Clock is Ticking: Programs Critical to REALTORS® to Expire on September 30
Without Congressional action, two programs of vital importance to the real estate business will sunset on Sept. 30, 2011. The end of the current extension of the National Flood Insurance Program (NFIP) and the lowering of FHA and GSE loan limits could create a significant disruption in a housing market struggling toward recovery. It is imperative that REALTORS® remind their Members of Congress on how important these issues are for fragile housing market.
The National Association of REALTORS® has launched two Calls for Action on www.RealtorActionCenter.com encouraging REALTORS® to contact their Member of Congress urging them to pass a five year National Flood Insurance Program extension and to keep the FHA and GSE loan limits at the current levels. Additionally, NAR brought Federal Political Coordinators from across the nation to Washington, D.C. to participate in direct talks with key Senators and Representatives.
Reauthorizing the NFIP
Nationally, this program is the only source of flood-damage protection for 5.6 million home and business owners. Since September 2008, Congress has approved nine NFIP extensions and allowed five lapses. During the most recent lapse in June 2010, 47,000 home sales were delayed or cancelled. Real estate markets require certainty to make the long-term investments that are vital to the U.S. economic recovery. NAR is urging Congress to reauthorize the NFIP long-term to ensure access to affordable flood insurance and end the uncertainty of extensions and shutdowns which hurt the housing market.
Due to REALTORS® participation in the call for action and fly-in, on July 12th the U.S. House of Representatives passed a 5-year reauthorization of NFIP by a vote of 406-22. While the Senate still needs to take action, this is a major step forward. REALTORS® now need to focus on getting their Senators to pass this critical piece of legislation.
FHA and GSE Loan Limits
Unless Congress acts, on October 1st the mortgage loan limit formula and cap will fall. This could cause a significant drop in housing prices in more than 669 counties in 42 states and the territories.
NAR estimates the average decline to be more than $68,000. Changing the formula for the loan limits (from 125% to 115% of median home price) and lowering the cap means that some 5 million homes—roughly 27% of all owner-occupied homes in the United States—will become ineligible for mortgage financing, since there is little to no private mortgage financing available. NAR is urging Congress to support an extension of the FHA and GSE loan limits and oppose any vote to reduce these limits.
The housing markets remain fragile and any further disruption to the market will stall our economic recovery. Make your voice heard and participate in the NFIP reauthorization, as well as the FHA and GSE loan limit calls for action, at www.RealtorActionCenter.com. To learn more about the impact these two issues have on the economic recovery, please visit www.realtor.org/government_affairs.