Federal Committee Room 308/309/310 Convention Center Sacramento, CA Thursday, June 10, 2010 3 p.m. – 5 p.m.
Presiding: Kathy Mehringer, Chair Heath Hilgenberg: Vice-Chair, NAR Liaison Mike Clancy, Vice-Chair Kevin Brown, Executive Liaison
Staff: Matt Roberts, Federal Government Affairs Manager
I. Welcome and Opening Comments – Kathy Mehringer
II. Survey of the Legislative Climate
A. Member Mobilization Report – DeAnn Kerr
B. What will Congress Tackle in their Final Six Months? – Oral Report from Staff
III. Reports by Committees and Task Forces
A. Transaction & Regulatory Committee – Liz Fitzgerald, Chair
B. Housing Committee – LeFrancis Arnold, Chair
C. Taxation & Government Finance Committee – Dennis Badagliacco, Chair
D. Land Use & Environmental Committee – Phyllis Carmichael, Chair
IV. Federal First Impression Issues
A. Ballot Proposition: Voter First Act for Congress(IBP)
Proposition 11, which was approved by the voters in 2008, created the Citizens Redistricting Commission which is responsible for developing the redistricting plans for the state legislature and Board of Equalization. Current law permits the legislature to develop the redistricting plans for Congressional districts. This proposition proposes to transfer the authority to develop those districts to the Citizens Redistricting Commission.
Note: For Information Only
B. Health Care After more than two years of hearings and numerous votes, the health reform legislative debate culminated on March 30, 2010. On this day, President Obama signed into law HR 4872, the Health Care and Education Reconciliation Act,” the second of two bills approved by Congress to reform the nation’s health insurance and delivery systems. The Reconciliation Act made a series of amendments to the comprehensive reform bill, HR 3590, the “Patient Protection and Affordable Care Act,” which had been approved earlier by the Senate and House, and signed by the President into law on Tuesday, March 23, 2010. For a complete summary of the final bills’ provisions and how they will impact real estate sale professionals, please see NAR’s Health Reform Q&A located at www.realtors.org/healthreform.
V. C.A.R. Federal Priorities & Issues
A. GSE The GSEs Fannie Mae and Freddie Mac continue to play a vital role in the recovery of California’s and the nation’s housing market by buying or guaranteeing approximately 60 to 70 percent of the mortgages originated; however, they remain under conservatorship and in spite of this large role in stabilizing the housing market their future remains uncertain. Congress will begin debating these entities’ futures in 2011.
B. FHA Solvency In response to a continuously dwindling reserve, the FHA in late November and early December announced proposed steps it would take to shore up its financial well being. These include:
• Raising the cap on the annual insurance premium that the FHA can charge borrowers • Setting a minimum credit score • Raising the downpayment requirement • Making lenders more accountable for loans that the agency insures and • Limiting the amount of money sellers can provide for closing costs on a home
The House Financial Services Committee favorably reported H.R. 5072, the "FHA Reform Act of 2010." This bill, sponsored by Reps. Waters (D-CA) and Capito (R-WV), will complete several changes FHA needs to insure the solvency of the mutual insurance fund. In October 2009, HUD released an audit that showed their capital reserves had fallen below the Congressionally-mandated level of 2%. This bill includes authority for FHA to increase the annual premium. To date, FHA has increased the up-front premium, because they lacked authority to increase the annual. Once this law has passed, FHA plans to reduce the up-front premium and raise the annual instead. In addition, the bill includes a number of lender enforcement provisions.
C. Real Estate Tax Provisions As the government continues to face both an increasing budget deficit and a growing national debt, many inside the beltway will be looking for ways to raise revenue. This will include discussions of changing or even eliminating many real estate related tax provisions. While not every provision is likely to be touched, almost all will at a minimum be discussed and their merits debated.
D. National Flood Insurance Policy On March 28, the National Flood Insurance Program (NFIP) expired for several weeks due to the House and Senate's failure to agree on how to pay for reauthorization of the NFIP along with an extension of several other programs. An all-member Call for Action was issued urging REALTORS® to contact their Representatives and Senators. The program was then extended to May 31. As of the date of the posting of this agenda, Congress had still not passed another extension of the NFIP beyond the May 31 deadline.
For some time now, the Congress has been approving a series of short-term extensions of the NFIP while discussions continue over comprehensive reforms to improve the program's actuarial and financial foundations. While debate has centered on how to pay for 2005 hurricane season debt, Congress is also expected to revisit issues of expanding coverage to wind and business damage and possibly, a phase-in of "full-risk" premiums for those primary homes selling over $600,000. Since September 2008, there have been 7 short-term flood extensions.
Without the NFIP, property owners in federally designated areas across nearly 20,000 communities nationwide could not obtain a mortgage or flood insurance to protect their properties.
E. Home Valuation Code of Conduct Since the HVCC went into effect on May 1, 2009, consumers in California and across the country have seen the cost of appraisals go up, the quality of appraisals be questioned, and real estate transactions encountering greater delays
As part of H.R. 4173, the Wall Street Reform and Consumer Protection Act, there is a provision which would require the creation of a Negotiated Rulemaking Committee that would create requirements for appraisal independence no later than 60 days after enactment of the legislation. These new rules would officially sunset the HVCC. H.R. 4173 passed the House on December 11, 2009 by a vote of 223-202. A Senate version of regulatory reform is still being considered by the Senate Banking, Housing, & Urban Affairs Committee and will now have the added issue of the upcoming retirement of the Committee Chair, Senator Dodd (D-CT).
Fannie Mae and Freddie Mac (GSEs) recently announced they will deploy a complaint process to address suspected violations of the Home Valuation Code of Conduct (HVCC), including a mechanism for providing pertinent information to state and federal regularly and enforcement departments. The process will be in place in the next few weeks. Click here for more information about the process.
F. VA Fees During NAR’s May business meetings, C.A.R.’s Leadership and members met with the Director of the VA home loan program to discuss the unlevel playing field in the housing market which veterans who wish to utilize VA financing are faced with. These include the veterans’ inability to negotiate closing fees and a pest certification requirement.
C.A.R. and NAR will continue to work with the VA to address these and other issues.
G. Energy & Climate Change Pending before Congress is climate change legislation that includes energy efficiency provisions for commercial and residential buildings. Last summer, the House of Representatives approved H.R. 2454: the American Clean Energy and Security Act, which includes energy efficiency provisions for new construction only. Realtors® succeeded in making a number of positive changes affecting the real estate provisions of the bill. The House–approved bill:
• Does not create a federal energy audit, labeling or multiple listing requirements for real property; • Exempts existing homes and buildings from any federal guidelines for new construction energy efficiency information labels; • Leaves the decision to states as to whether and how to develop energy labeling programs, but prohibits the implementation of any labeling during a sales transaction; • Provides property owners with significant financial incentives, matching grants and tools to make property improvements and reduce their energy bills; • Prohibits the EPA from regulating residential and commercial buildings under the Clean Air Act; • Eliminates an early proposal to allow citizens to sue over minor climate risks under the Clean Air Act; and • Establishes green building incentives for HUD housing, including a loan program for renewable energy, block grants and credit for upgrades in mortgage underwriting.
Senators John Kerry (D-MA) and Joe Lieberman (I-CT) worked to develop a framework to move legislation forward in the Senate. In mid-May the Senators released the American Power Act.
H. Credit Unions Due to the lack of commercial financing, REALTORS® are asking Congress to pass H.R. 3380. This bill would allow credit unions to increase their cap on business lending from 12.5% to 25%. This will provide an important additional source of funding for small commercial properties that need to refinance.