This is your time to take action!

Encourage the federal government to act on important real estate issues

So, you know the saying if real estate is your profession, then politics is your business? Well, the federal government has made real estate their business, and it is up to you to make sure they get it right.

What are the issues?

1. Qualified residential mortgage (QRM) and risk retention:

Proposed regulation changes the standards for a QRM.

• The proposed QRM rule would require an 80% LTV, which requires a 20% down payment.
• The proposed rule would also limit the mortgage payment to 28% of gross income and limit all debt to 36%.
• No credit-score requirement is included, but a mortgage loan would qualify as a QRM only if the borrower is not currently 30 or more days past due on any debt obligation.
• Borrowers could not have been 60 or more days past due on any debt obligation within the preceding 24 months.
• Borrowers could not have, within the preceding 36 months, been through bankruptcy, been foreclosed on, engaged in a short sale or deed-in-lieu of foreclosure, or been subject to a federal or state judgment for collection of any unpaid debt.

Why does this matter?

The QRM definition is of extraordinary importance for three reasons:

1. It will determine the types of mortgages that will be generally available for borrowers for the foreseeable future.
2. It will serve as a precursor for what the successor(s) to the current GSEs (Fannie Mae and Freddie Mac) are likely to be allowed to securitize.
3. Finally, the QRM proposal will telegraph the administration’s intentions for FHA. A narrow QRM will require severe tightening of FHA to prevent huge increases in FHA’s already robust market share.

What can I do?

Ask your clients to visit HomeOwnerActionCenter.com and to respond to the first ever Consumer Call for Action that supports NAR’s opposition to the proposed regulation.

2. National Flood Insurance Program

NAR supports efforts to reauthorize the National Flood Insurance Program (NFIP) to issue flood insurance, which is required in 21,000 communities nationwide. These efforts include:

• Renew and strengthen the long-term viability of the NFIP for at least five years.
• Improving the accuracy of flood insurance rate maps used to determine which properties require flood insurance.
• Continue to include comprehensive coverage for residences including rental properties and second homes
• Include reforms that provide "full risk" premiums for most repetitive loss structures in many states.

Why does this matter?

Twice in 2010, Congress allowed the NFIP to lapse for multiple weeks at a time, which halted tens of thousands of real estate transactions in areas where homebuyers are required to purchase flood insurance to obtain a mortgage. With the NFIP authority set to expire on Sept. 30, 2011, for the 10th time in three years, NAR is advocating for further reform and long-term extension of the program.

What can I do?

Respond to the Call for Action and ask the Senate to pass the National Flood Insurance Reform Act before the deadline.

3. FHA Loan Limits

The current FHA and GSE loan limits have been in place since February of 2008, when they were passed as part of the Emergency Stimulus Act. Housing conditions have not improved enough to warrant letting the limits drop. The current loan limits are set to expire on Sept. 30, 2011. Unless Congress acts, FHA and GSE loan limits will drop to 115% of local area median home price with a cap of $625,500  (from the current limit of 125% of local area median home price with a cap of $729,750). 

Why does this matter?

• Decreasing the limits impacts nearly every state—not just high-cost areas!FHFA and FHA have published the new limits, and more than 669 counties in 42 states and the territories would be negatively impacted by the loan limit change. The average decline in loan limits would be more than $68,000.  Only 8 states will see no decline (AR, IA, KS, MS, NE, ND, SD, & OK). 
• Housing markets are rebounding, but the recovery will be slow.With tight underwriting constraining mortgage availability, lowering the FHA/Fannie/Freddie loan limits will only further restrict liquidity. Even with the current higher limits, borrowers are finding it more difficult to obtain affordable mortgage financing. Making the current limits permanent at levels appropriate in all parts of the country will provide homeowners and homebuyers with safe, affordable financing and help stabilize local housing markets.
• Retaining the current loan limits will allow homebuyers in higher-cost areas to have access to affordable mortgage financing and share the same opportunity to achieve homeownership that borrowers in other regions of the country enjoy.

What can I do?

Respond to the Call for Action to ensure that your clients have access to affordable mortgages.

4. Protect and defend the Mortgage Interest Deduction

Individuals are permitted to deduct mortgage interest paid on mortgage debt of up to $1 million. The deduction is available for interest on mortgages for a principal residence and one additional residence.

As part of its FY2011 and FY2012 budgets, the administration has proposed limiting the value of the mortgage interest deduction (MID) for upper income taxpayers by, in effect, converting the deduction to a 28% tax credit for those individuals who are currently in the 33% or 35% tax brackets. Individuals with incomes below $250,000 would generally not be directly affected by this proposal. There have also been recent recommendations to repeal or reduce the MID.

Why does this matter?

The mortgage interest deduction is a remarkably effective tool that facilitates homeownership. While only about 30% of all taxpayers in any given year itemize their deductions, more than 3/4 of homeowners utilize the deduction over the period they own their home.  According to NAR research, eliminating the MID would cause a 15% decline in the value of homes across the nation.  In high cost areas, that impact would be greater, while in lower cost areas the effect would be more modest.

What can I do?

Participate in the Home Ownership Matters Campaign. Find the latest statistics, news and important facts about the impact being a homeowner.

And that’s not all you can do!

Tell a friend

Wondering what else you can do? At the bottom of every call for action, there is a Tell a Friend button. While you may respond to every call, other agents in your office do not. Please use that button and alert your friends to the importance of sending those messages to Washington.

Broker Involvement Program

Ask your broker if he or she is signed up for the Broker Involvement Program. This way, all of NAR’s calls for action will come from your broker’s e-mail address, and will more likely generate a response from agents in your office. Your broker can contact their Texas Association of REALTORS® field representative to learn more.

 

Written by: Elizabeth Schneider is the Central Texas Field Representative for the Texas Association of REALTORS®. She can be reached at eschneider@TexasRealtors.com or 512-971-8334.