By Margaret Kelly
With the new year underway, there are a number of critical housing issues that could affect your clients and, in turn, your business. You’ll want to follow these developments closely to be a reliable resource for your clients. You may also want to be proactive and reach out to lawmakers to make your voice heard, especially if the National Association of REALTORS® issues a call to action for its members.
Here’s a brief look at some of the issues worth watching in 2014:
- National Flood Insurance Program – The Biggert-Waters Act of 2012 is facing major criticism, and lawmakers are seeking to postpone insurance premium increases. In fact, two bipartisan congressional measures (H.R. 3370 and S. 1610) would delay premium increases for four years. The increases would be a huge burden to homeowners in flood-prone areas.
- Lower FHA Loan Limits – The FHA is making changes that could affect higher-priced home sales in more than 300 counties where loan limit reductions could be greater than 10 percent. Some may see 50-percent cuts in the limits, according to a letter sent to HUD Secretary Shaun Donovan by the Mortgage Bankers Association and the National Association of REALTORS®.
- Increased Fees from Fannie and Freddie – The GSEs have proposed a new fee schedule that could raise mortgage costs for many borrowers, including those who don’t have at least 20 percent to put down on their home purchase or who don’t have high credit scores. Critics say this move could price some potential homebuyers, particularly lower-income families, out of the market.
- Uncertainty in Lending Policies – Big changes are on the horizon this year in terms of lending practices. For one, the qualified mortgage ability-to-repay rule (QM) is now in effect. A qualified mortgage cannot be made to a borrower whose total monthly debt payments, including the mortgage, would exceed 43 percent of their income. We hope the proposed qualified residential mortgage (QRM) rules align with QM to provide some much needed consistency. It’s also possible that Fannie and Freddie will see more lending changes with a new leader at the helm of the GSE regulator, FHFA.
Many industry analysts are already considering the implications of these and other issues, as they may all come to a head this year. It’s a lot to consider, but you should stay on top of these important discussions and be prepared to answer questions from current and potential clients. They’ll want to know how some of these items might impact their home purchase or sale, and they’ll look to you for expertise and guidance.
Also, consider sitting down with a lender you work with to better understand how new rules could impact potential buyers. Lending practices will undergo significant changes in 2014 that could impact your clients’ chances of achieving their real estate goals this year—and beyond.
Margaret Kelly (CRB) is chief executive officer of RE/MAX, LLC.
For more information, visit www.remax.com.