“If consumers are working in a one-stop service situation with a real estate firm, the assumption was made by CFPB that those consumers are likely paying more than they should in a real estate transaction,” Brown explains. “But that’s absolutely not the case. Real estate firms must provide the same excellent service in their affiliated businesses as they do in their real estate function if their customers are to be satisfied with the entire experience. Quite contrary to the intent of the law, now consumers are being limited, and perhaps forced to pay more, by not being able to use a broker’s one-stop service.”
Earlier this year, NAR hosted a panel to press the issue and invited CFPB Director Richard Cordray to participate. The event received major coverage, including airing on C-SPAN.
“There were many large brokers present, as well as a lot of press and regulators,” reports Polychron. “The purpose of the panel was to bring out in the open our feelings about the CFPB and the effects of the Dodd-Frank Act. We explained that in the bill, large financial institutions were being treated differently in terms of the 3 percent cap on fees. When you close a transaction, the large banks could charge virtually all they wanted. But when it came to our brokers who had their own mortgage companies, they had to abide by the cap. This ultimately hurts consumers because it narrows their choice.”
Also high on NAR’s advocacy agenda for brokers: fending off threats to tax policies that encourage real estate ownership, such as the Mortgage Interest Deduction (MID), deductibility of state and local taxes, and the commercial 1031 exchange.
Policies that sustain property ownership are part of the fabric of the nation, Brown says, and NAR strongly opposes any radical changes that would weaken the value of real property or discourage ownership.
“When people refer to 100-year-old policies as ‘tax loopholes,’ that concerns me,” says Brown. “America’s real estate tax policies have long encouraged the consumer to purchase real estate because the benefits derived from the purchase of real estate are profound and long lasting. No matter if one looks from an economic, a social, or a civic perspective, NAR’s advocacy for property ownership, whether that’s residential, commercial, or farm, is for the good of our country.”
“In most Western countries, given the high cost of housing, the government gives people either rent subsidies or a mortgage deduction to enable housing solutions, especially in the retirement years,” Brown says. “The American tradition of self-reliance, personal responsibility, and freedom to make your own choices would suggest MID is still the way forward.”
The Consumer Is the Ultimate Beneficiary
While NAR’s advocacy efforts reflect the concerns and goals of brokers and their agents, the ultimate beneficiary is the real estate consumer.
Supporting the consumer begins at the ground level for NAR. First and foremost, the association strives to ensure its members are as informed and skilled as possible in order to professionally guide consumers through the complicated real estate process.
“NAR’s numerous designation and certification programs help REALTORS® develop expertise in many areas that are tremendously beneficial to consumers,” says Brown. “When we bring the talent to the table, consumers realize a real estate transaction is not something they can do as successfully without a REALTOR® next to them.”
NAR is also steadfast in advocating for real estate consumers on several policy fronts. One example is the recently passed Homeowner Flood Insurance Affordability Act, a response to skyrocketing flood insurance premiums triggered by the Biggert-Waters reforms to the National Flood Insurance Program (NFIP). NAR strongly supported the legislation that was signed into law on March, 21, 2014. REALTORS® sent nearly 300,000 emails to Congress, calling for action on the extreme rate increases that affected millions of property owners.
“Because REALTORS® are on the ground, we quickly recognized the need for legislation to halt the unintended consequences of the increases. NAR was first on board to push for relief and get this bill passed,” says Polychron.
Preserving access to affordable mortgage products is another key priority for NAR on behalf of all consumers. REALTORS® have been staunch supporters of efforts to protect the government guarantee in the secondary mortgage market, which ensures the continued availability of safe, reliable mortgages such as 30- and 15-year fixed-rate loans.
While some members of Congress want to privatize the secondary market, NAR will continue to advocate for housing finance policy reforms that shield taxpayers from risk and still maintain a government backstop.