Legislative Corner: Washington D.C. Updates


Federal Housing Administration (FHA) Programs – House Subcommittee Passes FHA Bill
The Housing and Insurance Subcommittee of the House Financial Services Committee recently passed the FHA Emergency Fiscal Solvency Act (no bill number yet). NAR supported the measure which strengthens FHA’s financial solvency by barring unscrupulous lenders from participating in the program; allowing FHA to collect losses from lenders who made material errors in underwriting or committed fraud; and strengthens financial oversight and disclosure. The bill will also give FHA flexibility to increase premiums, if needed to restore reserve levels.


NAR was successful in removing provisions from an earlier draft that would have increased the minimum down payment requirement, eliminated the loan limit floor, and eliminated the cap on premium increases. The bill will next be considered by the full committee later this month.

HUD Removes Streamline Refinances from Lender Compare Ratio Calculation
Part of the Obama Administration’s announcement to help underwater homeowners includes the Streamline Refinance offered by FHA. The announcement allows FHA borrowers who are current on their mortgage to refinance into a new FHA loan to take advantage of today’s historically low interest rates without requiring additional underwriting. Some lenders have been reluctant to offer the Streamline Refinance product because of the additional risk on loans they may have not underwritten and the potential negative impact this has on their Compare Ratio. On Feb. 3, 2012, Acting FHA Commissioner Carol Galante announced that the Streamline Refinance will not be included in the lender’s compare ratio. The Compare ratio is the value that reveals the largest discrepancies between the lender’s default percentage and the default percentage to which it is being compared. The percentages being compared are the percentages of originations that first defaulted during a selected period. A higher ratio may indicate that a lender has an unusually high default percentage in comparison with that region or the lender’s surrounding area.


Money Laundering and Terrorist Financing – Final Anti-Money Laundering Rule for Non-bank Lenders and Originators Released
On Feb. 7, the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury released a final rule that subjects non-bank residential mortgage lenders and originators to certain anti-money laundering (AML) regulations already applicable to other types of financial institutions.


Importantly, FinCen has decided not to bring real estate agents and brokers under the rule, pending further study and analysis.


Under the new regulations, non-bank lenders and originators will be required to establish anti-money laundering programs and file suspicious activity reports (SARs). This final rule follows a proposed rule issued in December 2010. FinCEN noted that this requirement will close a regulatory gap, as well as mitigate some of the money laundering risks and vulnerabilities that have been exploited in the nonbank residential mortgage sector.

In its official comment letter in February of 2011, NAR supported “continued efforts to combat money laundering and the financing of terrorism.” At the same time NAR applauded FinCen’s decision to defer possible regulations for real estate agents and others involved in real estate settlement and closings until further research and analysis can be conducted on their business operations and vulnerabilities to money laundering. NAR cited the fact that in nearly all real estate transactions funds are actually transferred using services of several different regulated entities.  The final rule announced this week suggests that such research will occur and states that while the final rule maintains the deferral of coverage for real estate agents, the rule is written in such a way that other groups could be added if the research indicates a need and as a result NAR will continue to closely monitor this issue.

Mortgage Reform – Federal Government and 49 States Enter into $25 Billion Mortgage Servicing Settlement
On Thursday, Feb.  9, 2012, the federal government and 49 states entered into a settlement dealing with the mortgage servicing issues emanating from the foreclosure crisis of the last few years, including the “robo-signing” scandal. The $25 billion agreement with Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc. and Ally Financial Inc. (formerly GMAC) is designed to provide eligible homeowners with some relief and prevent future abuses. The settlement requires banks to do a number of things, including reducing the principal balance on many loans, refinancing loans for underwater borrowers, and paying billions of dollars to states and victims. The settlement will take some time to implement and people are cautioned that it will not be immediately known who is eligible for relief. The only state not to participate is Oklahoma.

REOs – Fannie Mae Announces New Online Offer System
On Feb.  7, 2012, Fannie Mae announced the rollout of its online offer system for offers made on Fannie Mae-owned properties listed on the company’s REO website, www.HomePath.com. Agents must register to submit offers, receive receipt confirmation and track the status of submitted offers through the HomePath website. The expansion of the programs comes after successful pilot testing in Orlando, San Diego, and Detroit. Agents can visit the Homepath website for updated information on the online offer system, along with webinars and other mini-tutorials.


Rural Housing Programs – USDA Unveils Rural Refinance Pilot
The U.S. Department of Agriculture’s (USDA) Rural Development announced a pilot refinance program for the Single Family Housing Guaranteed Loan Program (SFHGLP). The pilot allows borrowers in both the direct and guaranteed programs to refinance their programs with greater efficiency. Designed to help those in the hardest hit states, participants will be able to take advantage of historically low interest rates without the need for obtaining a new credit report, an appraisal, or a new property inspection. Borrowers must still meet income requirements, reside in an eligible rural area and have made timely mortgage payments for the 12 months prior to the refinance.

Sales Tax Fairness – NAR Supports Internet Sales Tax Fairness
On Feb. 1, 2012, NAR, along with dozens of other organizations, sent a letter to the U.S. Senate Finance Committee as well as a letter to the Chairman of the Committee (Sen. Baucus, D-MT) asking for support of S.1832, the Marketplace Fairness Act. The bill would level the playing field between brick-and-mortar and e-commerce retail businesses while assisting the states in collecting approximately $23 billion in uncollected state sales taxes that are currently due on Internet and other remote sales. The inability of state governments to collect taxes on items sold from Internet retailers acts as a subsidy to online retailers. Traditional brick-and-mortar businesses are hurt by this un-level playing field since in-store purchases are subject to sales taxes that increase the ultimate cost of goods to customers.


Short Sales – Treasury Department Holding Short Sale Outreach Event for Real Estate Professionals
Starting Feb. 22, 2012, the Treasury Department, in collaboration with NAR, will hold Making Home Affordable – Help for Homeowners outreach events across the country. These events will include sessions for real estate agents wanting to learn more about the Treasury Department’s Home Affordable Foreclosure Alternatives (HAFA) program. NAR urged the Treasury Department to engage real estate professionals at Making Home Affordable community outreach events to increase participation in the HAFA program and expedite short sales transactions. In addition to informational sessions for real estate professionals wanting to learn more about the program, agents and brokers will have the opportunity to work on solutions to difficult HAFA transactions with loan servicers face-to-face. The first events are scheduled for Miami on Feb. 22 and Tampa on Feb. 24. These will be followed by Sacramento and Los Angeles in March, Chicago and Indianapolis in April, Las Vegas and Phoenix in May, Atlanta and New Orleans in June, New York in July, and Maryland in August. For more information, please contact Eric Hagen at Eric.Hagen@Treasury.gov or 1-202-622-1168.


Section 8 Voucher Reform – House Subcommittee Passes Section 8 Reform Bill
Last week the Insurance and Housing Subcommittee of the House Financial Services Committee passed the Affordable Housing and Self-Sufficiency Improvement Act of 2012 (AHSSIA, no bill number). This bill seeks to reduce taxpayer costs within the Department of Housing and Urban Development’s Section 8 voucher program and facilitate greater private sector participation in the program. The bill includes provisions that will reduce administrative burdens and lower program costs, while increasing local flexibility. These changes (such as streamlining physical inspections; simplifying rent and income calculations; and reducing the burden of foreign language translations) will mean that more owners will want to participate in delivering affordable housing to those who need it.


NAR supported this bill along with other industry partners. The bill next moves to the full committee for consideration later this month.


Reason to Give to CORPAC
CORPAC serves as a consistent bipartisan entity that has provided REALTORS® a voice clearly heard on both Democratic and Republican sides of an issue.  We are well recognized for being one of the strongest grassroots organizations. For more information, please contact Gavin Blair, Columbus Board of REALTORS® Government Affairs Director, at GBlair@ColumbusRealtors.com or by phone at (614) 475-4000.