The Washington Report

In This Issue
Business Report
FinCEN Publishes ANPR Directed at Non-Bank Residential Mortgage Lenders and Originators on Money Laundering and Suspicious Activity Reporting
House Committees Consider House Health Reform Legislation

Conventional Residential Lending Report
Freddie Mac Stresses Appraisers Knowledge of Local Areas in Recent Bulletin

Environment Report
NAR Testifies on Green Building Incentives

Federal Tax Report
Ways and Means Adopts Surtax

Housing Report
Dave Stevens Sworn in as FHA Commissioner
The Impact of the Home Valuation Code of Conduct
NAR Submits Comment Letter to FTC on Loan Modification and Foreclosure Relief Agencies

FinCEN Publishes ANPR Directed at Non-Bank Residential Mortgage Lenders and Originators on Money Laundering and Suspicious Activity Reporting

On July 15, 2009, Treasury's Financial Crimes Enforcement Network (FinCEN) released an advanced notice of proposed rulemaking: Anti-Money Laundering Program (AML) and Suspicious Activity Report (SAR) Requirements for Non-Bank Residential Mortgage Lenders and Originators. FinCEN seeks comments on several questions, including: 1. FinCEN's incremental approach to regulating residential mortgage lending or origination; 2. definitions of those engaged in such activities; 3. money laundering risks posed by non-bank residential mortgage lenders and originators; 4. how AML programs should be structured; 5. SAR reporting; and 6. whether any non-bank residential mortgage lenders and originators should be exempted from AML/SAR reporting requirements.

FinCEN press release
FinCEN's advanced notice of proposed rulemaking

Marcia Salkin 202-383-1092, 202-383-1090, Scott Rinn 202-383-7508

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House Committees Consider House Health Reform Legislation

The House began consideration of its Tri-Committee health reform bil, HR 3200 on Tuesday. By week's end, the Ways and Means and Education and Labor Committees completed action on their portions of the bill — the Ways and Means Committee by a vote of 23-18 and the Education and Labor Committee by a vote of 26-22. The House Energy and Commerce Committee is expected to complete its mark up next week. House leadership are hopeful to bring a complete bill to the floor the last week in July, but that could easily spill into September after the August recess. NAR has no position on the House bill at this time as the bill's provisions are in a state of flux.

In the Senate the health committee approved its version Wednesday on a party-line vote of 13-10. Senate Finance is expected to introduce and mark up its version next week. However, it's highly unlikely that the Senate will have time before it breaks for its August recess for a combined Health Committee/Finance Committee floor vote. Thus, a Senate floor vote could spill over into September.

Against this backdrop, NAR submitted a letter to the three House committees commenting on the various components of the House bill. Staff is currently analyzing the mammoth bills and consulting with the members of NAR's Business Issues Committee and Federal Tax Policy Committee for specific policy input.

Read NAR's Letter to the Three House Committees
Visit www.realtor.org/healthreform

Marcia Salkin 202-383-1092, Ken Wingert 202-383-1196, Scott Rinn

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Freddie Mac Stresses Appraisers Knowledge of Local Areas in Recent Bulletin

On July 10, Freddie Mac released Bulletin 2009-18 to sellers and servicers. The bulletin addresses appraisals and underwriting. Regarding appraisals, the bulletin focuses on qualified appraisers, credible appraisers, comparable sales, and monitory appraisal quality. Freddie Mac reminds sellers that they must be in compliance with the Home Valuation Code of Conduct (HVCC).

The guidance also reminds servicers that appraisers must be familiar with local markets where the property is located, must be competent to appraise the subject property type, and must have access to data needed to create a credible appraisal. NAR has strongly emphasized the issue of out of area appraisers in recent meetings and conversations with the Federal Housing Finance Agency (FHFA) and both government sponsored enterprises, Fannie Mae and Freddie Mac.

Bulletin 2009-18

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

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NAR Testifies on Green Building Incentives

NAR Treasurer Jim Helsel testified at a House Transportation & Infrastructure subcommittee hearing on the benefits of green buildings. Because of its LEED Silver certification, the privately-owned NAR building — the first in D.C. to achieve this — was cited by Chairman Norton (D-DC) as a benchmark by which to evaluate the Federal government's progress toward 'greening' its buildings. As chair of the NAR committee that oversaw the NAR building's construction, Mr. Helsel testified on the building's many environmental and community benefits as well as the process by which the committee acheived LEED certification. He also reinforced NAR's support for funding for green public buildings included in The American Recovery and Reinvestment Act (ARRA; Public Law #115-5, as well as other ARRA provisions for energy efficiency tax credits, block grants and weatherization assistance for modest-income families. These provisions are consistent with NAR policy, which favors incentives over mandates as the most effective way to improve the energy efficiency of the nation's commercial and residential buildings.

Read the testimony

Austin Perez 202-383-1046, Russell Riggs 202-383-1259, Helen Devlin 202-383-7559

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Ways and Means Adopts Surtax

The House Ways and Means Committee has approved the revenue portion of the House health care reform bill, H.R. 3200. The Committee vote was 23-18. Three Democrats joined all the Committee Republicans in voting against the package. (Democrats voting No were Messrs. Pomeroy [SD], Kind [WI] and Tanner [TN].) Nearly all of the new revenues are raised from a surtax that would apply to high income taxpayers.

The proposed surtax would apply to adjusted gross income, which includes salaries, capital gains, dividends, Schedule C income (which is NET business income, not gross), taxable Social Security benefits, pension income — anything income item reflected on the front page of a Form 1040.

Surtax is progressive, just like regular income tax. Its brackets are 1%, 1.5% and 5.4%, applied to income in excess of $350,000.

View examples of the impact on a joint return

Linda Goold 202-383-1083

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Dave Stevens Sworn in as FHA Commissioner

On July 15, 2009, David H. Stevens, former President and Chief Operating Officer of the Long and Foster Companies, was sworn in as Assistant Secretary for Housing/Federal Housing Administration (FHA) Commissioner at the Department of Housing and Urban Development (HUD). President Obama's pick for the position, Mr. Stevens was strongly endorsed by NAR and will oversee HUD's major housing programs and the FHA mortgage insurance fund. He will also administer important regulatory programs such as RESPA.

Secretary Donovan said "David Stevens is an innovator in the housing industry and he is the right person to lead FHA as it continues to help hundreds of thousands of families finance their homes with lower rates and better terms. David's knowledge in real estate, housing and the mortgage industry will help us overcome the current challenges we face, he will implement changes that protect FHA and will enhance its risk management capabilities to protect its future viability."

Federal Housing Administration
US Department of Housing and Urban Development

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

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The Impact of the Home Valuation Code of Conduct

This month, NAR conducted a survey of its members to gauge the impact the Home Valuation Code of Conduct (HVCC) is having on the real estate industry. A preliminary analysis released on July 6, 2009, indicated that the implementation of the HVCC appears to be having adverse impacts on the housing markets.

A more detailed analysis of the survey results confirms the early analysis. While 70 percent of appraisers report that turnaround times shortened after May 1, 2009, approximately 75 percent of Realtors® who responded report an increase in the length of time it takes to get the appraisal report, which is causing delays or cancelling deals. This may correspond to an increase in the number of appraisal requests coming from AMCs. NAR's appraiser members report that 40 percent of appraisal requests come from AMCs after May 1, 2009, compared with only 13 percent prior to May 1st. Both appraisers and Realtors® say this is having a negative impact on the quality of appraisals while the cost of an appraisal for the consumer is increasing.

Visit www.realtor.org/hvcc
HVCC Research Commentary

Jerome Nagy 202-383-1233

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NAR Submits Comment Letter to FTC on Loan Modification and Foreclosure Relief Agencies

On July 15, 2009, NAR submitted to the FTC a comment letter stating that the practice by mortgage assistance relief companies of splitting real estate agent commissions as a method to pay for such services should be banned. Banning referral fees and commission splits is consistent with current FTC policy and HUD's directives to HUD-approved counseling agencies. In addition, such a ban is consistent with RESPA objectives which prohibit referral fees and fee-splitting by a settlement service provider and limit compensation to a settlement services provider to bone fide services actually performed.

NAR Comment Letter to FTC on Loan Modification and Foreclosure Relief Agencies

Scott Rinn 202-383-7508

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Last Updated: 07/20/2009 Bira de Aquino