I have quite an amount of information to share with the Board this month as the amount of activity has been quite busy. I will begin my report this month with a legislative update on Federal Issues that NAR is monitoring. With both the General Election and NAR Annual Convention under our belts, attention has quickly shifted to guiding NAR priority issues in Lame Duck session which started when the House and Senate returned yesterday. High on the priority list remain getting an extension of the Mortgage Debt Forgiveness Tax Relief, reauthorizing the Terrorism Risk Insurance Act (TRIA), and working to ensure that the Waters of the US (as overseen by the EPA and Army Corp of Engineers) are scientifically and responsibly defined. Our legislative contact Lindsay Shuba, keeps me informed on a monthly basis and she is quite helpful with any questions that I have in regards to Federal Issues. Please continue to watch for NAR Calls for Action and reply ASAP. Also encourage your fellow agents to become active on the issues.
FHA Programs
FHA 203(K) Monitoring
On September 26, 2014, the National Association of REALTORS®, along with the National Association of Homebuilders and the Mortgage Bankers Association, sent a letter to the Federal Housing Administration (FHA) in response to proposed changes to the 203(k) Rehabilitation Mortgage Insurance Program. The 203(k) program provides financing to renovate older and damaged homes. The coalition provided several recommendations to maintain the viability of the program and allow the revitalization of properties that might otherwise continue to deteriorate.
FHA Property Flipping Waiver
On Friday, October 3, 2014, NAR President Steve Brown sent a letter to the FHA Commissioner urging FHA to extend the property flipping waiver that allows FHA financing on single family properties that are being resold within 90 days of the previous acquisition. NAR has seen the positive effects of the waiver where property rehabilitation and resale of these homes has increased the availability of safe and affordable homes in many communities.
FHA Letter on Note Sales
On October 16, 2014, President Steve Brown sent a letter to the FHA Commissioner in response to member concerns about the Single Family Note Sales Program (SFLS). Many REALTORS® are concerned that the program is auctioning large pools of mortgages to the highest bidder, in some cases without considering the investor's ability to achieve homeownership preservation and affordable housing goals. NAR provided recommendations to improve FHA's pre-foreclosure sales process as well as place additional controls on the SFLS program to prioritize keeping owner-occupants in these homes.
FY 2015 Rural Housing Funds
Funding for Rural Development's Single Family Housing Guaranteed Loan program is now available for fiscal year (FY) 2015. The funding received is based on a Continuing Appropriations Resolution, 2015 (P.L. 113-164, H.J. RES.124). Loans that were issued Conditional Commitments "subject to" commitment authority will be obligated on the Agency's Guaranteed Loan System (GLS). If the loan has closed, the lender may submit their request for Loan Note Guarantee, together with their closing package. Ensure the lender certification on Form RD 1980-18 "Conditional Commitment for Single Family Housing Loan Guarantee" is dated on or after the obligation date provided by Rural Development. Lenders using the Agency's Automated Lender Loan Closing/Administration transaction will complete the certification upon submission of the loan closing and payment of the guarantee fee. Questions regarding this notice may be directed to the Single Family Housing Guaranteed Loan Division, at 202-720-1452.
NAR Submits Comments on FHFA's Proposed Affordable Housing Goals
On October 28, 2014, NAR President Steve Brown submitted comments on the Federal Housing Finance Agency's (FHFA) proposed rule to establish housing goals for the GSEs for 2015-2017. NAR's comments support ambitious, but reasonable, affordable housing goals for the GSEs and calls for providing flexibility to insure the GSEs to meet those goals. In addition, NAR asks that FHFA examine what policies, both at the GSEs and at their lender customers, are producing the very market dynamics that contribute to reduced market forecasts. A GSE is considered to be in compliance with the goal if its performance meets or exceeds either
(1) The share of the actual market that qualifies for the particular goal.
(2) The benchmark level for the goal. NAR supports the dual test for goals compliance because it is not reasonable to hold the GSEs to the benchmark test if market conditions significantly erode and make achieving the goals with sustainable mortgages impossible.
NAR Supports Efforts to Improve Credit Liquidity
On October 13, 2014, NAR submitted comments on the Federal Housing Finance Agencies proposal to create a Single Security that could be guaranteed by either Fannie Mae or Freddie Mac (the government-sponsored enterprises or GSEs). The multi-year development of a single GSE mortgage backed security (Single Security) is part of the development of the common secondary mortgage market securitization platform being developed by FHFA and the GSEs. NAR has supported the development of the securitization structure, which functions like a utility, since last year. Having a single GSE MBS should increase liquidity of these securities in the market, increasing demand and producing better pricing. In the letter to FHFA Director Mel Watt, NAR President Steve Brown requests FHFA carefully monitor potential pricing inefficiencies to ensure that implementation and issuance of the Single Security benefits borrowers. Most importantly, this process should not impede a borrower's ability to 'lock in' an interest rate ahead of settlement of their home purchase and contribute to lower mortgage rates through increased liquidity a Single Security.
CFPB's 4th RESPA/TILA Webinar
On Tuesday, November 18, 2014 at 2:00 PM EST the Consumer Financial Protection Bureau (CFPB) and the Federal Reserve will hold their 4th webinar on changes to the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA). This webinar will focus on the closing disclosure that will replace the HUD-1 settlement statement. NAR will continue to work with CFPB and industry to implement the rule and educate our members. The rule takes effect August 1, 2015.
The changes to RESPA rules will have a tremendous effect on our members and I will be referencing this further in my report. A link to register for the webinar is copied below:
http://philadelphiafed.org/bank-resources/publications/consumer-compliance-outlook/outlook-live/
NAR Comments on RESPA/TILA
On Wednesday October 29, 2014 NAR submitted comments to the Consumer Financial Protection Bureau (CFPB) on changes to the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA) rule. CFPB has proposed giving lenders a full day to re-disclose the loan estimate when the loan is locked in. NAR believes the extra time to disclose will give consumers more flexibility in deciding when to lock in loans because lenders will not have to worry about getting the disclosure to the consumer that same day. NAR also promised to continue to work with CFPB and industry to implement the rule which takes effect August 1, 2015.
CFPB/HUD Target Marketing
On September 30, 2014, the Consumer Financial Protection Bureau (CFPB) ordered Lighthouse Title, a Michigan title insurance agency, to pay $200,000 for illegal referrals under the guise of marketing agreements under the Real Estate Settlement Procedures Act (RESPA). Similarly and on the same day, HUD's Office of Inspector General targeted Cornerstone Home Lending for similar issues. The cases follow on the heels of enforcement actions targeting disclosures and practices under the anti-kickback provisions of RESPA. Tying the value of marketing arrangements to the amount of referrals is a clear problem under RESPA. Likewise, requiring arrangements to be exclusive also raises red flags with regulators. Finally, arrangements where marketing is not commensurate with the amount of compensation will raise further concerns. NAR will continue to work to educate members about their obligations under RESPA and also work with the CFPB to ensure appropriate compliance guidance is issued.
http://www.hudoig.gov/sites/default/files/documents/2014-FW-1006.pdf
http://files.consumerfinance.gov/f/201409_cfpb_consent-order_lighthouse-title.pdf
Clean Water Act
EPA: Withdraw the Water Rule
The Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (The Corps) have issued a proposed regulation that would place more water bodies under federal authority, which would result in more property rights violations, more time consuming and expensive permits, more regulatory red tape, and less economic development in communities across the country. The link below allows you to personalize a letter to EPA on this issue.
http://www2.realtoractioncenter.com/site/R?i=sgV8k2lhncjRSqH9aq7x1Q
SBA Asks EPA to Withdraw Water Rule
The U.S. Small Business Administration, a federal agency responsible for protecting the interests of small businesses, has asked the Administration to withdraw a proposed rule that changes the scope of existing law without Congress' authority and expand federal regulatory power under the Clean Water Act. In a letter to the U.S. Environmental Protection Agency (EPA) and the Army Corps of Engineers (Corps), the Office of Advocacy of the U.S. Small Business Administration (SBA) raised concerns that the proposed rule "Definition of Waters of the United States under the Clean Water Act" would have "direct, significant effects" on small businesses. The SBA Office of Advocacy stated that the proposed rule was improperly certified by the EPA and Corps, and urged withdrawal of the rule. Changing the scope of federal law is solely the responsibility of Congress, and over the past several Congresses, the legislative branch has repeatedly determined not to expand federal jurisdiction under the Clean Water Act. However, finalization of the proposed rule would allow the Administration to bypass the legislative process in order to achieve its agenda. NAR has been actively engaged in this effort to force the EPA to withdraw this proposed rulemaking and will continue to look for every opportunity and make every effort to oppose this proposed overreach of Clean Water Act authority
Interstate Land Sales Act
Bill Amending Condo Sales Requirements Signed
On September 26th, 2014, the President signed into law H.R 2600, a bill to amend the Interstate Land Sales Full Disclosure Act (ILSA) to clarify how the Act applies to condominiums. The Senate approved the measure by unanimous consent as one of the last items considered before it adjourned for the election recess. H.R. 2600 (Grimm, R-NY; Maloney, D-NY) is the companion bill to S. 2101, introduced by Senators Schumer (D-NY) and Heller (R-NV). The House approved H.R. 2600 by a vote of 410-0 late in 2013. The measure takes effect 180 days from the date of the bill's signing. As amended, the ILSA will treat the sales of condominiums still under development in the same manner as condo sales in completed projects. By doing so, the bill closes the loophole that allowed buyers to use a technicality to rescind otherwise valid real estate contracts due to personal financial reasons or "buyer's remorse". The ILSA protects consumers from purchasing property that is not as advertised by requiring extensive disclosures by project developers. If ILSA disclosure requirements are not fully met, the purchaser may revoke the purchase contract. During the recent economic downturn, as markets softened and some high rise condominium developers lowered their asking prices, some early buyers, who had paid higher initial offering prices for units, used the ILSA's reporting requirements as the basis to rescind valid real estate contracts.
Regulators Finalize QRM Rule
After three years of strong opposition from NAR, congressional leaders, and consumer and industry groups, the six financial regulators released the final version of the long-awaited qualified residential mortgage (QRM) rule. The six regulators listened to NAR when finalizing the rule which now equates QRM with the "Qualified Mortgage (QM)" standard. As originally proposed, the QRM rule would have narrowly defined QRMs to require a 20 percent down payment. REALTORS® were among the most vocal opponents of the originally proposed QRM rule and forged the broad-based Coalition for Sensible Housing Policy, which includes nearly 50 organizations, to draw attention to the regulations onerous 20 percent down payment requirement and other credit limiting features such as strict debt-to-income limits. The coalition asked for and received an extension of the proposed regulation comment period in 2013. During that time, NAR and its coalition partners gathered the support of 44 U.S. Senators and 282 House members, who wrote to regulators expressing their intent on QRM and opposing the sizable down payment requirement. In synchronizing both definitions, the revised rule encourages safe and financially prudent mortgage financing while also ensuring creditworthy homebuyers have access to safe mortgage financing with lower risk of default. In addition, consistency between both standards reduces regulatory burden and gives mortgage professionals much-needed clarity and consistency in the application of the important mortgage standards required pursuant to Dodd-Frank.
NAR Comments on Mini-correspondents
On September 30, 2014, NAR wrote to Consumer Financial Protection Bureau (CFPB) director Richard Cordray expressing concern that the CFPB's guidance on mini-correspondent lenders relating to the Ability to Repay/Qualified Mortgage (QM) rule not be interpreted in a way that would reduce access to credit by unfairly discriminating against smaller lenders. NAR noted that certain provisions of the guidance relating to whom the lender sells its loans to and who it receives its warehouse line of credit from should not be over-emphasized. NAR warned that doing so could reduce consumer choice. It could also concentrate lending even further amongst the largest lenders and banks. NAR continues to work with CFPB to ensure that lenders of all sizes are treated fairly and consumers have access to the credit they want and need from the providers they choose.
National Flood Insurance Program
Regulators Propose Tweaks to Flood Rules
Regulators released a joint proposed rule November 13th, 2014 that would require lenders to escrow flood insurance payments and eliminate mandatory insurance requirements for structures that are detached from a primary residence. The rule would require lenders to escrow premiums and fees for flood insurance for loans secured by residential improved real estate or mobile homes that are made, increased, extended or renewed after Jan. 1, 2016, unless the lender or the loan qualifies for a statutory exception. The proposal would also require lenders to offer borrowers of outstanding residential loans the option to escrow flood insurance premiums and fees. It would also eliminate a requirement to purchase flood insurance for a structure that is part of a residential property located in a flood zone if the structure is detached from the primary residential structure, and doesn't also serve as a residence. The proposal was issued by the Federal Reserve, Office of the Comptroller of the Currency, FDIC, National Credit Union Administration and Farm Credit Administration. The comment period will be open for 60 days.
In conclusion for Federal Issues portion of my report you can see that NAR is dealing with a large amount of both legislative and regulatory issues on behalf of our members. Our legislative portion of our Association is large and is only part of the total benefit package we offer.
I attended the 2014 NAR Convention in New Orleans from November 4th thru the 10th and I will try to hit some of the highlights of the convention in the following portion of my report.
On Thursday I attended the NAR Legal Seminar. This meeting is held along with Attorneys to discuss many of the current issues that the industry is facing. The main topics covered were:
Antitrust Compliance Program and Litigation Update
This part of the DOJ settlement and outlines potential trouble spots to avoid in the operation of local Boards.
Independent Contractor Status
This portion of the program was a good refresher on this issue. I am planning on putting together an article on this for our Brokers. Would make a good topic for Broker meeting.
Copyright Issues
Good information on the Safe Harbor provisions of the DMCA act and steps we need to address to ensure compliance on this issue.
Trademark and dotREALTOR
• .REALTOR domains will launch in phases as follows; Oct 23rd individual members on a first come first serve basis.
• First 500,000 NAR members free for 1 Year domain name.
• Next phases will include firms, Boards, and REALTOR owned MLS's
RESPA/TILA
My take on this is that we need to ensure we promote and schedule training classes on these changes before the August 1, 2015 date.
MLS and Professional Standards Updates
Four recommendations to be presented to the delegate body for a vote
• Amendment to NAR's IDX policy and rules REDUCING THE TIME TO REFRESH ALL MLS IDX DOWNLOADS AND DISPLAYS TO NOT LESS THAN 12 HRS.
• Amendment to NAR's IDX policy and rules to REQUIRE INCLUSION OF SOLD DATA IN IDX FEEDS UNLESS INFORMATION IS NOT PUBLICLY ACCESSIBLE
• Amendment to NAR's IDX policy and rules ALLOW MLS PARTICIPANTS TO COMINGLE IDX DATA FEEDS
• Amendment to NAR's IDX policy and rules 7.90 TO REQUIRE ADOPTION AND IMPLEMENTATION OF RETS WEB API BY JANUARY 1, 2016
API is short for Application Program Interface and describes a data transfer method that eliminates the need to copy listings between servers.
Core Standards Updates
Long session on this subject and I will save discussion at this time.
Legal Updates
The number one case discussed was the Ohio case Auer vs Paliath opinion of the Ohio Supreme Court.
I will close this report at this time and am available to answer questions on the above items and I will report further on the convention next month.
Respectfully Submitted,
David W Freitag, RCE