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June 2011

Real Estate Services Update: June 2011

The latest RES Update, a newsletter for NAR's Real Estate Services Group, which aids real estate firms and their agents in implementing and maximizing their core business services.

i. QRM Comment Deadline Extended i. QRM Comment Deadline Extended
ii. House Approves 1-Year Extension of NFIP
iii.NAR Urges House to Consider Impact of Housing on Economy
iv. NAR President Testifies Against Changes to FHA
v.Senior Democrat Addresses MID & Deductions
vi. Fannie Mae Announces Delinquency Directives
vii. Reduced Premiums Announced for Federal High Risk Insurance Program
viii. Bank of America to Accept FHA Mortgages with Credit Scores Under 600
ix. NAR Submits Statement on Regulatory Fairness
x. Treasury Department Holds HAFA Summit
xi. White House, Congress Propose Data Breach Disclosures
xii. Improve Client Communications with Ifbyphone
xiii. zipLogix Introduces New Online Document Storage Tool
xiv. How Can I benefit from Print on Demand?

Read full version here > (PDF: 547KB)

i. QRM Comment Deadline Extended; QRM Podcast
On June 6, 2011, the deadline for commenting on the proposed Qualified Residential Mortgage (QRM) regulation was extended until August 1 by the six federal regulators involved in the rulemaking. The extension was made at the strong urging of NAR and a large coalition raising concerns about the QRM rule. The proposed rule implements a provision of the Dodd-Frank Act that requires lenders that securitize mortgage loans to retain 5% of the credit risk unless the mortgage is a QRM or is otherwise exempt (for example, FHA mortgages are also exempt).

A podcast recorded by NAR staff on the QRM issue is featured in the Alaska Association of REALTORS® Update News Letter. The podcast explains NAR's concerns with the QRM rule which includes a 20% downpayment, low debt-to-income ratios, and other strict credit criteria. NAR believes the high down payment and low debt-to-income proposals are unreasonable, are not necessary to assure a safe mortgage, and would cause serious harm to consumers. Non-QRM mortgages are likely to result in significantly higher rates and fees being imposed on otherwise creditworthy borrowers, including low and moderate income borrowers, who maintain good credit and seek safe loan products.

ii. House Approves 1-Year Extension of the National Flood Insurance Program
On June 2, 2011, the House approved a 1-year extension of the National Flood Insurance Program (NFIP) in the Homeland Security Spending bill for 2012, H.R. 2017. However, the Senate would still have to approve the legislation and it is not clear at this time if and when that would occur. To improve the chances that Congress will reauthorize NFIP authority before the Sept. 30, 2011, deadline, NAR is supporting any and every effort to extend the program for as long as legislatively possible but above all, avoid another lapse of the NFIP. For this reason, on May 27, 2011, NAR joined a broad coalition of real estate, financial and insurance representatives in writing the entire House of Representatives also urging immediate consideration and passage of H.R. 1309, the Flood Insurance Reform Act (Biggert, R-IL; Waters, D-CA). This bill would extend and fiscally strengthen the NFIP for five years and was approved May 13, 2011 by a unanimous, bipartisan vote of the House Financial Services Committee. The Coalition letter, which NAR helped organize, urged congressional leaders to schedule a floor vote on the bill at the first available opportunity. In the Senate, initial discussions and planning have begun to introduce its version of the 5-year reform legislation, with the first hearing for FEMA's Administrator Fugate scheduled on June 9, 2011. NAR will continue to make every effort to reauthorize this critical program before the deadline.

iii. NAR Urges House to Consider Impact of Housing on Economy
On June 2, 2011, the House Budget Committee held a hearing on the "Taxpayer Exposure in the Housing Markets." The hearing focused on the costs of Freddie Mac and Fannie Mae in conservatorship, and the so-called "hidden costs" of FHA. The Committee reviewed a proposal for analyzing FHA by a different accounting model - one which would show FHA costing the government money, versus the traditional model which shows FHA as making money for the federal government. In a letter to the Committee, NAR argued that when looking at the costs of the various programs, they should also consider the overall impact on our nation's economic health. Furthermore, NAR argued that the revised model was not an appropriate measure for FHA, and using such a model would not allow for an even comparison across all federal programs. It is expected that the Budget and Appropriations Committees will use the traditional evaluation of FHA, which shows the program generating a $4.4 billion surplus in FY12, when they debate the Appropriations bills.

iv. NAR President Testifies Against Changes to FHA
During the week of May 23, 2011, the House Financial Services Committee put forth a "discussion draft" on FHA reform. The draft has a number of good provisions (providing increased lender enforcement, other risk avoidance tools, etc). However, there are several provisions that we STRONGLY oppose. The first would raise the FHA downpayment for all borrowers to 5%, and prohibit the financing of all closing costs and the Upfront MIP. The second would change the whole calculation of the loan limits by making it 125% of median home price by county. It would eliminate the MSA rule — which raises all counties within an MSA (metropolitan statistical area) to the highest limit in that area, and it would eliminate the FHA floor of $271,050 (which means low cost counties would go to 125% of median — under $100k in many areas). It would make the high cost limit $625,500.

NAR President Ron Phipps testified on this proposal on May 25, 2011, before the House Financial Services Subcommittee on Insurance and Housing. He strenuously opposed those two changes, saying "What our economy needs is less government interference, and more market activity." Seven of the nine panelists at the hearing expresses serious concerns with the proposal, which the Subcommittee Chair confirmed was simply one of several proposals they are reviewing, with much more discussion to come. NAR continues to work with the Committee staff to urge them to withdraw these harmful provisions. More hearings will come before any legislation is offered.

v. Senior Democrat Addresses MID and Other Deductions
Sander Levin (D-MI), the senior Democrat on the House Ways and Means Committee, presented a major address to the Center for American Progress to explore issues related to tax reform. He noted the importance of and the need for tax reform, but questioned whether Congress could or would make the kinds of cuts that would reduce the maximum tax rate to 25% as some have suggested.

Levin noted that four major so-called "tax expenditures" would have to be cut or eliminated in order to broaden the base sufficiently to bring the top rate that low. These include health insurance exclusions, housing incentives, retirement savings incentives and education incentives. Levin pointed out that these four elements of the code provide enormous benefits to the middle class. He questioned whether the middle class (or those aspiring to the middle class) should lose these incentives solely to achieve a particular goal for tax rates. Tax rates have a history of going up and going down, so if the rates went back up, then middle income families would have lost considerable benefits.

Mr. Levin also emphasized how remarkably different the economy is from what it was in 1986 when the last major reform occurred. In the past 25 years the economy has become globalized, new technologies have exploded and the political climate has changed significantly. Congress itself has changed personnel. Only three members of the House Ways and Means Committee and only two members of the Senate Finance Committee participated in the 1986 reforms.

vi. Fannie Mae Announces Delinquency Directives
On June 6, 2011, Fannie Mae an updated servicing guide that requires servicers to implement processes for contacting delinquent borrowers and offering foreclosure alternatives, and setting deadlines for resolving escalated cases. The new requirements begin the implementation of consistent mortgage loan servicing and delinquency management requirement described in FHFA's April 28, 2011, directive to Fannie Mae and Freddie Mac. Servicers must implement the revised requirements no later than September 1, 2011. Under the new rules, loan servicers are directed to develop a uniform standard for communicating with homeowners (and encouraged to provide a single point of contact), determine why the borrowers have missed payments and their ability to pay, and educate borrowers on foreclosure prevention options.

In response to a foreclosure prevention solicitation letter, borrowers must complete a Borrower Response Package. A complete package must include:

• A completed Uniform Borrower Assistance Form;
• Income documentation (no more than 90 days old);
• Hardship documentation; and
• An IRS Form 4506-T signed by the borrower

Real estate agents should familiarize themselves with these forms to assist clients in submitting a completed package.

Additional information on the directive and servicers' responsibilities can be found on Fannie Mae's website.

vii. Reduced Premiums Announced for Federal High Risk Insurance Program
On May 31, 2011, the Obama administration announced changes that will make a federal high risk pool health insurance program more affordable and accessible for Americans who have been denied coverage because they are sick. Created by last year's healthcare law, the Preexisting Condition Insurance Programs (PCIP) is meant to provide temporary coverage to sick Americans until 2014, when insurance companies will no longer be allowed deny coverage to people who are sick. Eligibility is limited to those who have been denied enrollment by an insurer or offered coverage at twice the price of what a healthy enrollee might pay and who have been uninsured for six months or more.

The changes announce include (1) premium reductions of as much as 40% in some of the 23 participating states and (2) the elimination of a requirement that applicants to provide proof that they had been turned down for coverage in the traditional insurance markets. Starting July 1, 2011, applicants only must provide a letter from a doctor or nurse saying they've had a medical condition, disability, or illness in the past year.

For more information on whether the PCIP is available in your state and the premium charges for these plans, please go to http://www.pcip.gov or by call (866) 717-5826.

viii. Bank of America to Accept FHA Mortgages with Credit Scores Under 600
Bank of America Home Loans recently changed underwriting standards for the FHA loans it provides through its mortgage loan officers for FHA purchase mortgages. Bank of America will increase its flexibility on FICO score requirements and allow borrowers with minimum FICO scores of 580 to apply for loans, assuming they meet certain debt-to-income requirements. Agents with questions about Bank of America's underwriting criteria for FHA loans should contact a Bank of America Mortgage Loan Officer.

ix. NAR Submits Statement on Regulatory Fairness
On May 24, 2011, the Small Business Administration's Office of the National Ombudsman held a hearing on National Regulatory Fairness for Small Business. The hearing focused on the impact federal regulatory enforcement and compliance actions have on small businesses. NAR provided comments on several rules that directly impact real estate agents and brokers which, in some cases, create a disincentive for real estate professional to provide assistance to consumers. Though supportive of regulatory efforts to protect consumers and curb abuses, the growing regulatory compliance required of real estate professionals will harm the ability of real estate agents to operate in an efficient manner as trusted advisors to their clients on both the purchase and sale of their homes. NAR remains concerned that the cumulative effects of additional layers of regulatory compliance are detrimental to both the housing industry and consumers.

x. Treasury Department Holds HAFA Summit
On May 9, 2011, the National Association of REALTORS® along with representatives from the California, Illinois, and Nevada Associations, met with lenders, mortgage insurance companies, the Treasury Department and other federal agencies to identify issues impeding the success of the HAFA program. Panelists provided an overview of eligibility and documentation requirements for their respective HAFA and proprietary short sale programs, procedures for establishing property values and for appealing property valuations, and problems with subordinate liens which remain an obstacle to streamlining the short sale process. All groups agreed that subordinate lienholders continue to severely limit the number of borrowers approved for a short sale under the HAFA program. NAR is participating in all three working groups, consisting of summit participants, to offer recommendations to the Treasury Department on possible improvements to the HAFA program and collaborate on ideas of creating a streamlined short sale process beyond the end of the program.

xi. White House, Congress Propose Data Breach Disclosures
Both the White House and Congress are proposing a national data breach notification standard that would require businesses to implement data security programs and notify individuals if their electronic personal information is breached. Rep. Cliff Stearns (R-FL) introduced H.R. 1841 the Data Accountability and Trust Act. This legislation would preempt the 46 state breach notification laws that currently exist. The White House proposed that similar legislative language be included in Cyber security legislation aimed at protecting the nation from cyber threats. NAR created a toolkit to assist our members to develop data security and privacy policies (see link below.)

xii. Improve Client Communications with Ifbyphone
NAR’s newest REALTOR Benefits® Program Partner, Ifbyphone, is designed to make the lives of brokers and agents easier and more profitable by improving client and prospect communications. As a voice-based marketing automation service, Ifbyphone for REALTORS® offers faster connection with hot leads, maximization of marketing dollars, virtual office support and more – all with exclusive benefits. http://www.realtor.org/realtor_benefits/benefits_partners/ifbyphone?cid=IBP0011

xiii. zipLogix Introduces New Online Document Storage Tool
zipVaultTM, the newest product from REALTOR Benefits® Program Partner, zipLogix, offers zipForm® 6 Professional (online) users a cost-effective, secure and user-friendly document storage tool integrated within the zipForm software allowing for easy accessibility. zipVault™ provides users the ability to store documents created both inside and outside of zipForm. Brokers when you order zipForm® 6 Professional for your agents, use code DB75 to get 10% off the retail price. Call 866-627-4729! http://www.realtor.org/realtor_benefits/benefits_partners/zipform?cid=ZV0010

xiv. How Can I Benefit from Print On Demand?
Check out a FREE sample of a customized brochure available through NAR’s Print On Demand Service, and discover how easy it is to professionally customize and print NAR’s most popular publications to share with your clients. Visit www.REALTOR.org.Store to maximize your marketing efforts with Print On Demand.
http://www.realtor.org/prodser.nsf/pages/PrintonDemandProgram?OpenDocument&cid=prod00306


Upcoming Data Releases

Tuesday, May 21

May Existing-Home Sales

Wednesday, June 29

Pending Home Sales Index

Wednesday, July 20

June Existing-Home Sales

 

Real Estate Services Staff
Ken Trepeta – Director, ktrepeta@realtors.org
Kara Beigay – Communications Manager, kbeigay@realtors.org
Patricia Tarhon – Project Coordinator, ptarhon@realtors.org