Equal Opportunity—Cultural Diversity Committee Anaheim Marriott Hotel Grand Ballroom Salon F Anaheim, California Thursday, January 26, 2006 1:00 PM – 3:00 PMPresiding: Kelvin Wong, Chair Robert Aldana, Vice-Chair Armida Del Campo, Vice-Chair Heidi Ricker-Rizzo, Executive Committee Liaison Allen Chiang, NAR Committee Representative Richard D'Ascoli, GAD Committee Liaison
C.A.R. Staff Coordinators: Carmen Petrinca, Membership Development Manager Jeff Keller, Public Policy AnalystI. Call to Order/Introductions– Kelvin WongII. Legal Update -Llewellyn Chin III. Political Updates – Jeff Keller
A. HUD Update
- Minority Housing Increases On November 29, 2005 HUD Secretary Alphonso Jackson commented that the increase in home sales this year can be partially contributed to the growth of minority owned housing. He noted that three years ago, President Bush challenged the nation to create 5.5 million new minority homeowners by the end of this decade. Secretary Jackson commented, “The President’s housing initiatives are helping more families, particularly minorities, to achieve that dream”. To date, that figure has seen a net increaseof 2.35 million minority homeowners, 43% of the goal. Additionally, to further stimulate the production of affordable housing in distressed communities, HUD will continue their push for the affordable housing tax credit.
- Internet-based Real Estate and FHA HUD is reviewing complaints that some Internet-based real estate postings might be in violation of the federal Fair Housing Act (FHA). The FHA was enacted before the arrival of the internet, so this is new territory for HUD. FHA does not allow for any published notice to indicate preference based on race, color, religion, sex, handicap, family status, or national origin. Some internet listing sights, such as Homestore.com currently run software that checks their listings for any violations. Others, such as Craigslist, do not perform these checks.- The American Dream Downpayment Initiative (ADDI) HUD is continuingtheir program of ADDI, which aims to increase the homeownership rate, especially among lower income and minority households, and to revitalize and stabilize communities. ADDI will help first-time homebuyers with the biggest hurdle to homeownership: downpayment and closing costs. The program was created to assist low-income first-time homebuyers in purchasing single-family homes by providing funds for down payment, closing costs, and rehabilitation carried out in conjunction with the assisted home purchase. The 2006 Budget also provides $25 million to fund the American Dream Downpayment Initiative (ADDI)
B. New 2006 Conforming Loan Limits: As of January 1, 2006 HUD will increase the FHA conformingloan limits as follows:
C. GSE Oversight: Congress has reinvigorated its attempt to write regulatory reform legislation amid continuing scrutiny of Fannie Mae, FreddieMac, and the Federal Home Loan Banks – the housing government-sponsored enterprises (GSEs). The effort to balance the generally accepted need for stronger regulation for the GSEs' financial structure and reporting without undermining the current federal housing finance system proved elusive in the past, but this year it has passed the House and is currently in the Senate as S. 190.
On October 26, 2005, the House passed H.R. 1461, the Federal Housing Finance Reform Act. Included inthe legislation were major victories for California REALTORS® and future homeowners. One victory was the inclusion of an amendment by Representative Gary Miller that will allow a newly created independent GSE regulator to set high-cost conforming loan limits by an area’s median home price, up to 150% of the national conforming loan limit. For 2006, the conforming loan limit is $417,000; however, high-cost states such as Hawaii, Alaska, Guam and the Virgin Islands, are allowed a high-cost conforming loan limit of $625,500 (150% of the regular conforming loan limit). In addition, the legislation does not place a statutory restriction on the size of the GSE’s portfolios. As this legislation now moves through the Senate, C.A.R., in conjunction with NAR, will continue to monitor and lobby for these issues to be included in the Senate version. D.New Minority Homeownership Websites: 1. Century 21 Real Estate:Century 21 Real Estate has added to their Spanish website to include information on Hispanic heritage. They discuss the importance of homeownership in the Hispanic culture and allow recent home buyers to share their unique stories about how they realized the American dream of homeownership. The website can be found at:http://www.Century21Espanol.com 2. NAHREP: A new national referral network offering a wide range of real estate service providers for Spanish-speaking home buyers has been launched on MSN Latino Finanzas. This site is run through NAHREP and helps assist Spanish-speaking home seekers with the knowledge and tools necessary to enter the home-buying process. More information can be found at:http://www.nahrep.org/ContactUs/ReferralNetwork/ReferralNetwork.htm
E. Section 8 Housing In April 2005, S. 771 and HR1999 were introduced. Both bills aim to assist low-income families obtain affordable housing by converting the existing section 8 housing choice voucher program into a flexible voucher program. These bills would offer block grant vouchers to states for Section 8 public housing and also reward housing authorities for “graduating” tenets from the program. The administration supports this move and recently agreed to keep funding at current levels, instead of the proposed cutting of funding, if these bills are successful. Currently S. 771has no cosponsors and is in the Committee on Banking, Housing, and Urban Affairs. HR 1999 has 6 cosponsors and is in the House Committee on Financial Services.
Many REALTORS® are involved in the ownership and managementof Section 8 housing. There are some concerns that these block grants would add an unnecessary burden to state officials to determine which programs have the most need and also monitor to see if programs are “graduating” tenets. In June of 2004, C.A.R took the follow stance, “That C.A.R., in conjunction with NAR, oppose changes to the section 8 voucher program that create(s) block grants to Public Housing Authorities (PHA).
F. FHA Low/No Downpayment Currently there are efforts to assist certain professional and first time home buyers to acquire a single-family FHA loan without needing a downpayment, or with a large reduction in downpayment. The applicants would still have to meet FHA criteria, but their downpayment and closing costs would be financed into the loan. Some drawbacks are that there would be a higher upfront premium as well as a ¼% higher interest rate thantraditional loans.
There are currently two bills in the House concerning Low/No FHA downpayments. H.R. 3043 was introduced by Rep. Tiberi [R-OH] on June 23, 2005. It currently has 1 cosponsor and is in the Committee on Financial Services. HR 3043 would create a pilot program, which would limit zero-down FHA loans to no more than 10% of the total FHA portfolio. H.R. 3556 was introduced by Rep. Harris [R-FL] on July 28, 2005. It currently has no cosponsors and is in the Committee on Financial Services. HR 3556 would reduce the FHA downpayment to 1% for teachers, firefighters, police officers, and other public safetyworkers whom purchase their homes within the communities they serve.
G. Asian Homebuyers Freddie Mac released a study called; “Homeward bound: An In-Depth look at Asian Homebuyers in the United States”. The participants were from various portions of the Asian community. This included: Chinese, Korean, Vietnamese, Asian Indian, Filipino, and American-born Asian consumers and real estate professional. The key findings of the study found that: - Most participants said they need to feel financially stable and secure before they purchase a home. - Most participants were looking for the most cost-conscious financing package since they had an aversion to debt. - Lack of knowledge of the process might delay or prevent them from finding a home and they would rely heavily on a real estate professional to help them. The full report can be found at: http://www.freddiemac.com/news/pdf/Asian_Homebuyers_in_the_US.pdfIV. Fair Lending Update – Jeff Keller C.A.R. has worked at the state and federal level to address the issue of subprime and predatory lending through legislative and regulatory means. This includes the passage of the California predatory lending laws.
Current California law classifies any loan as a “covered loan,” or high cost loan, that is below the conforming loan limit ($417,000) and has an APR of more than eight percent above the comparable Treasury security, or the total points and fees exceed six percent of the total loan. Covered loans are subject to strict prohibitions in accordance with California’s predatory lending laws.
NAR’s Subprime Lending Working Group had come out in May 2005, with recommendations on how REALTORS® can address the issue of subprime lending. This included a public awareness campaign and increasing consumer education.
EO-CD leadership, in discussions with the Real Estate Finance leadership, agreed that the EO-CD Committee should look at how C.A.R. may address the issue of predatory lending beyond legislative means.
To see links provided by NAR for education on subprime and predatory loans click here: http://www.realtor.org/HousOpp.nsf/Pages/predatorylendingtwo?OpenDocumentThe Real Estate Finance Committee will also be reviewing this issue at their meeting. For more background please see attached Predatory Lending Issues Briefing Paper from the September business meeting. (Click Here )V. Roundtable Discussion: Fair Lending– Kelvin WongVI. C.A.R. Cultural Diversity Website Update– Carmen PetrincaVII. California Latino Homeownership Initiative Update - Adriana Guerrero, Hispanic LendingPrograms CoordinatorVIII. Other Business – Kelvin Wong