Mortgage Debt Relief. Wassup?

Another question hanging about our heads this year-end involves extension of Mortgage Debt Forgiveness, that measure that allows lenders not to 1099 you for the mortgage debt relief sellers who have gone through a short sale or foreclosure receive.

At this point with all eyes focused on the fiscal cliff, it is unlikely anything specific to this measure will be passed this year. If there is a continuing resolution (kick the can down the road for 90 days and let the new Congress deal with it), debt forgiveness could/would likely be a part of that. Otherwise we just get to wait until after the first of the year. NAR is pushing very hard for this – it was the subject of a recent call to action for Realtors nationwide, and we are moderately optimistic it will be extended by the new congress but by no means assured. Join the club with all the other individuals, businesses, charities, military members and others awaiting their fate at the whim of the administration and the able hands of Congress.

I know this is very nerve wracking for people involved in short sales or foreclosures right now who don’t know if their phantom income (debt relief) will be taxed or not. Imagine shortselling your home at a loss of $100,000 to your lender. If you close prior to December 31st, you have no tax liability on that money. If you close after January 1, that $100,000 could be added to your regular income and taxed at your increased rate – a potential difference of $20,000+. And right now nobody knows what’s going to happen. Merry Christmas. I’ll provide any updates as they become available.

You can let Congress know how you feel about this by clicking here:

 Do No Harm To Housing


$40 political survival proposal – updated.

Many of you have commented on my earlier blog regarding the proposed $40 dues increase to fund the Realtor Political Survival Campaign. As you recall, that will be voted on in May at our annual meeting in DC. Yesterday we had a 1 1/2 hour webinar with NAR leadership discussing why the additional funding was necessary. At that time the possibility of putting the Public Awareness campaign on haitus for a couple years and using those funds for political purposes was presented as a sort of plan B. According to NAR stats however, that public awareness campaign is a great success – although most of you would just as soon it went away.

Anyway, for those of you opposed to an additional $40 hit on your dues, it appears your voices have been heard, Now you just need to make sure your local association and your NAR Directors are aware of your feelings.

From NAR President Ron Phipps:

To:        Local Board and State Association Presidents

This letter constitutes the official notice required by Article II, Section 10 of the Bylaws of the NATIONAL ASSOCIATION OF REALTORS® of a proposal to eliminate a previously approved membership assessment.

In May of 2010 the NAR Board of Directors approved an assessment of $35 per member for 2011-2013 to be used to continue the Public Awareness Campaign during those years.  The Finance Committee has now offered two alternative proposals regarding funding for the REALTOR® Party Political Survival Initiative.  One proposal eliminates the Public Awareness Campaign $35 Assessment for 2012 and 2013.  That proposal also increases NAR dues by $35 per year to fund the REALTOR® Party Political Survival Initiative.

The other proposal offered by the Finance Committee is being recommended by the NAR Executive Committee.  That proposal would increase NAR Dues by $40 per year to fund the REALTOR® Party Political Survival Initiative.  The Public Awareness Campaign $35 Assessment would remain in effect during 2012 and 2013.

Dues, membership assessments and amendments to membership assessments for the National Association are adopted by the Board of Directors of the National Association.  These issues will be coming before the Board of Directors at its meeting on May 14, 2011.

Sincerely,

Ron Phipps
2011 NAR President


Realtors! Please answer your Call for Action.

Stay Active. Answer the CFA!, Posted by Vince

Posted: 30 Mar 2011 07:18 AM PDT

Doctors consistently tell us that we can keep ourselves healthy if we stay active. Without consistent exercise, our health deteriorates.

It’s the same in politics. If REALTORS® continue to stay active on Capitol Hill, we can help bring our industry back to health and maintain its health. If our participation slides, our businesses slide.

We sent out a Call for Action on Monday to all REALTORS® on the mortgage interest deduction. It tells Congress not to trim the MID one bit. It also asks members of the House of Representatives to back House Resolution 25 which supports the MID in its current form.

We’ve already seen a strong participation rate on this one. But when we say we need “everyone” on board answering the Call for Action, we mean it. This is a serious issue that will affect homeowners, consumers, and every single REALTOR® in America.

There’s no association for home owners out there. There’s only us. NAR represents the 75 million home owners.

So it’s crucial that REALTORS® remain active and answer the CFA today. Now is your moment to let your member of Congress know what’s important to you.

If you need more convincing, check out the letter-to-the-editor on the MID in the Chicago Tribune from NAR’s Chief Economist. Do you think it’s a good time to ask homeowners to cough up another $3,050? I don’t either.

Thank you for your participation! I promise you, it’s making a big difference. — Vince Malta, 2011 NAR Vice President and Liaison to Government Affairs


Realtors® Oppose High Down Payment Requirement for Qualified Residential Mortgage Exemption

Washington, March 29, 2011

High down payment requirements being proposed by federal regulatory agencies as part of the upcoming rulemaking under the Dodd-Frank Wall Street Reform and Consumer Protection Act will unnecessarily burden homebuyers and significantly impede the economic and housing recovery, according to the National Association of Realtors®.

Six agencies, including the Department of Housing and Urban Development, Federal Deposit Insurance Corp., Federal Housing Finance Agency, Federal Reserve, Office of the Comptroller of the Currency, and the U.S. Securities and Exchange Commission, are developing a proposed risk retention regulation under the Dodd-Frank Act that requires lenders that securitize mortgage loans to retain 5 percent of the credit risk unless the mortgage is a qualified residential mortgage (QRM); FHA and VA mortgages would also be exempted. The purpose is to create strong incentives for responsible lending and borrowing.

“As the leading advocate for home ownership NAR supports a reasonable and affordable cash investment requirement coupled with quality credit standards, strong documentation and sound underwriting,” said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “A narrow definition of QRM, with an unnecessarily high down payment requirement, will increase the cost and reduce the availability of mortgage credit, significantly delaying a housing recovery.”

NAR believes that Congress intended to create a broad QRM exemption from the 5 percent risk retention requirement to include a wide variety of traditionally safe, well-underwritten products. Congress chose not to include a high down payment among the criteria it specified in the Dodd-Frank Act to guide the regulators in defining a QRM. Strong evidence shows that responsible lending standards and ensuring a borrower’s ability to repay have the greatest impact on reducing lender risk.

“We need to strike a balance between reducing investor risk and providing affordable mortgage credit. Better underwriting and credit quality standards have greatly reduced risk. Adding unnecessarily high minimum down payment requirements will only exclude hundreds of thousands of buyers from home ownership, despite their creditworthiness and proven ability to afford the monthly payment, because of the dramatic increase in the wealth required to purchase a home,” said Phipps.

The definition of QRM is important because it will determine the types of mortgages that will generally be available to borrowers in the future. Borrowers with less than 20 percent down could be forced to pay higher fees and interest rates, up to 3 percentage points more, for safe loans that otherwise do not meet too narrow QRM criteria.

NAR is concerned that a narrowly defined QRM will also require severe tightening of FHA eligibility requirements and higher FHA premiums to prevent huge increases in its already robust share of the market, adding additional roadblocks to sustainable home ownership.

“Saving the necessary down payment has always been the principal obstacle to buyers seeking to purchase their first home. Proposals requiring high down payments will only drive more borrowers to FHA, increase costs for borrowers by raising interest rates and fees, and effectively price many eligible borrowers out of the housing market,” said Phipps. “We strongly urge the regulators to consider the negative consequences of setting onerous limits on the availability of credit.”

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.


NAR Realtor Party Political Survival Initiative – A Penny for your Thoughts.

It’s entirely probable you’ve heard about the new NAR Realtor® Party Political Survival Initiative introduced at the AE Institute this past Sunday. While NAR has not made a broad announcement of the program yet, our AE’s are returning from their meetings this week with information on the initiative and word has been getting out from Inman, from the blogs, and of course on Realtor.org itself.

According to NAR, the initiative was launched partially in response to last years Supreme Court decision, the celebrated Citizens United Case. As forecast, that decision stands as a game changer in the lobbying world granting corporations the same rights as individuals to contribute to political campaigns. The price of doing business has just gone up and if you want to stay at the table with the serious players, you’d better step up your game.

That’s what NAR is proposing by instituting a mandatory $40 dues increase effective 2012. The issue will be voted on at NAR’s Mid-Year Legislative meetings in May.

The following is a post by NAR stating their reasons for launching the initiative. I would encourage you to read it. I have also included the slide show presented to our AE’s in Dallas this past Sunday. I have no doubt this will be hotly debated as we approach our May meetings and I encourage you to make you opinions knows to me, to your local associations as well as your state and NAR Directors. Make sure to note that 2/3 of the funds raised will be channeled back to your state and local associations for local purposes.


Why did NAR create the REALTOR® Party Political Survival Initiative?
•  In January of 2010, the Supreme Court ruled in the case of Citizens United vs. the Federal Election Commission.
•  The ruling states that corporate dollars—so-called soft dollars—can be used to fund independent expenditure campaigns.
•  This not only changes the way elections are financed at the national level, but it also overturns restrictions that allowed only hard dollars—those funds contributed for political purposes by individuals, rather than corporations—to be used in 23 states.
•  This means political fundraising as we have known it for the past 100 years just shifted dramatically.
•  Corporate funds/dues can now be used to shape opinions about candidates in ALL 50 states.
•  It is a game changer of gigantic proportions.
•  It is as if the goal posts on a 100 yard football field were expanded to now cover 140 yards.
•  In order for “The Voice for Real Estate” to have the impact it has had for the past 100 years in terms of political advocacy, the REALTOR® organization is stepping up its game.
•  No one has spoken with more power or as passionately about protecting private property rights and fighting for opening the door to the American Dream of Home Ownership than the REALTOR® Family.
•  To maintain and grow our political power in this new landscape, NAR launched the REALTOR® Party Political Survival Initiative.
•  The REALTOR® Party Political Survival Initiative did not just happen overnight.
•  It was the result of nearly a year of careful study and consideration.

What does the REALTOR® Party Political Survival Initiative mean for members?
•  The proposal is for a dedicated dues increase of $40.00.
•  The increase would take effect in the 2012 budget year.
•  Because it is “dedicated” to this initiative, it would be used exclusively to fund political advocacy efforts.
•  In the past, NAR has already contributed funds to this initiative out of its operating budget.
•  But to undertake the initiative at this level and give it a best chance for success, greater additional funding is needed.
•  The increased dollars will be dedicated solely to advocacy purposes as outlined by the Political Survival Initiative.
•  If this dues increase is approved, over 50% of NAR budget would be devoted to political advocacy, which consistently ranks among members as the #1 benefit they receive from NAR.

What are the benefits of the Political Survival Initiative?
•  The most powerful benefit is it will keep the REALTOR® organization as one of the most influential advocacy groups in America.
•  There are monumental issues coming down the pike that will affect members in their daily businesses, such as the future of mortgage finance and keeping housing affordable in America.
•  We must have the power to shape this pivotal moment for the American Dream of Home Ownership.
•  Most importantly, these dollars will be available to state associations and local boards.
•  2/3rds of the dollars raised will be returned back to states to be used in support of local candidates and issue campaigns, and for other political advocacy needs—to help shape the opinions of candidates on real estate-related issues as they work their way up as elected leaders.
•  It will combine NAR funds with state/local funds to increase our political power
•  It will create early relationships with state and local lawmakers/policymakers
•  It will shape the political make-up of state or local governing bodies.
•  NAR President Ron Phipps often comments that “now is our time.”
•  With this initiative, REALTORS® are seizing the moment for home ownership.
•  We are doing this NOT ONLY because of the Citizens United Supreme Court decision, but because our core competency is our grass roots advocacy; it’s where we need to be investing today so our future advocacy efforts will be successful tomorrow.
•  We need to be grooming our “REALTOR® Champions” at the state / local levels now, before some of them progress to become elected leaders at the federal level.
•  The political press in Washington has already noted the emerging clout of the REALTOR® Party.
•  A recent article in Politico said: “REALTORS®… are going to want to be politically effective, and a large measure of their influence is that they are present everywhere.”
•  Now is our time to seize the day.


2010 Recap Realtor Report

If you click on that little red Realtor Report just above the chart, you’ll get to a slightly larger version of the report which will be easier for your old eyes to read. You’re welcome.


NAR Pres. Elect Moe Veissi Talks Turkey at CAR Mid-Winter

Take-aways from our recent California Association of Realtors Mid-winter meetings.

From NAR President-elect Moe Veissi –

Six of the past eight recessions have ended due to increasing strength in the housing market. The other two were due to wars. That seems like an easy choice. We need to get behind housing. This battle against housing is counterproductive and the attack on the mortgage interest deduction is an attack on one of the basic foundations of the American Dream.

Similarly we should seek to preserve the basics of the GSE’s.They can certainly be improved upon but their services are vital to home buyers. They provide a foundation and critical financial instruments that allow many people to buy homes that otherwise would not be able to. Keep in mind that during the height of the meltdown, Fannie and Freddie had take-back rates of about 3 1/2% while at the same time banks like B of A and Wells were taking back 15% to 18%.

You hear people today who don’t know the history, who don’t know any better – oh, Canada doesn’t have a 30 year fixed mortgage and their housing market is great. Oh, Europe doesn’t have a Fannie/Freddie and their market is great. The fact is, their markets don’t compare with ours. Never have. Nobody does it like us. These other countries are trying to figure out how to do it like we do and we’re trying to figure out how to kill our system and adopt the systems others are trying to get rid of. So why would we try to emulate markets with which we have nothing in common? Why would we destroy 100 years of success to become more like an inferior market? It just doesn’t make sense.

These are not short term problems we are dealing with and they will keep rearing their heads. We have saddled ourselves with tremendous debt so attacks on basic and short term sources of tax revenue will be ongoing. Don’t believe them when they tell you – oh, we aren’t going to take it all away. Just this little bit. Yeah, just that little bit this time. Then  a little more, then a little more, you know how that works.

Realtors just don’t realize the power we have in our communities and our country. But we’ve got to stand up and be counted if we want to be heard. We need to present Congress with 1/2 million Realtor calls on issues instead of 100,000. When we can consistently deliver 1/2 million member voices or more to our Congressional leaders, they will know we mean business.


Realtors Efforts Could Be Next Wave in Fundraising

Great article in the Politico yesterday entitled Realtors’ effort could be next wave in fundraising’

A year ago this week, the Supreme Court freed corporate America to fully engage in campaigns, prompting dire predictions that Big Oil, Wal-Mart or even foreign firms would suddenly flood the political marketplace.

That didn’t happen. But at least one industry sector quietly and without controversy became a major player in the 2010 midterms – in a way that some campaign-finance experts believe could be the wave of the future for 2012 and beyond.

The model: the “Realtors’ Party,” the moniker the National Association of Realtors gave to its $6.5 million election effort, which backed a bipartisan slate of 103 pro-Realtor candidates and saw election of 66 of them.

“The business community is figuring out they need to be their own best advocate,” said Greg Casey, president of the Business Industry Political Action Committee, which helps companies set up voter registration and education programs aimed at their employees. “There is a lot going on. In some cases, the Realtors could be the model.”

Read more:

politico

party

party


Lawrence Yun responds to MID criticism.

January 2, 2011

It’s a common misperception that the mortgage interest deduction benefits primarily the wealthy, as argued in the Washington Post’s January 1 editorial, “Trim the Excessive Tax Subsidy for Real Estate.”

In fact, the MID actually benefits primarily middle- and lower income families. Sixty five percent of families who claim the MID earn less than $100,000 per year, and 91 percent who claim the benefit earn less than $200,000 per year. As a percentage of income, the biggest MID beneficiaries are younger middle-class families.

The MID helps many families become home owners by reducing the carrying costs of owning a home. The ability to deduct the interest paid on a mortgage can mean significant savings at tax time. For example, a family who bought a home last year with a $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 5 percent, could save nearly $3,500 in federal taxes when they file next year. That’s real money they can use to pay down other debts, save for their children’s college education, or put away for retirement.

It’s no wonder, then, that most Americans support the MID. In fact, in a recent NAR survey by Harris Interactive of 3,000 home owners and renters, nearly three-fourths of home owners and two-thirds of renters said the MID was extremely or very important to them.

Unlike the very rich, much of whose wealth is tied to the stock market, the wealth of most middle-class American families is connected to their home. Millions of these Americans bought their homes with the understanding that mortgage interest is tax-deductible, and many of them have steadily paid down their mortgages to build equity in their home. Eliminating or reducing the MID would destroy part of this hard-earned equity for all home owners, independent of their tax filing status.

Furthermore, we also need to be mindful that home owners already pay 80 percent to 90 percent of U.S. federal income tax, and this share could rise to 95 percent if the MID is eliminated. Proposals that would remove certain tax benefits in return for lower tax rates just may hold for one or two terms of Congress before the tax rates are changed again. Americans are not naïve; they understand the nature of Washington politics.

For people who don’t have hundreds of thousands of dollars in savings to buy a home outright, tax benefits like the MID help them begin building their futures through home ownership. In a time when the middle class faces increased economic pressures, you can be sure that the National Association of Realtors® will remain actively engaged to ensure that hard-working, home-owning families continue to receive this important benefit.

NAR Chief Economist Lawrence Yun


2010 NAR Public Policy Accomplishments

Throughout 2010, NAR made significant progress educating Congress and the Obama Administration that a stable and sustainable housing market is the primary building block for any economic recovery. NAR had a series of successes in the regulatory and legislative fields, some of which are highlighted below.

As we look ahead to 2011, NAR will continue to advocate policy initiatives that benefit REALTORS® and consumers in the residential and commercial real estate industry.

PROTECTING REALTORS®’ BUSINESS INTERESTS AND ACTIVITIES
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.

Me etings with 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.

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.

SUSTAINING HOUSING OPPORTUNITIES
First-Time Homebuyer Tax Credit – In November 2009, the $8,000 credit was again extended for purchasers through April 30, 2010. Those under contract by April 30 retained eligibility for the credit, so long as the transaction closed before July 1, 2010. An additional $6,500 credit was created for current homeowners purchasing a new or existing home between November 7, 2009 and April 30, 2010. These buyers were also subjected to the July 1, 2010 settlement requirement. In June 2010, NAR noticed that many purchasers who had signed contracts on or before April 30 were unable to close their transactions, particularly in short sales. At NAR’s urging, Congress extended the closing date requirement through September 30, 2010.

Protecting the Mortgage Interest Deduction – The Administration’s proposed budgets for Fiscal Years 2010 and 2011 included a recommendation that health insurance reform be “paid for” by limiting the value of the mortgage interest deduction (MID) and other itemized deductions for upper income taxpayers. The limitation proposal was based on an individual’s tax bracket. Itemized deductions for individuals in tax brackets above 28% would have not have received the value of their higher tax brackets. Rather, the “value” of itemized deductions would have been limited to 28 cents on the dollar, rather than the 33 cents or 35 cents to which they would have otherwise been entitled. NAR aggressively and successfully fought off changes to the MID through grassroots, advertising and similar advocacy tools.

FHA and GSE Loan Limits – NAR successfully advocated for legislation to once again extend the temporary higher loan limits for FHA and the GSEs in both 2009 and 2010. Had the limits expired, NAR estimates that more than 612 counties in 40 states and the District of Columbia would be negatively impacted, with an average decline in loan limits of more than $50,000. The current limits (at the greater of $271,050 [for FHA] and $417,000 [for the GSEs] or 125% of local area median up to $729,750) are now in place through September 30, 2011.

SUSTAINING COMMERCIAL REAL ESTATE OPPORTUNITIES
Small Business Lending Fund – On September 27, 2010, the Small Business Jobs and Credit Act of 2010 (H.R. 5297) was signed into law. Under this bill, which NAR supported, the U.S. Treasury is authorized to lend up to $30 billion to interested community banks to further expand lending to small businesses. As an incentive for community banks to participate and increase small business lending, participating banks’ interest rates will be adjusted relative to the amount of their small business lending activity. It is estimated that community banks could use the $30 billion lending fund to leverage up to $300 billion in new loans to small businesses. Additionally, NAR successfully worked to include provisions in the legislation that enhance Small Business Administration (SBA) programs and provide $12 billion in tax relief for commercial real estate practitioners and small businesses.

ELIMINATING BARRIERS TO CREDIT
Flood Insurance – NAR secured a full one-year extension through September 2011 of National Flood Insurance Program (NFIP) authority, after supporting legislation, which twice broke congressional stalemates that led to multi-week shutdowns of the program. Without the program, thousands of property owners in tens of thousands of communities across the U.S. would not have been able to obtain the insurance necessary for them to obtain a mortgage in federal-designated floodplains.

Development of NAR Credit Policy – The Conventional Finance and Lending Committee proposed a NAR Credit Policy for consideration by the Board of Directors in November 2010 which was approved. The new policy calls for the lending industry to reassess and amend its credit policies to increase mortgage liquidity for qualified home buyers, including low and moderate-income families and first-time home buyers. The policy also includes specific recommendations.

Appraisal Reform – On July 21, 2010, the President signed into law the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act. The legislation includes the first major appraisal reforms in more than a generation. NAR worked with Congress on this legislation, which regulates appraisal management companies (AMCs), establishes new appraisal independence standards, and regulates automated valuation models (AVMs) and broker price opinions (BPOs). The legislation also sunsets the Home Valuation Code of Conduct (HVCC). NAR is currently working with the Federal Reserve on the implementation of regulations related to appraisal independence, which must be implemented within 90 days of enactment of the legislation.