Hyatt Grand Champions
8 a.m. - 11:30 a.m.
Thursday, Feb. 4, 2010
Indian Wells, CA
Mission Statement: The Housing Committee is a Policy
Committee. Its mission is to develop C.A.R.'s housing policy. It has
original jurisdiction to evaluate housing legislation and regulation in the
following issue areas: Common Interest Developments; Fair Housing/Equal
Opportunity; Housing Policy; Manufactured Housing; Multifamily Housing;
Property Management; and Real Estate Finance.
Presiding:
LeFrancis Arnold, Chair
John Torres, Vice Chair
Issue Chairs:
Diane Conaway, Manufactured Housing
Winnie Davis, Real Estate Finance
Miguel Garcia, Fair Housing/ Equal Opportunity
Rana Linka, Common Interest Development
Tica O'Neill, Property Management
Georgia Richardson, Housing Policy
Mike Riley, Multifamily Housing
Committee Liaison:
Kevin Brown
NAR Representatives:
Larry Black
Sandy Darling
Jeannette Way
Staff Coordinators:
Dave Milton
Matt Roberts
I. Welcome and Opening Remarks - LeFrancis Arnold,
Chair
II. Housing Committee Issues Areas Mission Statements
(IBP*) - John Torres, Vice Chair
III. Common Interest Development - Rana Linka, Issues
Chair
a. C.A.R.-Sponsored Right-to-Rent Legislation for 2010
Bill Number Pending - Owner's Right to Rent in a
CID - Over the last few years, C.A.R. members noticed a trend
among some homeowner associations to adopt restrictions that limit the
ability of unit owners to rent their dwellings in common interest
developments (CID). C.A.R. sponsored AB 2259 (Mullin) in 2008 which was
approved, almost unanimously, by the legislature. Unfortunately, the
Governor vetoed AB 2259 saying that owners of a unit in a CID agreed, when
they purchased their unit, to abide by the rules of the HOA, and understood
that any decision to change those rules would be governed by the HOA.
C.A.R.'s Board of Directors has approved the sponsoring of legislation in
2010 to require two-thirds of the unit owners in a CID to approve, by
written ballot, any amendment of the governing documents that would
prohibit owners from renting or leasing their unit.
Status: Pending Introduction
b. State
Law Revision Commission Proposal to Re-Codify the Davis-Stirling
Act; An update-
As it did in 2008 (AB 1921, which never moved out of its house of origin),
the California Law Revision Commission (CLRC) intends to sponsor
legislation to recodify the Davis-Stirling Common Interest Development Act
(Davis-Stirling) in order to improve the Act's organization, make it easier
to understand and use, and to implement noncontroversial substantive
improvements in the Act. The CLRC has stated its intention to approve a
final draft at its February 2010 meeting, after which it will make
available copies of the draft to any and all individuals and interest
groups that have expressed an interest in this project. It is the CLRC's
intention to review all technical comments and recommendations during 2010
and introduce a bill in January 2011, so a full 2-year session of the
Legislature can be devoted to reviewing the proposed recodification of
Davis-Stirling.
c. Federal
FHA Condominium Rules - On November 6, 2009, HUD issued
mortgagee letters 2009-46A and 2009-46B. These letters explain the new FHA
condominium approval process, for single family housing. 46B contains the
new guidelines for condominium approval for FHA loans. 46A is the new
temporary guideline that delays the implementation of five of 46B’s
provisions. The mortgagee letters were effective for all case numbers
assigned on or after December 7, 2009.
Mortgagee letter 46B will create two methods of approval for
condominiums:
1. HUD Review and Approval Process (HRAP)
2. Direct Endorsement Lender Review and Approval Process (DELRAP)
Under DELRAP lenders have to have unconditional Direct Endorsement
authority to utilize this option. These lenders may, if they wish still
seek project approval under HRAP.
HUD continues to maintain a list of Approved Condominium Projects; however,
the spot loan approval process has been eliminated. These are applicable to
condominiums that are proposed/ under construction, existing construction
or conversions.
Projects that will be ineligible are:
*Condominium Hotel or “Condotels”
*Timeshares or segmented ownership projects
*Houseboat projects
*Multi-dwelling unit condominiums [i.e. more than one dwelling per
condominium unit]
*All projects not deemed to be used primarily as residential
Eligibility Requirements (Please see link for mortgagee letter for the
complete list)
*No more than 25 percent of the property’s total floor area in a project
can be used for commercial purposes.
*No more than 10 percent of the units may be owned by one investor. This
applies to developers/ builders that subsequently rent vacant and unsold
units.
*No more than 15 percent of the total units can be in arrears (more than 30
days past due) of their condominium association fee payments.
*At least 50 percent of the total units sold prior to endorsement of the
mortgage.
*At least 50 percent of the units must be owner-occupied or sold to owners
who intend to occupy the units. For proposed, under construction projects
still in their initial marketing phase, FHA will allow a minimum owner
occupancy amount equal to 50 percent of the number of presold units (the
minimum presale requirement of 50 percent still applies).
*FHA will not insure more than 30 percent of a particular condo project.
For projects consisting of three or fewer units, FHA will insure one
unit.
*HOA budget must be reviewed in accordance with guidelines set forth in the
letter.
Mortgagee letter 46A delays the implementation of four provisions until
December 31, 2010, and one provision until February 1, 2010, the Spot Loan
approval process. The four provisions delayed until the end of 2010
are:
*The FHA concentration will be increased from 30 percent to 50 percent
(This may go up to 100 percent if the project meets certain
criteria).
*Vacant or tenant-occupied REOs may be excluded from the calculation of the
required owner-occupancy percentage (50 percent).
*Pre-sale requirements will be reduced from 50 percent to 30 percent.
*The last provision deals with Florida condos.
The condo conversion requirements have changed as well, including the
elimination of the one-year waiting period required for conversion.
FHA
FAQ
Mortgagee Letter
2009-46A
Mortgagee Letter
2009-46B
IV. Fair Housing/Equal Opportunity - Miguel Garcia, Issues
Chair
a. State
The Department of Fair Employment & Housing (DFEH) is proposing
legislation to conform state law with federal law as to civil penalty caps
and source of income criteria. The DFEH bill, if introduced in 2010, will
propose to conform state law with federal law in the following areas:
1) Conform the civil penalty caps stated in the housing provisions of the
Fair Employment and Housing Act (FEHA) to those stated in the federal Fair
Housing Amendments Act.
2) Add "source of income" to the list of protected characteristics in
specified provisions of FEHA that were not amended to conform to existing
law when "source of income" was permanently added to FEHA.
3) Revise specific Civil Code sections to expressly state that admission
preferences based on age, imposed in connection with a federally-approved
housing program, do not constitute age discrimination in housing.
No new bills have been introduced in this issue area as of 1-15-2010.
b. Federal
Sexual Orientation Discrimination (IBP*) -Should C.A.R., in conjunction
with NAR, “OPPOSE” discrimination based on sexual orientation for equal
housing opportunity?
V. Housing Policy - Georgia Richardson, Issues Chair
a. C.A.R. - Sponsored Bill
SB 206 (Dutton) - Homebuyer Tax Credit re REO
properties
C.A.R. is sponsoring SB 206, which as introduced,
would have, like federal law, created a first-time homebuyer's tax credit,
equal to 10% of the sale price of a home, not to exceed $8,000, for homes
purchased as the principal residence of the taxpayer. Due to the state's
fiscal crisis, C.A.R.'s Board of Directors at its June 2009 meeting decided
to limit this proposed tax credit to REO properties purchased as a
principal residence by homebuyers. The bill will be effective for one year
from the date of its enactment. SB 206 was amended to utilize a funding
source from
federal stimulus funds instead of the state general fund. Unfortunately,
this source proved to be unavailable for tax credit purposes. Efforts are
continuing to be made by C.A.R. to locate a federal funding source for this
tax credit.
Position: Sponsor
Status: Senate Revenue & Taxation Committee
b. State
1. AB 765 (Caballero) Housing Tax Credit - SB 15XX, which
was signed into law as part of the "marathon" negotiations on the state
budget last February, created a tax credit for new home purchasers equal to
5% of the sale price of a home, not to exceed $10,000. The credit is only
available for completed purchases of new (previously unoccupied) homes
between March 1, 2009, and March 1, 2010. The current program authorized by
SB 15XX allocated $100 million in state funds to provide these tax credits.
As introduced, C.A.R. supported AB 765 which would have removed the tax
credit funding cap for homes purchased prior to December 1, 2010. As
amended in June, however, AB 765, sponsored by the CBIA, does not eliminate
the $100 million cap, given the state budget shortfall, but rather changes
the eligibility criteria for the tax credit by requiring purchasers to
execute an enforceable contract by March 1, 2010 and to close escrow before
December 1, 2010. The bill was further amended to revise the Franchise Tax
Board (FTB) process for calculating the number of tax credits available.
For each certification received from a seller, FTB is required to reduce
the total amount of credit available for allocation by an amount equal to
70% of the credit allocated to a taxpayer. C.A.R. supports AB 765 because
it will allow approximately 5,000 more home buyers to access this tax
credit.
Position: Support
Status: Senate Floor
2. Governor's Proposed Housing Tax Credit (As
announced in his January "State of the State" Message.) (IBP*)
- The homebuyer tax credit is seen by the Governor as one of the key
factors in providing a much-needed economic boost for the California
economy by generating more home sales and creating jobs in an industry that
so desperately needs them. He sees a boost to the housing picture as being
one of the key pieces of his job creation initiative. He is proposing to
extend the current state $10,000 tax credit, due to expire in March, to
purchasers of new and existing homes. He proposes
to set aside $200 million for these tax credits. He is seeking to "get
people off the fence and move them into homes." He also believes this
proposed tax credit will help reduce the inventory of foreclosed homes, an
action that is crucial to the recovery of the housing economy in
California.
It is necessary for C.A.R. to revise its current position (i.e., sponsoring
a state tax credit for purchasers of an REO property as a principal
residence - SB 206) if it wishes to pursue a proactive course of action
sponsoring or supporting legislation proposed by the Governor in January to
create a state tax credit for homebuyers of ALL properties that are
purchased to be the principal residence of the purchaser(s).
The attached IBP on the Governor's housing tax credit weighs the
legislative environment surrounding the Governor's proposed tax credit as
well as the options available to C.A.R. if this proposal acquires
"legs".
VI. Manufactured Housing - Diane Conaway, Issues
Chair
a. AB 481 (Ma) Mobilehome Park Rent Control Exemption -
Existing law exempts a mobilehome space from rent control if it is not the
principal residence of the homeowner, and the homeowner has not rented the
mobilehome to another party. AB 481 would include in this exemption from
rent control, "second home" mobilehome spaces where the homeowner has
rented the mobilehome to another party. The bill also clarifies the basis
for determining if the mobilehome is the homeowner's principal residence.
C.A.R. supports AB 481 because the second home exemption from rent control
encourages the development of more parks and communities in jurisdictions
needing additional affordable housing.
Position:
Support Status:
Assembly Housing and Community Development Committee (Note: This bill is
dead as the sponsor, WMA, decided in early January not to pursue it in
2010.)
b. AB 761 (Calderon) Mobile Home Park Vacancy De-Control -
California has had vacancy decontrol for apartments since 1995 under the
Costa-Hawkins Rental Housing Act, which C.A.R. successfully co-sponsored.
This bill proposes to create "Costa-Hawkins-Type Vacancy De-Control" for
mobile home parks and manufactured housing communities. As with apartment
vacancy decontrol, this bill does not prohibit rent control nor does it
raise rents for existing tenants beyond that permitted by a local
ordinance. Rather, vacancy decontrol only permits an owner of a mobilehome
park to raise space rent to market rates for a new resident when the space
or mobilehome unit is voluntarily vacated due to a sale, assignment,
transfer, or termination of tenancy in the mobilehome. AB 761 further
provides that, after execution of the new rental agreement, the local rent
control ordinance provisions shall apply. C.A.R. supports AB 761 because
vacancy decontrol removes some of the negative impacts caused by rent
control which include discouraging investment in, and construction of, new
manufactured housing communities.
Position:
Support Status:
Senate Rules Committee
VII. Multifamily Housing - Mike Riley, Issues Chair
SB 500 (Steinberg) - Permanent funding source for affordable
housing
This bill would enact the Housing Market
Stabilization Act of 2010, which would create in the State Treasury the
Housing Market Stabilization Fund. It would provide that moneys in the fund
be available, upon appropriation, to the Department of Housing and
Community Development (HCD) for local assistance loans and grants for
purposes related to increasing the supply of safe, affordable, and
sustainable homes. This bill is a "moving spot bill" sponsored by HCD. It
is a vehicle to reflect its findings emanating from 10 regional forums HCD
conducted in 2008 around the State for the purpose of eliciting ideas as to
what revenue sources could provide permanent funding for the continuous
development of affordable housing. C.A.R. submitted its recommendations and
will be working closely with HCD as this effort moves forward.
C.A.R. communicated to the Director of HCD its position on recommendations
from the various regional meetings regarding the permanent source of
funding for affordable housing as follows:
A. C.A.R. could SUPPORT the following Recommendations under current
C.A.R. Policies:
* A combination of sources; not just one permanent source.
* Creation of a secondary market for California mortgages, similar to the
“Callie Mae” effort of the ‘80’s.
* Tax credit to businesses that provide housing assistance to
employees.
* Tax credit for private investment in affordable housing.
* Voluntary tax check-off dedicated to affordable housing
projects.
* Raise the redevelopment low-mod increment from 20% to 30%.
* Fair share allocation to state from National Housing Trust
Fund.
* Housing bonds. (C.A.R. actively supported passage of Proposition
1C.)
* Place unused redevelopment housing set-aside funds in the State
Housing Trust Fund.
* Gas tax dedication of a percentage to area housing production.
(C.A.R. would support if proceeds dedicated to such affirmative uses as
density bonus incentives, urban infill projects and mixed use
developments.)
* Tax write-off for contributions to housing trust funds.
B. C.A.R. would VIGOROUSLY OPPOSE the following Recommendations
under current C.A.R. Policies:
* Reassess homes over a
set value (such as $600,000) every 10 years and deposit that increment into
the Housing Trust Fund.
* Document recording fee (except if imposed upon documents that are
NOT part of the real state transfer of ownership process).
* Transfer fees
* Increased property taxes
* Adjust Proposition 13 to reduce tax incentives for commercial
development over housing development.
* Tax on commercial development based upon square footage (aka “Split
Roll”).
* Tax on sale of a home that is not a primary residence.
* Inclusionary zoning ordinances.
* Roll back the mortgage interest deduction.
* Construction tax.
* Require developers to donate homes (generating a tax deduction for
the developer) for a raffle to local citizens.
* Special assessment imposed on CID homeowners based upon HOA
fees.
* Have banks pay title insurance for affordable projects.
* Origination fees based upon income level of borrower.
* Interest on title insurance and escrow accounts.
* Tax on utility usage over a “reasonable standard.”
* Use savings from “green homes” to fund affordable housing
construction.
* Tax on real estate commissions.
C. C.A.R. WOULD NOT OPPOSE the following Recommendations
under current C.A.R. Policies:
* Add ½% sales tax with
proceeds dedicated to affordable housing production.
* Fund affordable housing production with a broadband and internet
tax.
* Create an employment tax on an inverse scale to workers’
wages.
* Hotel tax/transient occupancy tax.
* Luxury items sales tax
* Millionaire income tax (1/2%).
* Entertainment tax.
* Sin tax.
* Dedication of a portion of state, county and city general fund
reserves.
* Vehicle tax.
* Mandatory portion of income tax proceeds dedicated to affordable
housing.
* 1/2 of proceeds from abandoned properties fund.
* Place an incremental tax on gas corporations’ profits.
* Voluntary license plate fee directed toward construction of
affordable housing.
* 3 cents surcharge on all US stamps sold in California.
* Create a state-guaranteed investment pool.
* Lottery tax.
* Use unclaimed property funds for emergency shelters.
* Confiscated property sales dedicated to affordable housing
production.
* Adjust tax codes to incentivize production of market rate rental
housing.
* Dedicate increased resources to local revenue collection efforts;
set aside percentage for affordable housing production.
Position: NRF- Not yet rated, due to its evolving
status Status:
Senate Transportation & Housing Committee
VIII. Property Management - Tica O'Neill, Issues
Chair
a. AB 1170 (Calderon) Consumer Information Booklet on Megan's
Law - This bill would require the Department of Justice (DOJ) to
develop a Megan's Law Disclosure Booklet that would provide prospective and
current tenants of real property with a summary of federal and state law
relating to sex offender registration. Owners and/or owner's agents
providing this booklet to tenants would not be required to provide any
additional information relating to sex offender registration. C.A.R.
obtained amendments to AB 1170 that removed unreasonable and
liability-inducing disclosure obligations for landlords and their agents.
The sponsor (Community Associations Institute) added amendments that
removed the liability shield that exists in current law to protect
landlords and their agents when they deliver the Megan's Law Booklet.
C.A.R. will oppose AB 1170 until it is amended to re-instate this liability
shield.
Position: Oppose Unless
Amended Status:
Assembly Appropriations Committee (Note: This bill is dead as the
Appropriations Committee estimated costs to the State exceeding $160,000
and never released it from its Suspense File due to these potential
costs.)
b. AB 1171 (Ammiano) Tenant Notice Requirement - The
"Ellis Act" requires rental property owners in rent controlled
jurisdictions to provide tenants with a 120-day notice of termination of
tenancy when removing residential rental property from the rental market.
Tenants who are either disabled or are senior citizens (62 years of age or
older) are entitled to a notice of one year. AB 1171 was amended in early
April to require landlords electing to "go out of business" to give all
tenants a one-year notice of termination of tenancy if even one disabled or
senior citizen resides in the rental property's units. C.A.R. strongly
opposes AB 1171 because it discourages investment in rental housing, places
a substantial limitation on a property owner’s right to legitimately take a
property off the rental market, negatively affects property values, and
could cause substantial financial losses to rental property owners.
Position:
Oppose
Status: Assembly Housing and Community Development
Committee (Note: This bill is dead as the Author pulled it off the
Committee's calendar in the face of overwhelming opposition registered by
C.A.R., CAA and other property management groups.)
c. AB 1263 (Strickland) Revisions to Service of Process
Requirements for Unlawful Detainer Actions on Commercial
Properties - This bill proposes to revise the process for serving
an unlawful detainer notice for commercial rental properties. Current law
requires that service of an unlawful detainer be made at the tenant's place
of residence or usual place of business. AB 1263 would delete that
provision, and instead require that service be made by delivering a copy of
the notice to the tenant at the property. If the tenant is absent from the
property, AB 1263 would permit the notice to be served by both affixing a
copy of the notice in a conspicuous place on the property and mailing a
copy to the tenant.
Position: Watch
Status: Assembly Appropriations Committee
IX. Real Estate Finance - Winnie Davis, Issues Chair
a. C.A.R.-Sponsored Bills
1. Bill Number Pending - Local Property Maintenance
Ordinances - C.A.R.'s Board of Directors has approved the
sponsoring of legislation to address local property maintenance ordinances.
This bill will make the existing statewide rule for maintenance of
post-foreclosure properties pre-emptive of local ordinances and will
provide an REO owner notice and opportunity to repair before fines for
violation can attach. The amendments will also ensure that liability for
maintenance of pre-foreclosure property follows the legal owner, and is not
inherited by the foreclosing beneficiary or its agent. Finally, the
amendments will modify the statutory Notice of Default or Notice of Sale
recording to include contact information for the foreclosing entity’s
designated property manager. C.A.R. will work to achieve a consensus with
lenders, trustees, and local government on this proposal.
Status: Pending Introduction
2. Bill Number Pending - Anti-Deficiency
Protections - Many mortgages have lost their characterization as
"purchase money" because of a refinance, or because the purchase financing
was divided into two loans and one or more of them were structured as a
recourse or personal note that is really secured by the property. C.A.R.'s
Board of Directors has approved sponsoring legislation to expand borrowers’
anti-deficiency protections to cover refinanced purchase monies, and
“recourse” junior notes created as part of a purchase, or loans which
increase the basis of the property.
Status: Pending Introduction
3. Bill Number Pending - Portable Appraisals -
Current law permits, but does not require, lenders to utilize current
appraisals ordered by a different lender. C.A.R.'s Board of Directors has
approved the sponsoring of legislation in 2010 to require lenders to accept
a "portable" appraisal at the request of the borrower. Put simply, if an
appraisal is ordered and prepared by one lender on a particular property,
the second lender would be required to accept that appraisal to support a
mortgage even though the lender did not order that appraisal.
Status: Pending Introduction
4. Bill Number Pending - Increasing AMC Regulatory
Oversight - Appraisal Management Companies (AMCs) have grown
enormously over the last two years, driven primarily by the Home Valuation
Code of Conduct adopted by Fannie Mae and Freddie Mac. In 2009, C.A.R.
supported SB 237 (Calderon), which was signed into law, and subjects AMCs
to registration and review by the Office of Real Estate Appraisers (OREA).
C.A.R.'s Board of Directors has approved the sponsoring of legislation in
2010 to clarify and enhance OREAs oversight of Appraisal Management
Companies.
Status: Pending Introduction
b. State
No new bills have been introduced in this issue area as of 1-15-2010.
c. Federal
1. NAR’s GSE Presidential Advisory Group’s Policy Recommendations
(IBP*) - The Administration is expected to release their
Government Sponsored Enterprise (GSE) reform recommendations as early as
the end of January/ February of 2010. In response to this, NAR Leadership
at their November business meetings in San Diego adopted policy
recommendations from their GSE Presidential Advisory Group (PAG)
2. GSE Update - 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. Since C.A.R.’s business meetings in
San Jose, federal regulators have taken a few major actions to ensure these
two entities are able to continue their vital role.
*The Treasury lifted their cap on the amount of aid they can give Fannie
and Freddie. While the timing was a little shocking (Christmas Eve), the
move itself was not. Under the original agreement, Treasury was able to
provide up to $400 billion worth of government assistance to the two GSEs
($200 billion each). To date Treasury has pumped approximately $60 billion
into Fannie and $51 billion into Freddie. While this is well below the $400
billion, many experts still expected Treasury to lift the cap. The reason
is because under the original agreement, Treasury had until the end of 2009
to unilaterally lift the cap. Starting in 2010, Treasury would have needed
Congressional approval to take this action. If there is a second housing
market downturn and the GSEs need more funding, experts are uncertain if
Congress would have the stomach to put additional resources into them.
Given the GSEs size and role in this recovery, this could have sent a
message of uncertainty on Wall Street.
*The second major action taken by regulators was to adjust how the GSEs
would begin to wind down their portfolios. The GSEs portfolios are the
loans that Fannie and Freddie keep and don’t sell off into the secondary
market. Under the original agreement, Fannie and Freddie were to begin
reducing their portfolios by 10 percent a year starting in 2010 based on
their 2009 portfolio size ($752.2 billion for Fannie Mae and $761.8 billion
for Freddie Mac). Under the new rule, the GSEs’ 2009 portfolio cap of $900
billion will be reduced for 2010 by 10 percent. So the GSEs may not have
more than $810 billion in their portfolios at the end of the year. This is
important because investors have yet to bring private capital back to the
secondary market, making it hard for Fannie and Freddie to find a buyer for
their loans. There is; however, concern that the government will utilize
the GSEs portfolio space as a way to buy troubled assets from banks, which
would in essence transfer the losses to the U.S. taxpayer.
3. Regulatory Reform - The House of Representatives passed
H.R. 4173, (the Wall Street Reform and Consumer Protection Act of 2009) the
regulatory reform bill, on December 11 by a vote of 223 – 202. The issue
now moves to the Senate where Chairman Dodd is working with Republicans and
moderate Democrats on a draft version of a Senate regulatory reform bill.
NAR and C.A.R. will work to ensure that real estate agents and brokers are
not directly impacted by the legislation.
The House bill will have far reaching implications on the finance and
secondary market, including the:
* Creation of a Consumer Financial Protection Agency to monitor any
consumer financial products
* Creation of a Federal Insurance Office to advise Treasury on major
domestic and international insurance policy issues (does not preempt state
laws)
* Requirement of a new appraisal rules no later than 60 days after the bill
is enacted and would sunset the HVCC
* Creation of a council of federal regulators to oversee the financial
system for companies that pose a systemic risk
Attempt to make some regulatory simplification, but does not eliminate all
the different regulatory bodies
H.R. 4173 was amended on the floor of the House to include the Mortgage
Reform and Anti-Predatory Lending Act (HR 1728) which passed the House
earlier this year by a 300 – 114 vote.
4. FHA Update
A. 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. This included:
*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
NAR met with the FHA in December to discuss many of these proposed changes
and urge the FHA to not make unnecessary changes that would negatively
impact FHA borrowers.
B. 90-Day Flipping Rule
On January 15, 2010, HUD announced a one-year moratorium on their 90-day
anti-flipping rule that took affect on February 1, 2010. In summary, the
Waiver will:
* Place a one-year moratorium on the 90-day flipping rule starting on
February 1, 2010, unless otherwise extended or withdrawn by the
Commissioner
* All transactions must be at arms-length (no collusion between
participating parties)
* In cases in which the sales price of the property is 20 percent or more
above the seller's acquisition cost, the waiver will only apply if the
lender meets specific conditions, including a second appraisal and/or
supporting documentation supporting the increased value, an inspection paid
for by the lender (the cost of which may be passed on to the borrower), and
some other conditions
For more details please read the actual Waiver and press release linked
below.
Press Release from HUD:
http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-011
Link to Waiver:
http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf
C.A.R. Comment Letter:
http://www.car.org/media/pdf/159683/FHA_Anti-Flip_Ltr.pdf
5. VA Fees - At C.A.R.’s October business meetings in San
Jose, C.A.R. took the position to support the elimination of the VA pest
certification requirement and the making of all fees negotiable in VA
loans. With multiple offers being the norm in many places, many veterans
are finding themselves at a disadvantage when negotiating for the purchase
of a home and competing against loans that don’t require pest certification
and allow for the negotiation of fees.
C.A.R. staff has spoken directly with the VA on this issue and is in the
process of drafting a comment letter.
At the NAR November business meeting, the NAR BOD adopted the following
position:
“That NAR support elimination of certification requirements on VA loans,
and allow VA borrowers to negotiate all fees and closing costs.”
6. Federal Reserve’s MBS Purchase Plan - The Federal
Reserve’s $1.25 trillion program to purchase mortgage-backed securities
(MBS) is scheduled to end at the end of the first quarter. This program has
allowed mortgage interest rates to stay historically low during the
recession and has led to the stabilization of the housing market in many
areas. It is not yet clear if the Fed will completely turn off the funding
on April 1; however, many experts believe the Fed would not want to risk
taking any drastic measures that might create a market panic. A more likely
scenario would be measured steps to wean the mortgage market off of the
Fed’s subsidy.
X. Recommended New Business for Next Meeting from Public Policy
Forum
XI. Other Business
XII. Adjournment
* IBPs are attached.
