Housing has led the economy out of six of the last eight recessions. The weakness in housing is probably a significant factor in the lack of zest to what is being called an economic recovery. It just makes no sense to attack homeownership further. At a recent meeting, NAR President Ron Phipps made an excellent observation with regard to the mortgage finance system. He said, “We have already amputated the gangrenous arm in the mortgage system; why are they now insisting on giving it chemotherapy?” Much has been done to correct the issues in the mortgage finance system and the pendulum has already swung too far. Why are policy-makers pretending nothing has been done and seeking more legislation and regulation? Credit is already tight and making it tighter serves no useful purpose. With that in mind, NAR has been working assiduously on a number of fronts to fight back.
Qualified Residential Mortgage (QRM)
NAR assembled an enormous coalition (over 45 industry, consumer, and civil rights organizations) to fight mandatory 20% downpayments and other harmful aspects of the proposed QRM rule that have little or nothing to do with improving mortgage quality based on the data. The coalition produced a whitepaper making our case and shared it with Congress. This resulted in more than 300 members of the House of Representatives and more than 50 U.S. Senators signing a letter to the regulators insisting that their interpretation was not Congress’ intent. This is an unrivaled achievement and sends a strong signal to regulators that they got it wrong.
3% Cap on Affiliates in the Qualified Mortgage (QM) Rule
NAR has been working with industry partners and Congress to secure language ending the discrimination against real estate and mortgage affiliates in the QM rule. Those meetings have been very promising and we expect to see legislation fix the problem soon.
Home Warranty Guidance on RESPA
NAR and its home warranty industry partners are working to get home warranty out of RESPA. It is not a settlement service, it is not required by lenders, and it should not be governed by RESPA—it should be and already is governed by state consumer protection laws. NAR and our partners have received a commitment from key members of Congress to introduce legislation and NAR will be testifying at an upcoming hearing addressing this issue.
FHA and GSE Loan Limits
NAR conducted a “call for action,” mobilizing its one million members, to maintain the current loan limits and prevent a drastic reduction in loan limits for huge swaths of the country. NAR also conducted a July fly-in to visit Members of Congress on this issue. With Members of Congress on both sides of the aisle and the Administration desirous of reducing government involvement in the mortgage system, this will be an uphill climb but we continue to press.
Flood Insurance Renewal
NAR also conducted a “call for action” and fly-in to press Congress to renew the all-important flood insurance program. Properties in the flood plain cannot be mortgaged without flood insurance and, therefore, cannot be sold. With 98% of covered properties on inland rivers and lakes, this program should have wide support.
As you can see, progress is beginning on these fronts and others. However, nothing is a done deal and there are many uphill climbs ahead. I urge all of you to contact your Representatives and Senators and make your voices heard on these issues and other issues we care about. It can make all the difference.
Ken Trepeta is the director of Real Estate Services for the National Association of Realtors®.