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 In This Issue Commercial Finance Report Federal Reserve Announces that Legacy CMBS Will Become Eligible for TALF Conventional Residential Lending Report NAR Supports Realistic 2009 Affordable Housing Goals for Fannie Mae and Freddie Mac Environment Report House Committee Approves Real Estate Energy Labeling Federal Tax Report New Information Reporting for Landlords Proposed Housing Report HUD Announces Manufactured Housing Policy Guidance DoD Publishes Help for Military Families Selling Due to Transfer President Signs Bill to Designed to Limit Foreclosures HUD Announces Green Buildings Retrofit Initiative for Multifamily Assisted Housing Commercial Finance Report  Federal Reserve Announces that Legacy CMBS Will Become Eligible for TALF On Tuesday, May 19th the Federal Reserve Board announced that, starting in July, certain high-quality legacy CMBS will become eligible collateral under the TALF program. To be eligible as collateral for TALF loans, legacy CMBS must be senior in payment priority to all other interests in the underlying pool of commercial mortgages and must meet certain other criteria. Eligible newly issued and legacy CMBS must have at least two triple-A ratings from DBRS, Fitch Ratings, Moody's Investors Service, Realpoint, or Standard Poor's and must not have a rating below triple-A from any of these rating agencies. The initial subscription date for TALF loans collateralized by newly issued CMBS will be June 16, 2009. The subsequent subscription dates for TALF loans collateralized by newly issued and legacy CMBS will be announced in advance. Extending the TALF program to include legacy securities is an important step toward easing the balance sheet pressures on banks and other financial institutions. In taking this step, the Federal Reserve intends to promote the CMBS market and facilitate the issuance of newly issued commercial mortgage-backed securities. Term Asset-Backed Securities Loan Facility (Legacy CMBS) Lisa Brechtel 202-383-1090, Jeff Lischer 202-383-1117 back to top Conventional Residential Lending Report NAR Supports Realistic 2009 Affordable Housing Goals for Fannie Mae and Freddie Mac On May 22, 2009, NAR President Charles McMillan submitted NAR's comment letter supporting a proposed rule published by the Federal Housing Finance Agency (FHFA) to reduce the 2009 affordable housing goals for Fannie Mae and Freddie Mac. FHFA is the federal regulator and conservator of Fannie and Freddie. NAR generally supports the need to reduce the goals in light of the market conditions described in the proposed rule. Jumbo conforming loans (loans in high cost areas above $417,000 up to the $729,750 cap) are excluded for purposes of the goals, which should not reduce such lending, but NAR points out the important role the purchase of jumbo conforming loans by Fannie and Freddie plays in healthy housing and mortgage markets. Finally, NAR supports counting, for purposes of the housing goals, Fannie and Freddie loans that are modified under the Obama Administration's Making Home Affordable Program. It is better to keep families in their homes, and give the GSEs full credit, than to force families to become renters and only when they return to homeownership allow their loans to be counted towards the housing goals. NAR's Letter to FHFA Jeff Lischer 202-383-1102, Tony Hutchinson 202-383-1120 back to top Environment Report House Committee Approves Real Estate Energy Labeling On a 33 to 25 vote, the House Energy and Commerce Committee approved H.R. 2454, the "American Clean Energy and Security Act" by Chairmen Henry Waxman (D-CA) and Ed Markey (D-MA). Provisions of H.R. 2454 have been the focus of Land Use, Property Rights and Environment Committee meetings, Mid-Year Meeting Congressional Visits and a targeted Call for Action. Thanks to REALTORS®, as approved, the legislation has improved — i.e., 1) it preempts EPA regulation under development for multi-family and commercial buildings, and 2) eliminates citizen suit provisions to halt construction projects. However, there is more to do. NAR came within 2 votes of striking provisions that label and rate the energy performance of real estate (like miles per gallons on cars) but succeeded in securing new provisions that states may provide labels at several times other than the property sale and would be prohibited from labeling in a manner that disrupts sales transactions. Also the bill now includes stricter national building codes for new construction and renovation which preempt state laws, and there are new civil enforcement penalties for non-compliance. Next, the legislation moves to other committees with overlapping jurisdiction before it is considered by the full House of Representatives as early as June. The Senate Energy Committee is expected to act on the real estate energy provisions after Congress returns from recess on June 1. NAR will continue to work with members of Congress to oppose the bill provisions that are not consistent with NAR energy policies, which were unanimously reaffirmed by the Board of Directors a few weeks ago. Austin Perez 202-383-1046, Helen Devlin 202-383-7559, Russell Riggs 202-383-1259 back to top Federal Tax Report New Information Reporting for Landlords Proposed The Senate Finance Committee has released a paper laying out a series of options that the Committee could use to "pay for" health care reforms. This options paper is a discussion draft, not a formal proposal. One option would affect so-called casual investors in real estate, i.e., those who are not engaged full time in owning and operating rental real estate. The option would require information reporting of any payment of $600 or more that any owner of rental property might make to "service providers" (plumbers, AC repairman, bookkeepers etc). The owner would provide a Form 1099-MISC to the provider and to the IRS. Similar rules have been in place for at least 20 years that apply to "full-time" property owners . This type of reporting requirement is intended to provide the IRS with more extensive data for auditing both the owners and the service provider (who might be tempted to bury the cash). Linda Goold 202-383-1083 back to top Housing Report HUD Announces Manufactured Housing Policy Guidance On May 21, 2009, the US Department of Housing and Urban Development released Mortgagee Letter 2009-16 on Federal Housing Administration (FHA) mortgage insurance eligibility for manufactured housing. The Housing and Economic Recovery Act of 2008 authorized HUD to make changes to manufactured housing for new and existing construction. FHA states that a manufactured home is a structure that is transportable in one or more sections, and is designed to be constructed to the Federal Manufactured Construction and Safety Standards and is so labeled. While modular housing is also factory built, FHA treats it as stick-built housing. To be eligible for FHA insurance the manufactured home units and land must be classified as real estate although they need not be treated as real estate for state tax purposes. The borrower is required to have a 3.5 percent cash investment in the transaction and land equity may be used to satisfy this requirement. Gift funds from eligible sources are also permitted for the down payment. Individual units in condominium projects are now eligible for FHA insurance; however, the Spot Loan Approval process is not applicable. HUD Mortgagee Letter 2009-16: Manufactured Housing Policy Guidance Federal Manufactured Construction and Safety Standards Megan Booth 202-383-1222, Jerome Nagy 202-383-1233 back to top DoD Publishes Help for Military Families Selling Due to Transfer The American Recovery and Reinvestment Act (ARRA) expanded DoD's authority to help active duty families who are having to sell their homes at a loss due to a permanent change of station (PCS). Last week, DoD published the guidance on this new program. For those families with homes purchased prior to July 1, 2006, and the market area is experiencing a decline of at least 10%, they can receive up to 90% reimbursement on the loss of the sale of their home based on the previous fair market value. This is increased to 95% for Wounded Warriors and Surviving Spouses. The full guidance on the Housing Assistance Program is available at: http://hap.usace.army.mil/homepage.html. Dod Guidance on Housing Assistance Program Megan Booth 202-383-1222 back to top President Signs Bill to Designed to Limit Foreclosures On May 20, 2009 the President signed into law, S. 896, the "Helping Families Save Their Homes Act". This NAR-supported bill includes provisions to limit foreclosures and keep families in their homes. The bill will expand loan modifications by providing a safe harbor for mortgage servicers who conduct loan modifications in good faith. The bill reforms the Hope for Homeowners program, preserving benefits to homeowners while limiting risks to the FHA fund and the taxpayer. The bill also strengthens oversight of FHA-approved lenders to protect the FHA fund and taxpayers from fraud and abuse. Finally, the bill establishes a task-force to investigate mortgage foreclosure fraud. The bill had passed the House and Senate earlier in the week. Read Issue Summary Download Issue Brief Megan Booth 202-383-1222 back to top HUD Announces Green Buildings Retrofit Initiative for Multifamily Assisted Housing Under the American Recover and Reinvestement Act of 2009, HUD is creating a green retrofit program for multifamily properties receiving HUD project based assistance - including Section 8 or Section 202 or Section 811 housing. Funding of up to $15,000 per residential unit to reduce energy costs, improve indoor environmental quality or provide other environmental benefits can be provided. Applications are being accepted beginning June 15, 2009. All money must be obligated by September, with work being completed within 2 years. HUD website for more information Megan Booth 202-383-1222 back to top Go to archived weekly reports >> Last Updated: 06/03/2009 Bira de Aquino |
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