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REALTOR® Associations protect members,
achieve objectives in 2010
The National Association of REALTORS®, along with state and local member Associations across America, is gearing up to face the many challenges the new year will bring to the real estate industry. The Associations can look to the future as a chance to build upon the significant legislative victories fought and won in 2010.
Protecting REALTORS®' business interests and activities
Banks in real estate After eight years of continuous struggle to convince Congress that real estate is not financial in nature and banks should not be allowed in the real estate brokerage business, NAR achieved its objective. On March 11, 2009, the Omnibus Appropriations Bill, H.R. 1105, was signed into law, and with it a declaration that, going forward, neither real estate brokerage nor real estate management can be classified as a financial activity.
Wall street reform and consumer financial protection
On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act of 2010. This comprehensive reform of the nation's financial services sector is the most sweeping since the financial reforms ushered in during the Great Depression. NAR worked with both Democrat and Republican members of the House and Senate committees responsible for the legislation to secure a "real estate professional exclusion" ensuring that the daily business of REALTORS® was not negatively impacted by this historic piece of legislation.
Mortgage reform
Since the creation of the NAR Subprime Working Group in 2005, NAR has been a strong advocate for responsible mortgage reform. Title XIV of the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act of 2010 focuses on the reformation of mortgage lending, specifically lending activities that were deemed predatory. Seller-financing was severely impacted by the initial draft of the legislation. NAR worked with a bipartisan set of members of Congress to reduce the bill's impact on seller-financing and ensure that consumers would have this tool at their disposal.
Fannie Mae/Freddie Mac – The GSEs
In September 2008, the Government-Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, were placed into conservatorship to ensure that the residential secondary mortgage market continued to function. Since that time, NAR has convened a GSE Presidential Advisory Group (PAG) to determine the best approach for reforming the functions that these organizations perform that are vital to the viability of the housing industry. NAR recommends a government-chartered, nonshareholder-owned structure, which federally guarantees mortgage-backed securities, that would assure the availability of mortgage lending in all types of markets throughout the country. NAR has worked diligently to communicate the REALTOR® recommendations to Congress, the Obama Administration and our industry partners via face-to-face meetings, participation in housing finance symposiums and through responding to requests for input from the government. To date, the REALTOR® recommendations have been hailed as the best to promote a smooth, seamless transition from the current to any future housing finance system.
RESPA GFE/HUD-1 disclosures
Provisions of HUD's final Real Estate Settlement Procedures Act (RESPA) rule went into effect in 2009 after NAR successfully urged HUD to make significant changes to the proposed rule, including:
• Elimination of the "closing script"
• Creation of a 30-day cure period
• Improved uniform formatting of GFE/HUD-1
NAR held a number of education sessions and webinars for its members and led efforts to seek additional clarifications from HUD on the rule throughout 2009 and 2010.
RESPA guidance
NAR secured guidance from HUD on the issue of "admin fees" charged by brokers under RESPA. The guidance helped clear up long-standing concerns on the appropriateness and the manner in which these can be charged and should be disclosed. In addition, NAR and industry partners secured guidance on the sale of home warranty contracts. A 2008 informal letter by a HUD staff attorney threw the entire industry into disarray and led to class action lawsuits. The 2010 HUD guidance makes clear that agents and brokers can be paid on a per transaction basis and that each sale of a contract must be reviewed on a case-by-case basis. However, the guidance leaves many questions unanswered and has caused confusion. NAR continues to work with industry partners to address these questions.
Short sales
NAR continues to urge servicers, mortgage investors and regulators to improve the short sales process, through both the Home Affordable Foreclosure Alternatives Program (HAFA) and proprietary programs of the servicers and lenders. Keeping families in their homes is a top priority for REALTORS®. But if our loan modification and other programs are not able to help a family stay in their home, HAFA or another short sale program can give that family a "graceful exit" and allow them to avoid foreclosure.
Meetings with large lenders
Starting in the summer of 2010, NAR's elected leadership initiated a series of meetings with large lenders and servicers to discuss issues of concern for REALTORS®. The topics included origination issues (underwriting standards, appraisal issues, credit policy, condo financing); short sales; bank-owned properties; and the impact of the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act. NAR and the banks are discussing how we can work together to make significant improvements in all of these areas. The goal is to increase our mutual success and help support market recovery.
Foreclosure problems
Starting in September 2010, several lenders suspended foreclosures in two dozen states, and one did so for all 50 states, due to questions about whether foreclosures were being processed consistent with applicable state law requirements. As they completed their reviews, banks started the process of resuming foreclosures in October. On Oct. 12, 2010, NAR wrote to Treasury Secretary Geithner, HUD Secretary Donovan and Acting Director of the Federal Housing Finance Agency DeMarco to convey REALTOR® concerns about the resulting confusion and uncertainty. NAR called on lenders to assess the situation and correct any problems as soon as possible, in order to restore confidence in the system and minimize damage to the housing recovery. Lenders must not only assure the protection of the rights of borrowers, but also remove doubt that buyers may have about whether the seller is able to convey clear title. NAR also urged the lending industry to place additional resources into processing loan modifications and short sales, which are far better than a foreclosure for all involved.
Health insurance reform
NAR successfully raised the profile of the challenges that face the self-employed and small employers, including REALTORS®, throughout the 111th Congress' debate over health care reform. As a result, the underwriting and rating reforms in the final bill — guaranteed issue policies, ban on pre-existing condition exclusions, limited age rating, etc. — are in line with NAR's policy principles and will give the self-employed access to insurance with most of the characteristics of a group plan. In addition, individual affordability credits and tax credits for small employers will help to make health insurance more affordable for many NAR members who are currently uninsured.
Deductibility of health insurance premiums for payroll tax purposes
As the result of provisions championed by NAR in the Small Business Jobs and Credit Act of 2010, self-employed persons will be allowed to deduct health premiums when calculating their self-employment tax payments for 2010. For many years, self-employed individuals have been permitted to deduct the cost of any health insurance premiums they pay for themselves and their family from their self-employment (Schedule C) income when calculating their income tax obligation. However, the health insurance premium was NOT permitted as a deduction when computing payroll taxes, so the self-employment payroll tax base included the full amount of the premium. As a result, the self-employed have been required to pay an additional 15 percent in self-employment tax on the very sizeable health care premiums they pay. With the enactment of the Small Business Act, this additional tax burden is eliminated. While the change is only effective for the 2010 tax year, NAR will advocate for an extension or for making this provision permanent. |
