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Archive for March 11th, 2008

Conventional Residential Lending Report

NAR Testifies: Permanently Increase the GSE Conforming Loan Limits
On March 6, 2008, Vince Malta, Chair, NAR Public Policy Coordinating Committee and 2006 President of the California Association of REALTORS testified before the Senate Banking Committee on legislative proposals to reform the regulation of Fannie Mae and Freddie Mac. In his opening remarks, Chairman Dodd (D-CT) reiterated his commitment to passing GSE reform legislation that establishes a strong, single regulator for Fannie Mae and Freddie Mac with authority over safety and soundness and mission and with the power to set capital commensurate with risk. Chairman Dodd also indicated that he believes legislation should include a strengthened commitment to housing affordability—for low-income families as well as middle-class families—by the GSEs.

NAR has long-supported GSE reform, and has led the support for increasing the conforming loan limits. In his testimony, Mr. Malta urged the Senate to increase the national conforming loan limit to no less than $625,500 and to make the conforming loan limit increase for high cost areas, as provided in the economic stimulus legislation, permanent.

Also testifying at the hearing were representatives from the Government Accountability Office, National Association of Home Builders, Mortgage Bankers Association, Low Income Investment Fund.

NAR Testimony >
Housing Issues Continue to Dominate Tax Agenda
Following enactment of the first round of economic stimulus legislation (the $600 rebate and 50% bonus depreciation package recently enacted), Senate Majority Leader Reid (D-NV) introduced a second stimulus package directed specifically toward housing issues. That package contains provisions that the Senate had approved earlier, but that were not included in the final stimulus package. One important tax provision is intended to help homeowners stay in their homes. It would allow state housing agencies to issue additional mortgage revenue bonds and to use the proceeds from those bonds to assist eligible homeowners refinance subprime mortgages. A second provision would allow some taxpayers with losses to use the net operating loss carryback benefits for 5 years rather than the two years of current law.

The legislation was called up for Senate debate on February 28. Efforts to begin debate failed, however, on a very close procedural vote. Significant controversy related to a non-tax bankruptcy provision in the package doomed the package. It is expected that the Senate Finance Committee will make an effort to craft yet another tax-based housing package.
The Senate Finance Committee held a hearing on real-estate related issues, also on February 28. The witnesses were economists and executives of large commercial real estate development companies. Much of the questioning of the witnesses revolved around a proposed tax credit for purchases of homes. Senate Johnny Isakson (R-GA) has offered a bill that would allow a $15,000 tax credit to be taken over 3 years ($5,000 a year) for the purchase of a distressed property or a newly-constructed unoccupied residence. The credit would be available for principals residences only.

It is not yet known if the Isakson tax credit will be embraced. While it does have one Democratic cosponsor, the credit has 22 Republican sponsors and is also the centerpiece of a large Republican proposal. The Senate Finance Committee generally operates on a bipartisan basis. Nonetheless, the idea of a credit is still under consideration, though such a credit may be structured differently from the Isakson bill. Senate timing, however, is uncertain.
Housing Report
Fannie Mae and Freddie Mac Reach Deal on Appraisals with NY Attorney General
On March 3, 2008, government sponsored enterprises (GSE), Fannie Mae and Freddie Mac, reached an agreement with New York State Attorney General Andrew M. Cuomo that will help eliminate conflicts of interest on mortgage appraisals. According to the agreement, the GSEs will no longer purchase mortgages from lenders that utilize internal appraisers. The Home Valuation Protection Code will be implemented establishing standards on compensation and appraiser independence. A clearinghouse of appraiser information called the Independent Valuation Protection Institute will be created, with a separate board of directors, to monitor complaints from appraisers and consumers. All lenders will be required to provide post-purchase copies of appraisal documents to the clearinghouse. The Office of Federal Housing Enterprise Oversight and the Office of the Comptroller of the Currency were involved in the negotiations.

NAR Cuomo-GSE Update and FAQ >
NYS Attorney General Press Release >
Freddie Mac Press Release >
Fannie Mae Press Release >
OFHEO Press Release >
Court Rules Against HUD on Seller-Funded Downpayment Assistance Programs
On February 29, 2008, a federal court in California ruled against the US Department of Housing and Urban Development (HUD) on seller funded downpayment assistance programs. The Nehemiah Corporation and AmericaDream, Inc. both filed suit against HUD challenging the merits of the rule and seeking an injunction blocking its implementation. The court concluded that HUD’s regulation is invalid and that HUD violated federal law by failing to explain why it reversed its favorable stance on downpayment assistance and by failing to consider reasonable alternatives to the regulation. A ruling from the US District Court for the District of Columbia is expected shortly.

In October 2007, HUD published a final rule on Standards for Mortgagor’s Investment in Mortgaged Property that establishes that a prohibited source of downpayment assistance is a payment that consists, in whole in or in part, of funds provided by the seller or any entity that financially benefits from the transaction. Certain non-profits have raised concern because they were taking contributions from property sellers, subtracting a fee, and then granting the remaining money to buyers of the same property. In essence these non-profits created a “seller-funded” downpayment program, which NAR believes can result in home price inflation and risks for increased delinquency and foreclosure. In an effort to preserve qualified downpayment programs, NAR strongly urged HUD to construe the limits on non-profit downpayment assistance as narrowly as possible.

NAR supports downpayment assistance programs to help borrowers purchase a home. Downpayment programs take many different forms. For example, NAR has been a strong supporter of the American Dream Downpayment Initiative (ADDI). Other forms of downpayment assistance permitted with this ruling include assistance from family members, the borrower’s employer, state or local governments, and charitable organizations that do not rely on a party with a financial interest in the transaction.

HUD Final Rule: Standards for Mortgagor’s Investment in Mortgaged Property >
NAR Comment Letter to HUD on Seller-Funded Downpayment Assistance >
Higher FHA and GSE Loan Limits Published
On March 6, 2008, HUD published the new loan limits for FHA and Fannie Mae/Freddie Mac (the government sponsored entities, or GSEs). These new limits were required by the Economic Stimulus Act, signed by President Bush on February 13, 2008.

The new loan limits for FHA and Fannie Mae and Freddie Mac are now calculated at 125 percent of the HUD published median area prices, with a floor of $271,050 for FHA and a floor of $417,000 for the GSEs, not to exceed $729,750. The loan limits are effective through December 31, 2008.

NAR research has indicated that increasing the FHA loan limits will help an additional 138,000 Americans achieve the dream of home ownership and will allow nearly 200,000 homeowners to refinance and potentially keep their home. In addition, NAR believes that increasing the loan limits for Fannie Mae and Freddie Mac will bolster the housing finance market, which continues to be severely stressed, by providing an immediate infusion of much needed liquidity to the nation’s mortgage market. An economic impact study conducted by NAR in January 2008 estimated that increasing the GSEs’ conforming loan limits would result in as many as 500,000 refinanced loans and could help reduce foreclosures by as much as 210,000. In addition, over 300,000 additional home sales could be generated, housing inventory would be reduced, and home prices would be strengthened by two to three percent. To find out the FHA and GSE loan limits for your community and other information about these important increases, visit NAR’s website at www.realtor.org/fha.

NAR’s website on the new FHA and GSE loan limits, with links for looking up limits in your area >

Posted by admin on March 11, 2008 at 7:16 am under Uncategorized.
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GOVERNMNET ANNOUNCES CONFORMING LOAN LIMIT INCREASES
The Office of Federal Housing Enterprise Oversight (OFHEO) recently announced it has temporarily increased limits on jumbo loans offered by government-sponsored lenders Fannie Mae and Freddie Mac from $417,000 to as high as $729,750 in fourteen counties for loans originated between July 1, 2007 and Dec. 31, 2008. Fannie and Freddie are reported to be working out new underwriting standards and expect to begin offering the new loans soon.

Also, the government raised the conforming loan limit for mortgages guaranteed by the Federal Housing Administration, and has begun offering the maximum limit of $729,750 for 14 California counties, up from $362,790, for loans originated between now and Dec. 31, 2008.

The Fed’s economic stimulus package approved earlier this year called for the temporary increases on conforming loans to allow troubled borrowers to refinance out of sub-prime loans, and make it easier for many new buyers to qualify for mortgages in high-cost areas, particularly in California where they remain among the highest in the nation.

To view a list of the new FHA Mortgage Limits by county, go to https://entp.hud.gov/idapp/html/hicost1.cfmFor a list of the proposed loan limit changes for Fannie Mae and Freddie Mac, go to http://www.ofheo.gov/media/hpi/AREA_LIST.pdf

REALTORS® DEFEAT POINT-OF-SALE STOVE RETROFIT IN SOUTH COAST AIR DISTRICT
Thanks to aggressive and persistent monitoring by the REALTORS® Committee on the Air Quality Management Plan, the Southern California Air Quality Management District (SCAQMD) has dropped a proposal to retrofit outdated wood-burning stoves and fireplaces at the point-of-sale. On Friday, March 7th, the SCAQMD adopted Rule 445 regulating wood-burning devices, such as fireplaces and wood stoves in homes throughout the South Coast Air Basin. Foremost among REALTOR® concerns, the final rule does not include any form of point of sale enforcement. Representatives of a number of environmental groups did call for existing homes to cease burning wood and to have their fireplaces retrofitted with gas or other low emission devices, but the Board did not entertain any related amendments to the final draft rule. District staff pointed to their $1.5 million gas log incentive program and public outreach campaign as ways to help individual basin residents install cleaner devices in their home voluntarily.

SOUTHERN CALIFORNIA ASSOCIATION OF GOVERNMENTS’ EIGHTH ANNUAL REGIONAL HOUSING SUMMIT
SCAG invites you to attend its Eighth Annual Regional Housing Summit on Wednesday, May 21st, at the Mission Inn in Riverside. This year’s Summit theme, The Reality of Housing Marketing Uncertainty: Navigating the Course, will discuss the coming update of local housing elements, the impact of the mortgage lending crisis on local government, and the efforts to navigate through this difficult housing market period. This year, keynote speakers are Lynn Jacobs, Director, State Department of Housing and Community Development, and Lawrence Parks, Senior Vice President, Federal Home Loan Bank of San Francisco.

The Summit will include the 2nd Annual Compass Blueprint Recognition Awards Luncheon. The Awards program will feature plans and projects that demonstrate excellence, innovation, and work towards improving the mobility, prosperity, livability, and sustainability of our region.

Seating at this event is very limited. To register or for more information, please visit the SCAG website.

Posted by admin on March 11, 2008 at 7:09 am under Uncategorized.
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Member Legal Services has added three new cases to the Real Estate Brokerage Cases of Interest page on C.A.R. Online, Michel v. Palos Verdes Network Group, Inc. (2007), Nguyen v. Tran (2007), and Horning v. Shilberg (2005).  Michel deals with the fiduciary duty of a buyer’s broker; Nguyen discusses the C.A.R. arbitration paragraph when a buyer’s broker wants to compel arbitration against a buyer and the listing brokers; and Horning addresses a claim for commission when a real estate broker represents himself as the buyer, among other issues.  There is a summary of each case as well as a link to the actual text of the case. To find the Real Estate Cases navigation tab, first go to Legal Section at http://legal.car.org and then go to the Real Estate Law navigation tab and follow the arrow to the right.  Please contact me if you have any questions or comments. 

Posted by admin on March 11, 2008 at 7:06 am under Uncategorized.
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