Homeowners- Your most important constituents A 2006 Issue Guide for Federal and State Policymakers Presented on behalf of the nation’s 75 million homeowners by the American Homeowners Grassroots Alliance Who Are the Nation's Homeowners? Home ownership is the most important source of saving for most Americans and contributes to our nation’s social stability. Among the largest and most diverse U.S. population segments, the nation’s 75 million homeowners are the largest single identifiable U.S. voting block. In a national survey just prior to the 2000 elections, 91% of homeowners classified themselves as very likely to vote (second only to retirees among major population segments). Most homeowners are politically moderate; 23% are independents and the remainder is split evenly between the two major political parties. The American Homeowners Grassroots Alliance (AHGA) seeks to reflect that philosophical balance in the development of its policy and execution of its advocacy programs. Public policy on a wide range of issues has a significant impact on homeowners and home ownership. They include many issues directly related to home ownership as well as other major policy issues that have a substantial impact on the pocketbook or lifestyle of homeowners. Housing is the single greatest monthly expense for most homeowners and requires most to exercise financial prudence with their remaining discretionary spending. Therefore any policy that substantially impacts the cost and quality of living inevitably affects most homeowners. This includes health care, trade, education, tax, environmental policy, and other issues. The Alliance conducts issue analysis on proposed policies from the economic perspective of the average homeowner and presents the findings to policy makers, homeowners and the media in a concise and understandable fashion. The policy initiatives of AHGA are complemented by the consumer education programs of the American Homeowners Foundation (AHF). Established in 1984, AHF is an independent national education and research organization providing homeowners objective guidance and tools to assist them in home buying, selling, remodeling, financing and other major home-related decisions. More information about AHF and AHGA is at www.AmericanHomeowners.org. We would appreciate your comments and recommendations on current positions and potential new AHGA policy positions. American Homeowners’ 2006 Issue Priorities 1. Budget and the Economy Mortgage and consumer interest rates have a major impact on homeowners. Deficit financing by the federal, state and local governments competes for a finite source of funds and drives up interest rates for homeowners and other consumers. Governments should operate with a balanced budget. All programs and tax cuts should be subject to pay as you go rules and budget caps. No program, entitlement, or tax deduction should be exempt from scrutiny as a source of cuts in order to fund more deserving uses, and those who can more readily share the burden should be expected to do so. 2. Consumer Protection Sharing of sensitive financial and other personal information should be subject to an explicit opt-out system. Legislation to provide stronger consumer protection against identity theft and Internet fraud should be enacted. Legislation or regulations expanding the authority of independent directors and audit committees and ending stock analysts' conflict of interest should be enacted or promulgated. The consumer protection principles of the Consumer Federation of America should be reflected in all legislation 3. Education Education is critical to our nation’s future. While many factors influence the decline in U.S. student performance compared to students in other countries, we must improve U.S. K-12 education. Educational budgets must be increased so that teacher salaries can be increased to draw better qualified teachers and more teachers can be hired to reduce class sizes and allow more attention to students in need. The “No Child Left Behind Act” must be fully funded in order for students and society to benefit from strong systems of accountability based upon student performance, increased local control and flexibility, and the option for parents of children from disadvantaged backgrounds to participate in public school choice programs or obtain supplemental services such as tutoring. 4. Energy and the Environment Our nation must develop a balanced and comprehensive energy and environmental policy. The policy must emphasize energy conservation through education and include market- based conservation incentives. Government-funded energy research, aimed both at developing new energy technologies and reducing the environmental impact of existing energy sources, must also be expanded. The hydrocarbon based energy sources whose emissions are most adversely affecting public health and the global environment must be reduced by these steps and replacement with less harmful sources such as nuclear. Tax credits to encourage higher standards of energy efficiency in new home construction and remodeling, and the purchase of hybrid vehicles and other energy efficient products should be made permanent. There should be an increase in funds earmarked for home weatherization for low-income homeowners, and the program should be expanded to include active and passive energy systems. Federal funding for research into energy conservation and renewable energy technologies for home, consumer, automotive, and industrial uses should be expanded. Laws to encourage greater use of public transportation and car-pooling should be expanded. Improved incentives for business use of the home and health care insurance deductions would promote telecommuting and home-based businesses. 5. Healthcare Escalating health care costs have caused massive changes in the nation’s health care system over the last two decades. Market forces alone may not always assure access to affordable quality healthcare. Governments must adapt to the ongoing changes in the healthcare marketplace, interceding with appropriate policies where necessary to assure that all consumers may receive affordable quality healthcare. As new programs, such as the Medicare prescription drug legislation are implemented, they should be monitored and adjusted if necessary. Continued efforts to contain healthcare costs through techniques such as allowing the importation of prescription drugs from other nation’s with demonstrated safe consumer drug track records, facilitating the growth of telemedicine, or allowing association-sponsored health care plans containing appropriate minimum areas and levels of coverage should be implemented. 6. Housing and Real Estate Home equity is the single largest savings vehicle and source for retirement security for most homeowners. Programs that help families achieve the dream of home ownership can be the most cost effective long term policy tools to help reduce the ranks of the working poor, especially if combined with improvements in public education. (See “Tax” for additional proposals related to housing policy) Federal housing programs that help qualified low-income families accumulate the down payment to purchase a home should be strengthened. Congress should extend the Work Opportunity Tax Credit and Welfare-To-Work tax incentives to help the unemployed and economically disadvantaged on the road to home ownership. A national housing trust fund should be established to build rental housing for the lowest income families. The use of eminent domain procedures should be limited to acquisition of property for public use and not be allowed as a tool for commercial real estate developers to seize. Title insurance companies should be required to provide substantial discounts on title insurance for refinanced loans under 10 years old when the owners of the property have not changed. Mortgage lender commissions on reissued title insurance should be disclosed on HUD-1 statements and capped at 20%. State real estate laws that would allow a real estate broker to represent both a buyer and a seller simultaneously (i.e. dual agency) should be repealed at the federal or state level. State laws requiring minimum levels of service or prohibiting rebates should be repealed. State laws should be enacted (or updated) to require all disclosures to be made at the first physical meeting, with consumers, and expanded to include the identification of all services provided. Educational and continuing education standards for brokers and agents should be increased. Real estate trade associations should not advocate state laws that would violate antitrust laws were those rules created by real estate associations or state commissions. 7. International Trade Homeowners and other consumers worldwide benefit from reduced tariffs and non-tariff barriers to international trade. The U.S. Congress should oppose special interest groups who put the wishes of their narrow constituencies ahead of the best interests of the economy, homeowners, and other consumers. Workers displaced by foreign trade should be provided expanded re-education benefits, including extending unemployment benefits during the re-education period. Protectionist U.S. tariffs, such as the “new homes tax”, which adds $1,000 or more to the cost of a new home through tariffs on Canadian softwood lumber should be withdrawn. 8. Credit & Financial Services The ability of government sponsored enterprises (Fannie Mae, Freddie Mac) to provide favorable financing to homeowners should not be constrained by unnecessary legislation or regulations that would undermine the ability of GSE’s to provide favorable mortgage interest rates, and regulatory oversight of GSE’s should remain at HUD. A real estate broker has the fiduciary duty to secure to exposing the listing to the broadest potential audience of buyers. Real estate brokers and agents who are members of MLS’s should put all listings on MLS’s unless the homeowner gives permission not to. RESPA should be more vigorously enforced. It should be reformed to enable lenders and others to offer home buyers and refinancers guaranteed price packages of interest rates and insurance, legal appraisal and settlement and other fees and to reduce predatory lending and kickbacks among real estate industry service providers. All professionals who arrange home financing should be subject to all Truth-in-Lending Act (TILA) requirements. Banks should be permitted to offer real estate brokerage services and vice versa. Both should be subject to all existing laws and regulations pertaining to their respective services. Homeowners should be permitted to cancel private mortgage insurance when their mortgage balance is 80% or less of the home value assessed by the local taxing authority. Predatory lending should be outlawed and consumer financial education should be expanded. Sub prime lending should not be outlawed and specific mortgage products should not be outlawed. 9. Tax The current social security system should not be modified by other than minor rate adjustments to improve long term solvency. The worthy objectives of well-intended proposals to create personal savings accounts can be achieved through a variety of alternative savings incentives. Both IRA and 401K contribution limit increases should be accelerated and additional tax incentives for retirement saving in other new vehicles should be created. Annuity payments should be taxed at the same rate as dividends and incentives to expand home ownership should be considered in any plan to strengthen U.S. retirement savings. Protectionist tariffs, such as the “new homes tax”, which adds approximately $1,000 to the cost of a new home through tariffs on Canadian softwood lumber, should be withdrawn. First time home buyers should allowed a tax credit of 10% of the home’s price, capped at $6,000, and an affordable housing tax credit should be enacted to create more homes for low income taxpayers. Mortgage insurance premiums should be made tax deductible. The Employee Retirement Income Security Act or 1974 (ERISA) should be amended to permit investments by retirement plans in principal residences of children and grandchildren who are buying their first home. Tax credits and other incentives that promote energy efficiency, environmental easements and other forms of environmental protection, telecommuting, and business use of the home should be enacted. 10. Technology and Communications Homeowners use technology to pay mortgages and other bills, buy products and services, plan vacations and business trips, and increasingly telecommute, and/or facilitate home- based businesses. Their children use both tools to do school work and research. The Alliance recommends that: Web sites should provide clear and conspicuous home page disclosure of company privacy policies and include procedures that give consumers the ability to control the disclosure of any information they provide . Federal and state telecom regulatory bodies must protect the interests of consumers and recognize property rights. Consumer representation on state regulatory bodies should be increased. Spam enforcement procedures should be included in international treaties. Congress should enact new laws to punish unauthorized use of spyware and phishing. Anti-Spam laws should be strengthened if necessary. The Internet Tax Moratorium should be permanently extended and applied to Internet-based (VOIP) phone calls. Federal programs and tax incentives to provide rural residents and disadvantaged citizen’s access to affordable broadband services at reasonable prices should be expanded. Power line broadband should be promoted. Digital Rights Management (DRM) technology should not be mandated. Consumer’ “fair use” rights to make digital backup copies of music, movies, and books for personal use should not be abridged. Congress should enact a law criminalizing actions to put any software code on computers without the owner’s knowledge and advance permission. Internet service providers or backbones should be allowed to offer consumers different pricing based on access speeds but should not be allowed to slow or restrict consumers’ access to commercial websites. The cable TV monopoly should be ended. Federal and/or state laws should be enacted to let competitors from other sectors enter the TV services market. Internet-based (VOIP) telephone service providers must provide all customers 911 service immediately. *Consumer protection principles of the Consumer Federation of America: The marketplace must enable consumers to make informed choices among services, goods, and sellers: Unsafe goods and services should carry appropriate warnings if they put the user at risk. Contracts, advertisements, telemarketing, warranties, mailing envelopes, sweepstakes, and other written materials should not be designed to confuse, mislead, or frighten the public. Cooling-off periods should be available to consumers in transactions that have high financial risks or involve extended periodic payments. The marketplace must make available to consumers complete and accurate information regarding the goods and services they purchase. Information should be communicated in plain language, with written information printed in type that is legible and readable or, if broadcast, is audible and understandable, to a reasonable consumer. Consumers should have reasonable time to review disclosures before consummation of the transaction. When consumers are wronged in a marketplace transaction, appropriate and adequate redress must be available. Clear disclosures identifying how and where aggrieved consumers can complain must be provided. Redress must be provided in a timely manner and with a right of appeal.
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