i. Rural Development Begins Obligating Section 502 Loans ii. NAR

Document Sample
i. Rural Development Begins Obligating Section 502 Loans ii. NAR Powered By Docstoc
					i.       Rural Development Begins Obligating Section                                     September 2010
         502 Loans
On September 8, 2010, the US Department of Agriculture's Rural                  i. Rural Development Begins Obligating
Development began obligating mortgages for the Section 502 Single                  Section 502 Loans
Family Housing Guaranteed Loan program. A new upfront fee of 3.5               ii. NAR Urges FHA to Retain Permitted Seller
percent will be charged to borrowers. The fee for refinances will                  Concessions
remain at .5 percent; however, this will increase to 2.25 percent on         iii. FHA Announces Condo Recertification
October 1, 2010. The agency's first priority will be to address a backlog          Process
of approximately $1.6 billion in conditional commitments issued since         iv. NAR Comments on HUD’s Required Use
May 26, 2010. Rural Development stated that sufficient funds are                   ANPR
available for all guarantees during the remainder of the fiscal year.          v. Frank-Bachus Letter Prods HUD to Issue
                                                                                   S.A.F.E. Act Final Rule and Clarify Other
ii.      NAR Urges FHA to Retain Permitted Seller                                  Issues
                                                                              vi. FHFA Establishes New Housing Goals for
         Concessions                                                               Fannie Mae and Freddie Mac
In an August 16, 2010, letter to Commissioner David H. Stevens, NAR          vii. FHA Announces Premium Changes
President Vicki Cox Golder said a reduction in permitted seller             viii. Minimum Credit Scores Announced for
concessions will have a detrimental effect on the recovery of the real             FHA Mortgages
estate industry and make it more difficult for buyers to purchase a           ix. Vince Malta Represents NAR at the White
home. The letter is NAR's comments on the "Federal Housing                         House’s Conference on the Future of
Administration Risk Management Initiatives: Reduction of Seller                    Housing Finance
Concessions and New Loan-to-Value and Credit Score Requirements"               x. NAR Submits Comments on Proposed
Federal Register Notice. FHA currently permits seller concessions of up            Regulations for Grandfathered Health
to 6 percent but the proposed rule would reduce seller concessions to              Plans
3 percent. In the letter Ms. Golder said "In states where closing costs       xi. NAR Represented on HHS Health Care
are high our members report that seller concessions are often higher               Implementation Panel
than 3 percent and are critical to allowing the borrowers to purchase        xii. NAR President to Participate in
the home without depleting all of their savings."                                  Treasury/HUD Sponosred Event in
NAR also calls on FHA to lower the proposed the credit floor exemption             Cleveland
for all FHA-insured borrowers seeking to refinance and to ensure that
borrowers with nontraditional credit scores are not unduly burdened manual underwriting. FHA proposes a temporary
exemption for refinances that involve a reduction of existing mortgage indebtedness but this excludes borrowers with
a credit score below 500. Many borrowers have had credit scores above 500 when they purchased their homes but
now have lower credit scores and they may still be good candidates for a refinance. Lastly, FHA proposes manual
underwriting requirements for borrowers with nontraditional credit histories. NAR believes that the Technology Open
to Approved Lenders (TOTAL) scorecard was created to consider unique factors presented by borrowers with
nontraditional credit histories.

iii.     FHA Announces Condo Recertification Process
Effective August 23, 2010, condominium projects approved for Federal Housing Administration (FHA) financing may
utilize the recertification process to renew FHA approval. Mortgagee Letter 2009-46 B, Condominium Approval
Process for Single Family Housing, provides basic information on the recertification process; however, details on the
process were not previously available.

As with the standard condominium project approval process, projects may be approved using the HUD Review and
Approval Process (HRAP) or Direct Endorsement Lender Review and Approval Process (DELRAP). If the project was

approved prior to January 1, 2000, full project approval is required. If the project was initially approved on or after
January 1, 2000, then the project is eligible for recertification process.

iv.      NAR Comments on HUD’s Required Use ANPR
On Wednesday, August 25, 2010, NAR submitted comments in response to HUD's Advanced Notice of Proposed
Rulemaking (ANPR) on "Required Use" under the Real Estate Settlement Procedures Act (RESPA). "Required Use" is
forbidden under RESPA in most circumstances. However, HUD had concerns about de facto "Required Use" where the
incentives to use an affiliated business were so great that consumers had little choice than to use the affiliate. HUD
initially issued new rules as part of the RESPA reform of 2008. However, the National Association of Homebuilders
successfully challenged the rule. HUD then withdrew the "Required Use" portion of its rule. This ANPR is an attempt to
achieve a compromise that satisfies the industry, consumers, and the courts.

In the initial rulemaking, NAR successfully argued that the de minimis incentives provided by real estate firms and
their affiliates does not constitute a "Required Use" situation. In our comments, we continue to advocate this position
and suggest that HUD draw the line on required use where the incentive exceeds the price of the affiliated service.

v.       Frank-Bachus Letter Prods HUD to Issue S.A.F.E. Act Final Rule and Clarify Other
In Late July 2010, House Financial Services Committee (HFSC) Chairman, Barney Frank, and Ranking Member, Spencer
Bachus, sent a joint letter to HUD Secretary Shaun Donovan addressing their concerns related to the implementation
of the Secure and Fair Enforcement for Mortgage Licensing (S.A.F.E.) Act, as well as to clarify other issues. Their
primary concern was that as of July 31st, 2010, states were required to have a system in place to license and register
loan originators, yet HUD had not published its final rule addressing the implementation of the S.A.F.E. Act. Therefore,
they strongly recommended that "HUD provide prompt and clear guidance for states where there is some debate or
uncertainty as to the need for the registration and licensing of certain individuals."

In the letter, the Chairman and Ranking Member mention that "several states allow for a de minimis standard that
exempts seller financed and/or personal investment loan originations where there are five or fewer loans annually."
Reps. Frank and Bachus indicate that, "[they] believe that these types of standards are consistent with S.A.F.E. Act
language that requires consideration of the commercial context in which the mortgage loan origination activities are
undertaken." They go further to indicate that such an exemption is in line with the federal banking agencies' draft final
rule implementing the S.A.F.E. Act, (74 FR 27385).

Now, this does not mean that any existing State's S.A.F.E. Act is immediately amended. The letter submitted by
Chairman Frank and Ranking Member Bachus are just an indication to HUD of Congress' intention. It remains up to
HUD what the final S.A.F.E. Rule will be. Once the final rule is published, individual states will need to review their
legislation and determine if any changes are necessary. Also, as a point of clarification, the Dodd-Frank Wall Street
Reform and Consumer Protection Act does not amend the S.A.F.E. Act. However, the seller financing exemption
established in Title XIV of that legislation is partially responsible for the Frank-Bachus letter to HUD.
NAR will continue to communicate to HUD the importance of publishing their final rules for the implementation of the
S.A.F.E. Act, as well as to remind them of Congress' intentions with regard to seller-financing as outlined in the Frank-
Bachus letter.

vi.      FHFA Establishes New Housing Goals for Fannie Mae and Freddie Mac
On September 2, 2010, the Federal Housing Finance Agency (FHFA) announced it would soon publish in the Federal
Register new housing goals for Fannie Mae and Freddie Mac for 2010 and 2011. The final rule includes three goals for
mortgages used to purchase single-family, owner-occupied homes: (1) 27 percent for low-income families, (2) 8
percent for very low-income families, and (3) a percentage to be set annually for families in areas with lower-income
populations, areas high concentrations of minority residents, and federally-declared disaster areas. There is also a 21
percent goal for mortgages used to refinance mortgages for single family, owner-occupied homes for low-income
families. The rule also includes multifamily mortgage goals for each enterprise and requires them to report on the
acquisition of mortgages involving low-income units in 5- to 50-unit multifamily properties. The enterprises may not
meet goals by purchasing private-label mortgage backed securities. FHFA emphasizes that the enterprises should not

"undertake economically adverse or high-risk activities" to achieve the goals, or use the conservatorship as an excuse
for missing goals.

vii.     FHA Announces Premium Changes
On September 1, 2010, the US Department of Housing and Urban Development (HUD) released Mortgagee Letter
2010-28, Changes to FHA Mortgage Insurance Premiums. HUD has the authority to increase annual premiums for
Federal Housing Administration (FHA)-insured mortgages to 1.55 percent. However, the agency is not utilizing its full
authority at this time. In this announcement, HUD is increasing the annual premium and lowering the upfront

For all traditional purchase and refinance products the upfront premium is 1 percent. On 30 year loans with a 95
percent loan-to-value (LTV) ratio or lower the annual premium is .85 percent. On the 30 year loans with an LTV lower
than 95 percent the premium is .90 percent. For all reverse mortgages, known as the Home Equity Conversion
Mortgage, the upfront premium is 2 percent and the annual premium is 1.25 percent.

viii.    Minimum Credit Scores Announced for FHA Mortgages
On September 3, 2010, the US Department of Housing and Urban Development (HUD) released Mortgagee Letter
2010-29, Minimum Credit Scores and Loan-to-Value Ratios. This is in accordance with Federal Register Notice FR-5404-
N-01, which proposes minimum credit scores and loan-to-value (LTV) ratios.

Effective October 4, 2010, borrowers with a credit score below 500 are not eligible for FHA-insured mortgage
financing. Borrowers with a credit score between 500 and 579 are limited to 90 percent LTV, which requires a 10
percent downpayment. Borrowers with a credit score of 580 or higher are eligible for maximum financing, which
requires a minimum 3.5 percent downpayment. Borrowers with nontraditional credit histories may be eligible for
maximum financing.

ix.      Vince Malta Represents NAR at the White House’s Conference on the Future of
         Housing Finance
On Tuesday, August 17, 2010, Vince Malta, NAR's Vice President for Government Affairs, represented NAR at the
"Conference on the Future of Housing Finance" sponsored by the White House. The conference featured panels
moderated by Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan, as well as break-out sessions that
focused on topics from the "Role of the Private Sector and the Government" in a reformed housing finance system to
"Managing the Process of Transition" to a new financial system.

Mr. Malta was assigned to participate in the break-out session titled, "Aligning Private Market Incentives in the
Housing Finance Chain", that was moderated by FHA Commissioner, Dave Stevens. During the session, Mr. Malta
shared NAR's recommendations regarding the future of the GSEs, Fannie Mae and Freddie Mac, as crafted by the GSE
Presidential Advisory Group, as well as emphasized the importance of maintaining the staple of the U.S. housing
finance system, the 30-year fixed rate mortgage. In recent weeks, long-term fixed rate mortgages have come under
increasing pressure from pundits who believe this product is partly the crux of the nation's housing finance problem.

According to Mr. Malta, "the Treasury meeting provided a good discussion, but offered no clear direction other than
there remains a need for government support of the housing finance sector for the foreseeable future." He goes
further and indicates, that "we [REALTORS®] are well positioned with our GSE Recommendations, but should be open
to revisions where needed to ensure the flow of capital to the marketplace."

The debate on the future of the nation's housing system is finally beginning to heat up. As it does, NAR will continue to
espouse the virtues of homeownership and of providing a mechanism to ensure that qualified buyers have access to
the capital they need to become homeowners.

x.       NAR Submits Comments on Proposed Regulations for Grandfathered Health Plans
On August 13, 2010, NAR submitted formal comments to the U.S. Department of Health and Human Services (HHS) in
response to an interim final rule implementing the provisions of the health care reform bill that allows policies in
effect on the date of enactment to be "grandfathered" and not subject to many of the bill's reforms. It is the

grandfather provisions that are the basis for the claim that "if you like your policy, you can keep it" heard throughout
the health reform debate. NAR took a strong position in favor of allowing the maximum flexibility for individual and
small group plans already in place to remain in place once health care reform is fully implemented. You can view NAR's
full comments on the NAR Health Reform webpage located at www.realtor.org/healthreform.

xi.        NAR Represented on HHS Health Care Implementation Panel
On Monday, August 30, 2010 REALTOR® Vince Malta, 2010 NAR Vice President for Government Affairs, participated in
a day-long forum at the U.S. Department of Health and Human Services (HHS) focused on the creation of the new
health insurance Exchanges. The Exchanges, created as part of the Patient Protection and Affordable Care Act that was
signed into law in March 2010, will serve as the entry point to health insurance markets serving small businesses and
individuals beginning in 2014.

Malta highlighted REALTORS®' concerns about the design of the Exchanges, which have been described by some as an
"Orbitz for health insurance." Malta noted that while the prospect of having a streamlined process to compare and
shop for different health plans has long been a goal of REALTORS®, care must be taken to ensure that the health
insurance policies offered through the Exchanges are affordable for the average REALTOR® and other small
businesses. "When it comes to real estate, the adage has always been location, location, location," said Malta. "When
it comes to health insurance coverage, the rule must be affordability, affordability, affordability."

NAR will be submitting formal comments to HHS on the design of the individual Exchanges and the small business
SHOP Exchange in the next month. NAR's comments will focus on benefits included in the health plans offered by the
Exchange, ease of Exchange use, the need for outreach to the small business community and the availability of tax
credits for the self-employed to make coverage more affordable. For more information on NAR's health reform
advocacy efforts and an extensive Q&A on the new health care law's ramifications for Realtors, please visit

xii.       NAR President Golder to Participate in Treasury/HUD Sponsored Event in Cleveland,
On September 27, 2010, NAR President Vicki Cox Golder will serve as a panelist at a symposium hosted by
Treasury/HUD in Cleveland, OH. The purpose of this Treasury/HUD event is to talk about the future of housing policy
and finance (the future of Fannie Mae and Freddie Mac.) Golder will join other industry and government officials on a
panel that will discuss the future of housing policy and also participate in a breakout session. Joining Golder at this
event will be FHA Commissioner Dave Stevens, Assistant Secretary of the Treasury for Financial Institutions Michael
Barr, Under Secretary of the Treasury for Domestic Finance Jeffrey Goldstein and Deputy Director of the National
Economic Council Diana Farrell. This is the first of three events like this Treasury and HUD will be hosting in the next
few weeks.

        Thursday, September 23                       Monday, October 4                         Monday, October 25

       August Existing-Home Sales                Pending Home Sales Index                September Existing-Home Sales

Real Estate Services Staff
Ken Trepeta – Director, ktrepeta@realtors.org
Kara Beigay – Communications Manager, kbeigay@realtors.org
Patricia Tarhon – Project Coordinator, ptarhon@realtors.org


Shared By: