Washington Update Archive

 

WASHINGTON UPDATE 

February , 2010

### FHA Makes Critical Change

In October 2009, FHA announced that its capital reserve fund had fallen below the congressionally mandated level of 2 percent. The drop in capital reserves has led Congress and the Administration to call for changes to strengthen FHA.

On January 20, 2010, FHA announced major changes to ensure its long-term financial soundness. FHA is trying to balance three fundamental objectives: 1) financial soundness of the FHA insurance fund – ensuring that its capital ratio returns above 2 percent, 2) fulfilling its mission of serving borrowers not adequately served by the private sector and 3) facilitating the recovery of the housing industry and the over-all economy.

NAR has met with the Commissioner on several occasions to discuss the state of the housing market and to underscore FHA’s invaluable role. By all accounts the new changes are a victory for home buyers. FHA has carefully balanced the need to make financial reforms with the need to keep FHA available to a large segment of consumers. This is evident by retaining the 3.5 percent minimum down payment requirement and allowing the up-front mortgage insurance premium to be financed.

FHA announced changes in the following areas:

• The upfront mortgage insurance premium (UFMIP) will increase to 2.25 percent up from 1.75 percent. Contrary to reports, FHA will continue to allow the financing of the UFMIP.
• Borrowers with a credit score below 580 will be required to have at least a 10 percent down payment. The minimum down payment will remain at 3.5 percent for all other borrowers.
• FHA will seek legislative authority to increase the annual premium (currently capped at .55 percent). Over time, increasing the annual premium may allow FHA to reduce the up-front premium.
• Seller concessions will be reduced to 3 percent from 6 percent.

FHA will make the following lender enforcement changes:

• FHA will implement credit watch terminations at lender underwriting.
• Public reporting of lender performance through scorecard system will be implemented.
• FHA will implement, through notice and comment, indemnification against lenders. Indemnification will be expanded beyond fraud and misrepresentation.
• FHA will seek legislative authority to enforce indemnifications against direct endorsed (DE) lenders.
• FHA will seek legislative authority to sanction lenders nationwide based on performance of local branch.

FHA is an integral part to the continued recovery of the real estate industry and the overall economy. NAR will continue to work with FHA, the Administration, and the Congress to ensure FHA can fulfill its mission while providing for the safety and soundness of the insurance fund. NAR is committed to assisting FHA as they balance risk management with creating homeownership opportunities across the country.

 

### NAR Comments on Proposed Seller Financing Rules

On February 12, 2010, NAR President Vicki Cox Golder submitted a letter to Shaun Donovan, Secretary of Housing and Urban Development, on HUD’s proposed rule to implement the Secure and Fair Enforcement Mortgage Licensing Act of 2008 (the SAFE Act). The SAFE Act requires states to establish loan originator licensing requirements that meet minimum standards. The rule establishes minimum requirements for state licensing, the procedures HUD will use to determine whether a state is in compliance, the actions HUD will take if a state is not in compliance, and HUD’s enforcement authority if it operates the system for non-compliant states.
NAR urges HUD to exempt all seller financing from the licensing requirements. If HUD refuses to accept this comment, NAR urges it to make the proposed exemption for seller financing of a residence by the owner much more flexible by expanding it to apply to other sellers who occasionally provide financing for property they own. The exemption for the sale of a residence should also be expanded to include sale of an inherited residence by heirs and the sale of a former residence. NAR also asks HUD to clarify that the payment by a lender of a real estate commission for the sale of a lender-owned property does not make the real estate broker or agent a loan originator subject to SAFE Act licensing.

NAR Comment Letter

HUD’s Proposed Rule

### Realtors® Strive to Reduce Stress in Short Sale Transactions

According to the most recent Realtors® Confidence Index, buyers continue to be discouraged with the extended short sale process, resulting in foreclosures that could have been prevented. New resources from the National Association of Realtors® aim to help Realtors® and consumers successfully navigate the short sale process to help more homeowners avoid foreclosure.“Our members report that short sales are often riddled with delays and red tape,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. “As the first, best source for real estate information, Realtors® are dedicated to help streamline and improve the short sale process for both buyers and sellers. NAR has worked tirelessly to provide Realtors® with the resources they need to navigate short sale transactions, as well as provide guidance on helpful government programs designed for homeowners facing the process.”

On April 5, 2010, the U.S. government will implement the Home Affordable Foreclosure Alternatives Program. Part of the Home Affordable Modification Program, HAFA helps homeowners who are unable to retain their home under HAMP by simplifying and streamlining the use of short sales and deeds-in-lieu of foreclosures. Homeowners must meet certain requirements to participate and incentive payments are provided to homeowners and servicers.

To help Realtors® understand HAFA and its guidelines, NAR has released a brochure about the Home Affordable Foreclosure Alternatives Program and additional resources online, including government forms and guidelines, a video explaining the new federal guidelines, and frequently asked questions. Designed to help Realtors® explain the new program to homeowners, NAR’s HAFA resources explain how the program aims to streamline short sales and, in the process, save more families from foreclosure.

“The new guidelines and incentives as part of HAFA are a crucial step towards reducing problems with the short sale process, and Realtors® are ready to help make this new program a success,” said Golder.

In addition to its resources on HAFA, NAR launched a Short Sales and Foreclosures Certification Program in August 2009. The SFR program is offered by the Real Estate Buyer’s Agent Council of NAR and includes training on how to manage short sale, foreclosure and real-estate owned transactions.

The Realtors® Confidence Index is a monthly survey of more than 50,000 Realtors®.

 

### Report Discusses H-2B Guest Worker Program

A new report from the Center for Immigration Studies, 'Dirty Work: In-Sourcing American Jobs with H-2B Guestworkers' explores the H-2B guestworker program, which is for temporary or seasonal non-agricultural work. This paper aims to shed light on the poor conditions that H-2B guestworkers often toil in; to expose the damage it does to the most vulnerable sector of American workers: the poorly educated, students, minorities, and legal immigrants; to examine the recruiters who find workers and the employers who hire them; and to scrutinize the government’s role in sanctioning and managing the H-2B bureaucracy.

Among the findings:

• The popularity of the H-2B program soared from just 15,706 visas issued in 1997 to an all-time high of 129,547 in 2007. Issuances dropped to 44,847 in 2009, as Congress declined to renew a temporary expansion passed in 2005.
• Despite the global economic crisis, demand for H-2B guestworkers remains strong, even in areas with high unemployment rates. American companies filed petitions to request nearly 300,000 H-2B workers in FY 2008. The U.S. Chamber of Commerce listed expanding the H-2B program as one of its 'Policy Priorities for 2009.'
• The H-2B program was originally intended to help employers needing seasonal and/or temporary workers, but the majority of the program's current users are neither small nor seasonal employers, but rather mid- to large-sized companies and recruiters that petition for H-2Bs to work for 10 months out of the year, year after year.
• Many of the businesses filing H-2B petitions for foreign workers are 'body shops' that have no actual 'seasonal or temporary' need for labor and instead rent workers out to other firms.
• Despite credible allegations and even convictions for fraud and abuse of both H-2B workers and the program in general, neither the Department of Labor nor the Department of Homeland Security has ever barred a U.S. company from filing H-2B petitions. Some repeat offenders continue to have their petitions approved to this day.
• Economists have found no evidence of a labor shortage in the occupational groups that constitute the bulk of H-2B employment.

The report is online at http://cis.org/h-2b-guestworkers.

The Center for Immigration Studies is an independent research organization that examines the impact of immigration on the U.S.

 

### Obama Administration Exploring 14 New Monuments

The Obama administration is exploring the possibility of designating millions of Western acres as national monuments, according to an internal document obtained by House Republicans and released to the press. The draft document identifies 14 sites for new or expanded national monument designations under the Antiquities Act of 1906, which would allow the administration to make the designations without congressional approval.
The document, which calls for future evaluations of public and congressional support for the potential designations, reflects "brainstorming discussions" within the Interior Department and is not indicative of any definitive plans, said Kendra Barkoff, spokeswoman for Interior Secretary Ken Salazar.

"No decisions have been made about which areas, if any, might merit more serious review and consideration," Barkoff said. "Secretary Salazar believes new designations and conservation initiatives work best when they build on local efforts to better manage places that are important to nearby communities."
Top Republicans on the House Natural Resource Committee say the designations would be a misuse of the Antiquities Act.

The document mentions 14 potential monument designations or expansions in 9 states: Arizona, California, Colorado, Montana, New Mexico, Nevada, Oregon, Utah, and Washington.

Republicans estimated the new designations could cover up to 13 million acres.

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