Business Report
NAR Files Comments in FCC Net Neutrality Rulemaking Proceeding

On Thursday, January 14 NAR filed a comment letter with the Federal Communications Commission (FCC) supporting its proposed rule to codify network neutrality principles. Net Neutrality aims to ensure that internet service providers do not block, degrade or discriminate against online content, services or applications that might compete with them. Because the business of real estate is increasingly conducted online, NAR supports network neutrality principles as a way to ensure that future innovations in the industry are not impeded.

Click here to read the NAR comment Letter

Melanie Wyne 202-383-1234, Ken Wingert 202-383-1196

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House and Senate Leadership Continue Negotiations On the Terms of a Final Compromise Health Reform Bill

House and Senate leaders and their staffs continue to work on melding the House and Senate health reform bills approved late last year into one final compromise measure. A number of high profile issues still need to be resolved; these including (1) whether to include a single national Exchange (House) or a system of individual state-based Exchanges (Senate), (2) final thresholds for high cost health insurance plans subject to a proposed excise tax paid by insurers, (3) Medicaid eligibility income thresholds and (4) additional measures to improve and ensure affordabililty of required insurance coverages. While reports indicate that progress has been made, it is not clear when a final bill will be sent to the Congressional Budget Office (CBO) for scoring, i.e. an analysis of the proposed measure’s impact and cost. A final bill will not be released until an politically-viable CBO score is received. Any final bill must then be approved by both the House and Senate.

In a January 12, 2010 letter sent to House and Senate leaders, as well as the chairs and ranking members of each of the five House and Senate Committees with jurisdiction over health, NAR stressed the importance of improving the affordability of policies available thru the Exchange by providing (1) small non-profit employers with access to the same affordability credits available to small non-profit employers, (2) equitable payroll tax treatment of health insurance premiums for the self-employed and (3) a single national Exchange, in any final bill.

NAR’s letter and other background materials

Marcia Salkin 202-383-1092, Ken Wingert 202-383-1196, Scott Rinn 202-383-7508

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FED and FTC Jointly Issue Final Rules on Risk-Based Pricing under FACT Act

On January 15, 2010 the Federal Reserve Board and the Federal Trade Commission jointly issued new final rules to implement risk-based pricing provisions required under the Fair and Accurate Credit Transaction Act (FACT Act). The final rules “`generally require a ‘creditor’ to provide a risk-based pricing notice to a consumer when the creditor uses a consumer report to grant or extend credit to the consumer on material terms that are materially less favorable than the most favorable terms available to a substantial proportion of consumers from or through that creditor.” The new rules are effective on January 1, 2011.

Risk based pricing, FED/FTC FACT Act final rule

Jeff Lischer 202-383-1117, Scott Rinn 202-383-7508, Marcia Salkin 202-383-1092

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Conventional Residential Lending Report
Freddie Address REALTOR® Communication with Appraisers

In a letter to NAR dated January 14, 2010, Executive Vice President and Chief Credit Officer Raymond Romano reiterated that Realtors are permitted to communicate with appraisers. According to Freddie Mac, information provided by the Realtor must be verified by a non-interested third party but this may include MLS data or local tax data.

Mr. Romano also addressed NAR’s concern about appraisers lacking geographic competency. The letter emphasizes Freddie Mac’s Seller Servicer Guide, Chapter 44. The Guide reminds Sellers to be “particularly attentive to selecting an appraiser who is knowledgeable of the subject area when ordering appraisals.” The letter also states that all appraisers are bound by the Uniform Standards of Professional Appraisal Practice (USPAP), which includes geographic competency. Mr. Romano states that USPAP and the Freddie Mac Seller Guides apply to all appraisers, including those engaged by appraisal management companies.

Letter to NAR from Freddie Mac on Appraisal Concerns

Jeff Lischer 202-383-1117, Tony Hutchinson 202-383-1120

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Environment Report
EPA To Hold Listening Sessions on Wastewater Management Issues

The U.S. Environmental Protection Agency is hosting several Listening Sessions across the country to obtain stakeholder input on a new rulemaking aimed at reducing stormwater discharges from new development. According to the EPA, stormwater discharges from developed sites can negatively impact water quality through increases in stormwater volume and increased levels of pollution. To address this issue, EPA recently announced its plans to propose and take final action by November 2012 on a national stormwater rulemaking. These Listening Sessions are one of the first components of this regulatory process.

NAR members will testify at Listening Sessions in Denver, Dallas and Washington, DC to express support for clean water, but also voice concern regarding the danger of excessive regulation hindering the nascent housing recovery.

Russell Riggs 202-383-1259, Austin Perez 202-383-1046, Helen Devlin 202-383-7559

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Housing Report
VA Will Not Accept FHA Condominium Approval

Effective December 7, 2009, the US Department of Veterans Affairs (VA) will no longer accept HUD/FHA condominium project appraisals in lieu of VA project review. Condominiums previously accepted by VA, based upon HUD/FHA acceptance, will continue to be acceptable to VA. This policy appears to apply to all projects whether HUD (HRAP) or lender processed (DELRAP) approved.

VA Circular 26-09-19: Rescission of VA Acceptance of HUD/FHA Condominium Approvals
US Department of Veterans Affairs

Megan Booth 202-383-1222, Jerome Nagy 202-383-1233

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VA Announces HAMP Program Details

On January 8, 2010, the US Department of Veterans Affairs (VA) released Circular 26-10-2, which provides instructions for modifying VA loans through the Making Home Affordable Program. The two main features are the Home Affordable Refinance Program (HARP) and the Home Affordable Modification Program (HAMP).

VA expects servicers to exert all reasonable efforts to assist veteran borrowers in retaining ownership of their homes or mitigating losses when retention is not possible. Before considering VA HAMP, servicers must first evaluate defaulted mortgages for traditional loss mitigation actions including repayment plans, special forbearances, and traditional loan modifications. If the payments are affordable, then the traditional loss mitigation option will be used to help the veteran retain the home and avoid foreclosure. If none of the loss mitigation options provide an affordable payment, the servicer must evaluate the loan for a VA HAMP modification prior to deciding that the default is insoluble. VA expects servicers to complete all loss mitigation activities expeditiously, including those under review for HAMP modifications.

Circular 26-10-2: VA Making Home Affordable Program
US Department of Veterans Affairs

Megan Booth 202-383-1222, Jerome Nagy 202-383-1233

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VA Releases Circular On Impact of New RESPA Rules on VA Loan Fees and Charges

On January 7, 2010 the Veterans Benefits Administration released Circular 26-10-01 describing the impact of new Real Estate Settlement Procedures Act (RESPA) Rule on fees and charges for Department of Veterans Affairs loans. The circular provides guidance on permissible and impermissible fees for VA home loans. In addition, new required documentation is announced for lenders along with the elimination of a previously required disclosure statement.

Circular 26-10-01 RESPA impact on VA home loans
US Department of Veterans Affairs

Megan Booth 202-383-1222, Jerome Nagy 202-383-1233

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HUD Expands Waiver for Anti-Flipping Rule

The US Department of Housing and Urban Development (HUD) announced that it is temporarily expanding the property flipping waiver to include investors and entities that purchase foreclosures either singly or in bulk for resale. Under the waiver, homes that were foreclosed on and are being sold by the mortgagee or on its behalf may be purchased by FHA borrowers without regard to the 90-day seasoning period. NAR worked with the California Association of REALTORS® and FHA to expand the waiver.

HUD first announced the waiver on June 9, 2008, and the waiver was to be in effect for only one year. HUD exempted from the property flipping rules properties sold by HUD through its Real Estate Owned activities, new homes being sold by builders and properties being sold by relocation companies and the property owner’s employer as part of a job relocation. HUD later extended the waiver through May 10, 2010.

Jerome Nagy 202-383-1233, Megan Booth 202-383-1222

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FHA to Announce Significant Changes to Loan Programs

In October, the Federal Housing Administration (FHA) announced that its capital reserve fund had fallen below the congressionally mandated level of 2%. Although FHA has two reserves, the capital reserves and a cash reserve, with combined assets of $30.4 billion Congress and the Administration have called for changes to strengthen FHA.

FHA will announce major changes to ensure its long-term financial soundness. FHA is trying to balance three fundamental objectives: 1) financial soundness — 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 crafted an issue brief outlining the changes to FHA. FHA will be transformed over the next few years. The changes outlined in the briefing document are the beginning of the process with additional changes expected during the tenure of FHA Commissioner Dave Stevens.

FHA Regulatory Issues Brief
FAQ from FHA Commissioner Stevens

Jerome Nagy 202-383-1233, Megan Booth 202-383-1222