Subcommittee

The House Veterans Affairs Committee, Subcommittee on Economic Opportunity last week favorably passed H.R. 4884, the "Helping Our Veterans to Keep Their Homes Act of 2008". This bill, sponsored by Rep. Filner (D-CA), 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:

permanently increase the VA loan limits to 175% of the Freddie/Fannie limits (currently that would be equal to $729,750);
streamline refinances for veterans by eliminating the equity requirement and raising the refinancing loan limits to the same level as the purchase loan limits; and
extend the authority of VA to offer Adjustable Rate Mortgages (ARMs).

The bill will be marked up in Full Committee this week. Tony Agurs, REALTOR� from El Cajon, CA testified in support of this legislation back in late February. NAR strongly supports HR 4884, and is working to find a sponsor for a companion bill in the Senate.

View the testimony

Megan Booth 202-383-1222, Jerome Nagy 202-383-1233

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House Committee Supports Housing Recovery Bills

The House Financial Services Committee this week favorably reported two bills dealing with the current housing crisis. The Committee supported H.R. 5579, the "Emergency Mortgage Loan Modification Act of 2008." This bill, sponsored by Reps. Castle (D-PA) and Kanjorski (D-PA), would provide a safe harbor for servicers who undertake mortgage restructuring. NAR supports this bill, and believes it will alleviate reluctance on the part of some loan servicers to write-down or otherwise modify home mortgages. The Committee also supported H.R. 5818, the "Neighborhood Stabilization Act of 2008," sponsored by Rep. Waters (D-CA). This legislation would provide $15 billion in grants and loans to states to purchase foreclosed homes, in an effort to prevent blight.

In addition, the Committee also began consideration of Chairman Frank's (D-MA) bill, HR 5830, the "FHA Housing Stabilization and Homeownership Retention Act of 2008." This bill would create a voluntary program whereby loan servicers could dramatically write-down the value of the mortgage, in return for FHA refinancing. Qualified loans would be written down to a level that homeowners could afford to repay, and FHA would insure the loan. Final Committee action on this bill is expected this week.

It is believed that some of these bills may be included in a Housing Stimulus package being crafted by the House in response to the bill passed by the Senate several weeks ago.

Megan Booth 202-383-1222

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Last Updated: 04/28/2008 Bira de Aquino