What If REALTORS® Didn’t Lead?
By Carolyn Schwaar
What would the real estate industry look like without the leadership of REALTOR® associations and volunteers?
It may be hard for real estate practitioners today to imagine, but there was a time—long before state licensing—when the practice of real estate wasn’t even recognized as a profession. Only through the work of hundreds of REALTORS®, who fought for years, was the profession established and standards and license requirements created. Perhaps not surprisingly, professionalism was one of the national association’s first major advocacy campaigns.
Since then, REALTORS® have championed private property rights, tax incentives for home ownership, secure and affordable home loan products, environmentally responsible building practices, and hundreds of other issues affecting both real estate practitioners and property owners nationwide.
Today, however, there is a real possibility that the industry will face a back slide of some of its achievements. For instance, there is talk that Congress may do away with real estate tax deductions and reduce housing loan limits to trim the federal deficit.
In a virtual town hall meeting he hosted this spring to introduce the national association’s new sweeping political advocacy and community leadership initiative, 2011 NATIONAL ASSOCIATION OF REALTORS® President Ron Phipps cautioned, “The privileges we’ve had, our parents had, and our grandparents had since World War II are being eroded, and our children face having [those privileges] denied to them.”
NAR’s political advocacy project, called the My REALTOR® Party Initiative, is a call to action for associations and members to become more politically active. This rallying cry is not only to encourage members to defend established benefits, but to become modern advocates for the new issues relevant to their business and home ownership.
If there’s any doubt about what can be accomplished through advocacy, consider these three essential benefits REALTORS® and home owners wouldn’t enjoy were it not for the advocacy of association staff and volunteers.
Members and all home owners would pay more taxes
As far back as 1910—when the NATIONAL ASSOCIATION OF REALTORS®’ second present Alexander Taylor, said, “Unfair taxation is the most formidable foe of real estate”—reducing tax burdens on home owners and real estate practitioners has been a central objective.
Without the advocacy of association volunteers and staff, there’d be no capital gains exemption on home sales, no mortgage interest deduction, and no special tax status of independent contractor for real estate sales people.
These three benefits are under near-constant attack and are kept alive only by perpetual advocacy. NAR fought off a proposed modification of the mortgage interest deduction (MID) to pay for health care reform in 2009, and today it is fighting off more attacks on the MID as a debt reduction measure.
Fewer Americans could afford to buy homes
In the 1920s, the national associations assisted the United States government in the development of the Federal Housing Administration as part of its -unwavering commitment to ensuring that every American had the opportunity to attain a decent, safe, and affordable home.
In the 1930s, NAR was a key player in the creation of the Home Owners’ Loan Corp. (to help distressed home owners keep their houses) and the Federal National Mortgage Asso-ciation (now known as Fannie Mae).
More recently, in 2008, a year that marked the beginning of a recession, NAR leaders acted quickly to lobby Washington for a home buyer tax credit.
Today, NAR’s Home Ownership Matters campaign is an advocacy effort on many fronts. It encompasses not only public awareness, but also support of legislation and regulation to keep people in their homes and ensure affordability, including: tax credits, mortgage relief, increased FHA loan limits, and enhancements to programs, such as the VA Home Loan Guaranty.
Most recently, NAR volunteers and staff have been fighting against the qualified residential mortgage (QRM) proposal that would require a 20 percent down payment from buyers.
The practice of real estate would be far more federally regulated and dominated by banks
In 1999, NAR staff and volunteer leaders prevented bank holding companies from making a percentage of their profits from commercial activities—which included real estate. This kept large, national banks from entering, and dominating, the local practice of home buying and selling. In 2009, NAR won passage of legislation to permanently prevent national chartered banks from entering the real estate brokerage and property management business.
From 2006 to 2010, NAR worked to stop HUD’s implementation of burdensome RESPA rules and documents as part of RESPA reform.
NAR fought to secure an exemption for real estate professionals—performing traditional real estate activities—from being subject to new Consumer Financial Protection Bureau rules, which were directed at mortgage providers. Without this exception, members would be regulated by more complex policies and procedures in addition to the existing RESPA rules, which now fall under the CFPB.
It’s clear from the hundred-year history of REALTOR® political involvement that the real estate industry and home ownership as we know it today wouldn’t exist without the efforts of volunteers and staff on the local, state, and national level. The My REALTOR® Party Initiative invites all associations to take the advocacy torch passed to them from prior generations and to encourage their members to continue vigorously defending home ownership.
2006–2010 NAR LEGISLATIVE AND REGULATORY PREVENTIVE ACCOMPLISHMENTS
Stopped entrance of banks into real estate brokerage
Stopped HUD implementation of onerous RESPA rules and burdensome documents as part of RESPA reform
Defeated legislation and federal rules seeking to regulate the real estate industry against charges of anti-competitiveness
Defeated federal preemption legislation
Prevented Wal-Mart and Home Depot ownership of industrial loan companies
Stopped a reduction of the GSE high-cost conforming loan limits
Defeated tax increase on real estate partnerships
Prohibited inclusion of real estate under financial services reform legislation
Eliminated inclusion of onerous forms as part of RESPA reform
Defeated modification of the MID as a way to pay for health care reform
Increased FHA down payments
Worked for the prohibition against the financing of FHA premiums
Defeated time-of-sale energy efficiency requirements
Eliminated mandatory energy labeling
Stopped an expansion of federal authority under Clean Water Act affecting real estate with non-navigable waters
Prevented mandatory radon testing and retrofitting from being part of every residential transaction
Prevented mandatory mold testing from being part of every residential transaction
2006–2010 NAR PROACTIVE ACCOMPLISHMENTS
Permanently barring banks from engaging in real estate brokerage
Increase in FHA single- and multi-family loan limits
Increase in GSE conforming loan limits
Increase in VA loan limits
FEMA funding for flood plain map modernization program, including more accurate maps
Multiple extensions of the flood insurance program
Enactment and extension to 2012 of mortgage cancellation tax relief
Favorable permanent FIRPTA rules so that sellers need not disclose Social Security numbers to buyers at settlement on residential property
Federal terrorism insurance program protecting commercial real estate
Creation of HUD FHASecure, a refinancing program to help reduce foreclosures
An increase in the Fannie Mae/Freddie Mac investor-financed loan limit from 4 units to 10 units
Small-business lending fund benefiting commercial businesses
Favorable leasehold improvement provisions
Creation of a $7.2 billion grant program to increase broadband availability in unserved and underserved communities
Small-business health reform legislation benefiting the self-employed and small-business employers
Provisions allowing independent contractors to deduct the full amount of health insurance premiums when calculating payroll tax obligations
Electronic signature legislation that included language for real estate transactions.
The $7,500 first-time home buyer tax credit
Increase in the first-time home buyer credit to $8,000 and creation of a $6,500 credit for current home owners
Funding for rural home loans
Nomination of FHA Administrator Dave Stevens
Elimination of the controversial HVCC program
Repeal of 1099 reporting provisions
Thousands more victories have been won over the years by local and state association volunteers and staff.