Agenda SummaryFederal Issues Committee Marriott Hotel San Carlos Room II – Mezzanine Level Monterey, CA Thursday, January 18, 2007 3:00 PM – 5:00PMPresiding: Malcolm Bennett, Chair J. Michael Roberts, Vice-Chair Jeanne Garde, Vice-Chair Susan Tilling, Executive Committee Liaison Heath Hilgenberg, NAR Committee Representative Paul Cardus, GADLiaison
C.A.R. Staff: Matt Roberts, Federal Governmental Affairs Manager Jeff Keller, Public Policy AnalystI. Opening Comments: Malcolm BennettII. Report of Action Items from Reporting CommitteesA. Real Estate Finance B. Taxation C. Land Use and Environment D. Equal Opportunity – Cultural Diversity E. Housing Opportunity F. Commercial InvestmentIII. First Impression IssuesA. Action Items1. Data Security One of the large issues for the incoming Congress will be finding a compromise on proposed data security legislation. Data security legislation would set federal requirements onhow businesses and agencies that collect and compile personal information on consumers must notify those consumers when their information has, or has possibly, been stolen. In the 109th Congress numerous bills were proposed,but no compromise on a single bill was ever accomplished. The largest debate is whether there needs to be federal pre-emption on data security laws and whether those laws should favor the business or the consumer. (Please see attached issues briefing paper)2. Net Neutrality The idea of net neutrality is that the internet is open to all that are able to access it and that everybody able to access the internet has equal availability to services and information.Net neutrality principles have guided the development of the Internet to date. These principles call upon designers of the individual networks, that together make up the Internet, to create their piece of the Internet in a manner that allows any computer connected to the network to send information to any other computer on the Internet with minimal interference. A network designed to be perfectly neutral does not discriminate against any other network, hardware, software, language, culture, disability, or types of data.
The outcome of net neutrality could impact the future functionality of the Internet. Proponents of regulations fear that if allowed to continue, the internet will become a utility that has various tiers of access depending on what services a user is willing and/or able to pay for. Opponents believe that the free market will continue to maintain the openness ofthe internet as it is seen and used today with greater expansion of possibility by private innovation. REALTORS® concerns are that there are not increased costs to real estate firms as they maintain their presence on the internet and work to expand their access to consumers. (Please see attached issues briefing paper )
3. Retirement Visas At the NAR 2006 November business meetings, the issue of creating a new visa designation to allow retired foreigners to stay in the U.S. so they may fully use their U.S. property was raised. The argument was that current visa restrictions required them to return to their home country and was thus a deterrent to them purchasing properties in the U.S.(Please see attached issues briefing paper )
B. Discussion/Reporting Items1. Do-Not-Call Policies REALTORS® need to make sure that they have an up-to-date and available for distribution do-not-call policy for themselves and/or their office. This is a requirement under the federal Telephone Consumer Protection Act. The law requires that any company engaging in telemarketing must have a written policy showing how it complies with the law and be able to demonstrate the implementation of theirprocedures. This policy must also be made available to a consumer upon their request.Recently, there have been individuals testing real estate companies. They contact local real estate brokerages and askthat their number be placed on the company’s internal do-not-call list. They also request that a copy of the company’s do-not-call policy be mailed to them within five days. If the caller does not receivethe brokerages policy within five days, they threaten to file a lawsuit, but then offer to settle the matter instead for around $5,000.
While companies must be able to provide their do-not-call policies upon request, the law does not specify atime period. Companies have 30-days to update their do-not-call lists and a five day turnaround time for mailing policies is likely unreasonable. Nonetheless, the matter should be handled in an appropriate and timelyfashion. For a Q&A on setting a Do-Not-Call Policy and/or a sample policy you can check:
2. Pay-As-You-Go One of the promises the Democratic Party made during their campaign to gain a majority in Congress was that they would reinstitute the Pay-As-You-Go (PAYGO) budget rules. The basic idea behind PAYGO is that for any additional spending or tax cut that is created there must be an offset so that the budget deficit is not increased. While this decision should help reduce the large budget deficits that have been seen in the past few years, it also raises some interesting dynamics when it comes to major reforms being discussed; such as the elimination of the Alternative Minimum Tax (AMT) and changes to Medicare prescription drug coverage. (Please see attached issues briefing paper )
3. Affordable Healthcare One of the subjects that will see a revitalized debate during the 110th Congress is the issue of affordable healthcare. There have already been talks about numerous healthcare coverage bills that will be proposed during the 110th Congress. These range from expanding coverage for the poor and the elderly, allowing citizens to get the same coverage that Congress is allotted, small business health plans, and universal healthcare. While some of these are repeat issues from the past, expect the Democrats to make a push for a reasonable healthcare coverage bill. They understand that this is a key issue, especially going into the 2008 Presidential elections, and they would like to be able to campaign on progress, not just discussions.
These bills will need bipartisan support to pass the House and Senate. Therefore, while there will be changes made in some bills that we’ve seen in the past, they cannot be too drastic of changes otherwise they will not garner the support of Republicans and risk a veto from President Bush. C.A.R. will continue to monitor bills as they are introduced and amended. REALTORS® have a strong concern in healthcare options as many REALTORS® are independent contractors and must provide their own healthcare coverage.IV. Taxation IssuesA. Action Items1. Employee Housing Downpayment Assistance Due to the high cost of housing,employee downpayment assistance programs are becoming more frequent among employers as a means of attracting and retaining employees. However, under current law there are no incentives for employers to offer this benefit and this type of assistanceis often treated as taxable income to the employee. In September 2005 C.A.R took the position to “SUPPORT” in concept the creation of employee benefit plans designed to a) give employers an incentive to provide their employees with housing downpayment assistance and/or b) make the downpayment assistance tax-free to the employees. (Please see attached issues briefing paper )
B. Discussion/Reporting Items:1. Mortgage Insurance Premium Deduction In the last hours of the 109th Congress, H.R. 6111, the Tax Relief and Health Care Act of 2006, was passed. Inside this tax extenders andMedicare bill, a new tax deduction of mortgage insurance premiums was included. This is a one-year-only provision that would allow some 2007 home buyers to deduct the cost of their mortgage insurance premiums (PMI).In order to qualify, the loan must originate in 2007 and can be applied to private mortgage insurance, FHA insurance, and VA and Rural Housing premiums as well. The new deduction is available to those with less than $100,000 adjusted gross income on a joint or single tax return ($50,000 for married filing separately) and phases out for incomes above $110,000 ($55,000 for married filing separately). Individuals who claim the deduction are not permitted to prepay premiums that are otherwise due after 2007. Currently this provision expires on December 31, 2007 and would have to be renewed during the 110th Congress or it will expire.
2. Tenant Improvements Depreciation Also included in H.R. 6111, the Tax Relief and Health Care Act of 2006, Congress continued its stopgap approach to allowing the 15-year leasehold improvement. This deduction had expired on December31, 2005. However, Congress renewed the deduction retroactive to January 1, 2006 and it will expire again, unless renewed, on December 31, 2007. If this provision had not been extended then the recovery period for leasehold improvements would have returned to 39 years. While this tax extension passed before the 109th session had ended, the IRS had already gone to publication of the tax forms; without this tax provision included. While this deduction is allowed on a 2006 return, this can potentially raise issues which can result in delayed returns/refunds as well as potential audits. Please consult a tax professional with questions concerning how to properly deduct thistax deduction.
3. Tax Reform Since the President’s Advisory Panel on Tax Reform published their recommendations in November, there was a quick fury of renouncement of aspects of the recommendation; especially the proposed eliminationof the mortgage interest deduction. Since then, talks of tax reform have been brief and mostly without details. Currently most people are waiting for Treasury Secretary Paulson to announce his report on how Treasurywould like to see the tax code reformed. Prior to the midterm elections it was believed that any major reform discussion would wait until after this report was issued. At this time, no timetable has been given for when this report might be issued.However, with the midterm elections bringing control of both houses of Congress to the Democrats, the tax reform picture has changed. Democrats have often talked about reforming the tax code, especially the Alternative Minimum Tax (AMT). The Alternative Minimum Tax (AMT) is becoming a major problem that threatens to engulf the middle class in this special tax rate. Incoming Chairman of the House Ways &Means Committee, Rep. Rangel (D-NY) has said that he plans for one of his major initiatives to be the elimination of the AMT. The new Democratic Congress may not be willing to wait for the long delayed Treasury report.One major issue concerning this is that the AMT is currently projected to bring in $1.2 trillion over the next ten years. Replacing that lost revenue, especially if this is done under PAYGO rules, means having to eliminatetax breaks and spending in order to make the reform revenue neutral. This means that changes to the mortgage interest deduction, deduction of interest for Home Equity Lines of Credit, and deduction of mortgage interest for second homeswill be debated and potential targets during future calls for reform.4. FIRPTA Over the past several years as identity theft has become more of a concern for everyone, sellers have grown increasingly uneasy with providing their taxpayer identification numbers. The concern has become so great that some sellers are refusing to provide the required non-foreign affidavit to the buyer or are providing an affidavit with the seller’s taxpayer identification number removed. This creates a dilemma for buyer’s who may be liable for the sellers’ tax liability from the sale of the real property if they do not receive a fully completed sellers’ affidavit. C.A.R. believes a seller should be able to provide the information required by FIRPTA to escrow or another settlement provider as an alternative to providing that information to the buyer.In the January 2005 meetings C.A.R.adopted policy which stated, “That C.A.R. in conjunction with N.A.R., ‘SUPPORT’ legislation that would permit a seller to provide the information required by the Foreign Investment in Real Property Tax Act (FIRPTA) to escrow or another settlement provider as an alternative to providing that information to the buyer.”With Congress now being under Democratic control C.A.R. will be working with a new House Ways and Means Committee Staff to find appropriate language that can be attached to tax legislation during the 110th Congress.5. Tenants in Common (TICs) TICs (tenant in common interests) are fractional interest or co-ownership in real estate. The ownership structure, in 2002, qualified as a valid option for 1031 tax deferred exchange purposes and since then, the TIC industry has grown exponentially.TICs hold the promise of many advantages for buyers and sellers. For sellers, a high value property can be “fractionalized” or cut into multiple shares that can be sold more affordably to smaller investors or investors that want to buy only a portion of a property, and thus can be made available to a larger audience of exchange buyers. For exchange buyers, there are multiple attractions as well. Fractionalized interests create a much larger universe of properties into which the property seller can exchange.TICs are generally brokered in two ways, as a real estate offering and as a securitized offering. The distinction between a securitized TIC and a non- securitized TIC largely depends on how active investors are in the management of the property, and the extent to which the sponsor retains an interest in the property. When TICs are securitized they are subject to federal and state securities regulation, including the requirement that persons promoting the purchase of them have the necessary securities license. Because securitized TICs also involve the ownership of real property interests, their sale is also subject to state real estate license laws, which require a real estate license to engage in the promotion and sale of real estate.
Currently, there is a lot of confusion among REALTORS® about the TIC market place. More than a few REALTORS® have participated in securitized TIC transactions only to find that they could not be compensated for their work. Furthermore, a number of REALTORS® may not be aware of the risks investorsmight face in purchasing a securitized or non securitized TIC. The TIC industry is growing rapidly and is viewed as an attractive option for investors. Therefore, NAR published two education pieces on the TIC industry; one geared for commercial real estate professionals and another geared for the general practitioner.In their midyear meeting, NAR sought to affirm that TIC transactions are real estate transactions that can be both securitized and non-securitized. This will help consumers be served by the expertise of real estate professionals as well as allow them the protections of state real estate laws and applicable state and federal securities laws. NAR is in discussions with the SEC on defining a role for real estate professionals in the brokerage of securitized TIC interests, whereby they can provide real estate services and derive compensation. REALTORS® believe that it is in the consumer's best interest to work with a real estate professional in identifying any real estate investment opportunity, including a securitized TIC interest.
6. 1031 Exchanges The like-kind exchange provisions of Internal Revenue Code Section 1031 permits a taxpayer to defer taxation on capital gains if within 45 days of selling a "relinquished property," the taxpayer identifies a "replacement property" and closes on the acquisition of that property within 180 days of the sale of the“relinquished property”. The regulations for these rules provide a roadmap for securing the benefits of deferral and a well-established body of law governs these transactions.
If a real estate investor were to create a hierarchy oftax provisions based on their utility and the benefits provided, the like-kind exchange rules would be at or near the top of the list. Real estate investments are, by their nature liquid and they also require substantial investment of capital. The exchange rules permit an investor who can satisfy the criteria to preserve capital for ongoing real estate investment.
The exchange rules have not been modified since about 1991. Two developments, however, have brought new scrutiny of the rules. Thefirst of these is an effort to repeal the exchange rules that has been mounted by farmers located primarily in Iowa and Illinois. They believe that the exchange rules have the effect of driving up the price of farmland. A second development is the rise ofthe Tenant-in-Common (TIC) market since 2002.
In 2007, the Senate Finance Committee is likely to review several aspects of Section 1031. There are numerous areas they will examine, ranging from the basic to the more complicated of matters concerning 1031 exchanges. The more basic issues to be examined are whether the IRS Form 8828, which is used to figure and report the recapture tax on a federal mortgage subsidy, should be made a mandatory filing; and examining how long a 1031 exchange must be held before a replacement property can be purchased. They may also examine the issue of withholdings on boot. Boot is any part of a 1031 exchange that is not like-kind property.This can be other property or cash. An example would be if you are selling a house for $500,000, but doing a 1031 exchange on a house that cost $400,000, and you are receiving $100,000 in cash, the $100,000 would be considered boot. The boot must also be recognized as gain under current law. More complicated issues that may be addressed are the deferral of fees and collection of fees involved in TIC properties. The issue surrounding deferral amounts on TIC properties relates to fees. The fees associated with TICs are said to range as high as 25% of the acquisition cost. Congress may examine whether taxpayers engaged in exchanges should be permitted deferral treatment for these fees. Congress will also examine whether deferral treatment is appropriate for collectibles.
7. REMIC During the 109th Congress legislation was introduced in both the House and Senate that would amend the section of the IRS Tax Code governing commercial-mortgage-backed securities, also known as real-estate mortgage investment conduits (REMIC), allowing for modifications and/or changes to be made to the properties. Under current rules, a property owner would have to obtain atax opinion before renovating space to accommodate a new tenant. If the tax opinion found that more than ten percent of the loan’s collateral would be changed, the renovation could not go forward. Under the proposed changes, this type ofmodification, as well as many others (e.g., selling an adjacent parcel, demolishing part of a building, etc.) would be able to go forward provided that the terms of the loan (e.g., maturation date, principal, etc.) do not change. As a result of these changes, more commercial loans will likely be securitized which will, in turn, increase the flow of capital to commercial development.While no bills involving REMIC were able to make it out of committee during the 109th Congress, this issue will likely arise again during the 110th Congress. The change in leadership means that new staffers will be coming into the House Ways & Means committee as well as the Senate Finance committee. This shift can sometimes reenergize an issue that was dormant in the previous Congress.V. Real Estate Finance IssuesA. Discussion/Reporting Items1. Predatory Lending The issue of Predatory Lending is expected to be addressed by Congress in the 110th Session. Democrats are expected to hold hearings on this issue, though it is unclear if they will make a serious attempt at passing any legislation.Three questions that pose themselves when addressing this issue are, 1) what is “Predatory Lending,” 2) who is best to regulate and oversee it, the states or the federal government, and 3) would consumers and lenders benefit from one nationallaw to regulate the industry instead of 50 different state laws? Chair of the House Financial Services Committee, Congressman Barney Frank (D-MA) has placed passing a predatory lending bill as a high priority.While the subprime market has played an important role in making homeownership available for many Californians who otherwise would not qualify for prime loans, the question of when a loan is more harmful than beneficial to the borrower remains unanswered.2. Supreme Court Hears OCC Preemption Case In November, the Supreme Court heard oral arguments in Watters v. Wachovia, a case that may have far reaching implications on the jurisdiction of state lawsand regulations on subsidiaries of national banks. This case originated several years ago in Michigan when the Office of the Comptroller of the Currency (OCC) ruled operating subsidiaries of national banks were exempt from most state laws and regulations. This would allow bank subsidiaries to circumvent state real estate lending and licensing laws. REALTORS® opposed the OCC preemption regulation because it creates an uneven playing field. REALTORS® involved in real estate lending related activities, such as appraisal, home inspection, mortgage and title services, are at a disadvantage with national banks and their operating subsidiaries, which do not have to abide by andbear the costs of state licensing and compliance regulations.This case stemmed from when Michigan attempted to bar Wachovia’s mortgage unit from making loans in the state after it gave up its state registration. Thus far, four circuit courts have agreed with the OCC and Wachovia. Because the OCC cites the National Bank Act as giving it authority to make their ruling, a primary question the high court will look at is how the National Bank Act applies to operating subsidiaries since they are not specifically mentioned in the Act.The Court is expected to announce its decision prior to its summer recess in June.3. Insurance Regulation There was a growing interest in insurance regulation reform during the 109th Session of Congress that cut across party lines. Because of this, it is anticipated that Congress will introduce and possibly vote oninsurance regulation reform in the recently convened 110th Session. It is still not known exactly what sort of reform will be proposed or possibly passed by Congress. Previous discussions and bills from prior sessions range from the creation of a separate federal insurance license which an insurer may choose instead of a state license, to the complete elimination of state regulation of the insurance industry.C.A.R.’s policy is to oppose the preemption of state laws and to protect California’s right to regulate the insurance industry. California’s ability to regulate insurance is perhaps most important in the areas of property, fire and earthquake. California needs to be able to regulate those types of insurance as California is perhaps the most unique state in the Union with its large population, multitude geographical regions and climates, and various natural disaster threats.Critics charge that the existing state-based regulatory system has failed to effectively regulate the increasingly complex insurance industry. Others believe that compliance with 50 separate state regulatory agenciescreates a regulatory burden for companies operating nationwide. Some observers believe this inefficiency contributes to recent problems with the availability and affordability of insurance products.4. Natural Disaster Insurance The intensity of large natural disasters in recent years has made the acquisition of adequate homeowners’ insurance very difficult in some areas. More and more insurers are declining to write policies, canceling existing policies or increasing premiums on existing policies to the point where homeowners can no longer afford to make payments. Areas that have seen the largest increases in insurance premiums are the gulf and east coast stateswith premiums increasing by as much as 12 times.In California it is only a matter of time until a large earthquake hits a highly populated area causing incalculable financial damage along with the personal casualties thatfollows such a tragedy. According to the California Insurance Commissioner, only 14 percent of California homeowners have earthquake insurance. Some can’t afford it while others believe the federal government will pay to rebuild their homes as it is doing after Hurricane Katrina.C.A.R. supports the creation of a federal reinsurance program to act as a backstop for the private market and/or a state insurance fund. This backstop will save tax payers billions of dollars, and strengthen and protect the availability of natural disaster insurance.5. Community Choice in Real Estate In early 2001 the Federal Reserve and the U.S. Treasury Department proposedrules to expand the powers of national bank conglomerates. The agencies proposed allowing national bank conglomerates to engage in real estate brokerage and management, reclassifying these activities as financial in nature. C.A.R. and NAR strongly oppose the proposal, arguing that the Bank Holding Company Act of 1956 and the Gramm-Leach-Bliley Act (GLB) of 1999 do not authorize banking firms to provide real estate brokerage and property management services, as these are non-financial activities. REALTORS® have supported the enactment of the Community Choice in Real Estate Act in previous sessions of Congress, which removes the powers of these agencies to regulate these real estate activities.C.A.R. and NAR policy supports the separation of banking and commerce. If permitted to engage in real estate brokerage and management, national bank conglomerates would have an unfair competitive advantageand inherent conflicts of interest would result.While the Community Choice in Real Estate Act has yet to pass, C.A.R. and NAR have been successful in getting Congress to block the Treasury from implementing its rule.6. FHA Issuesa. FHA Reform The Federal Housing Administration (FHA) was created in 1934 as a way to ensure that lenders would supply the home buying market with capital. The FHA helped to expand homeownership to low- and moderate-income home buyers and has since insured over 33 million properties. The FHA is a self-sustaining program in that it charges a premium to cover its risks and operating expenses. The FHA’s current portfolio is comprised of 79% first-time home buyers, 35% of which are minorities.In 1999, the FHA insured approximately 127,000 homes bought in California. In 2005 that number dropped to roughly 5,000. Proposed legislation was introduced in the 109th Session of Congress that would have significantly reformed FHA insurance to stop the hemorrhaging of market share, not just in California, but across the country. Additionally, the bill would have attempted to expand the FHA’s ability to compete with the subprime market. The reforms proposed included:
- Increasing the FHA insurable limits. Currently, the FHA insures 95% of an area’s medianhome price with a ceiling of 87% of the conforming loan limit ($362,790) and a floor of 48% of the conforming loan limit. The legislation would increase the FHA limit to 100% of an area’s median home price capped at 100% of the conforming loan limit ($417,000), with a floor of 65% of the conforming loan limit ($271,050). - Making it so that condos are insured in the same manner as single-family homes. - Allowing for the coverage of zero-down loans. Currently, the FHA may only insure loans with a minimum of three percent down. - Allowing the FHA to insure 40-year mortgages.Lastly, the bill would have allowed the FHA to set its insurance premiums by risk. Under current law the FHA is limited to 2.25% upfront and .5% annual renewal premiums (the annual renewal premium is added to the monthly mortgage payment of the home buyer). The FHA currently charges a 1.5% upfront premium and .5% annual renewal premium. Under the bill the FHA would have balanced the mortgage terms and borrower’s finances when calculating the upfront and monthly premiums. This means taking into consideration the income, assets and financial profile of the borrower as well as the loan-to-value (LTV), loan period, fees and amortization schedule of the loan product. Presumably, this should allow the FHA to tailor products to borrowers’ specific financial circumstances. An example is a borrower with a small amount of cash to put down on a mortgage, but shows a strong monthly income. For this home buyer, the FHA may charge a lower upfront premium but with a higher annual renewal.This issue will be introduced again in the 110th Session of Congress, most likely by California Congresswoman Maxine Waters.7. VA & HUD Issuesa. RESPA Following the resignation of HUD General Counsel Keith Gottfried, any RESPA reform proposal will likely be further delayed. Keith Gottfried, whose resignation became effective November 5, was regarded as achampion of RESPA reform. It was anticipated that any new HUD rule regarding RESPA was likely to focus on improving the good-faith estimate and would no longer consider the guaranteed-mortgage package component. It was the guaranteed-mortgage package component that many in the real industry had problems with when HUD released its original RESPA reform proposal in 2002.No new timeline has been announced stating when HUD anticipates a new RESPA reform proposal. Some in the industry believe with Gottfried gone, HUD will have to practically start over from scratch with any new proposal.8. Fannie Mae & Freddie Mac Issuesa. 2007 Conforming Loan Limit The Office of Federal Housing Enterprise Oversight (OFHEO) announced on November 28, 2006, that the 2007 conforming loan limits for Fannie Mae and Freddie Mac will remain at the 2006 level of $417,000 for one-unit properties. OFHEO bases the annual change in the conforming loan limit on the October-to-October change in the average house price in the Monthly Interest Rate Survey (MIRS) of the Federal Housing Finance Board (FHFB). From October 2005 to October 2006, the FHFB reported a decline in the average home price from $306,759 to $306,258; or a decline of 0.16 percent. This is the first decline in the MIRS since 1992-1993.OFHEO has stated it will defer this year’s decrease to the 2008 conforming loan limit. This will allow for mortgages still in the pipeline to not be disrupted while giving lenders, the Government Sponsored Enterprises (GSE), homebuyers and investors plenty of time to prepare forthe change. While it is good news for California that the loan limit is not decreasing, there is a majority of areas in California still hurt by the stagnant loan limit. California’s median home price increased2% to $548,680 in October 2006 from October 2005.b. High-Cost Conforming Loan Limit & GSE Reform The median home price in California for the month of November 2006 was $555,290. The current conforming loan limit—the maximum loan amount that Fannie Mae and Freddie Mac (Government Sponsored Enterprises) may purchase on the secondary market in 2007—is $417,000. While the conforming loan limit is in excess of many states’ median home prices, in high-cost states such as California the loan limit is far too low. In the late 70’s and early 80’s Congress recognized the importance of increasing the conforming loan limit for high-cost states by raising Hawaii’s, Alaska’s, Guam’s and later the Virgin Islands’ conforming loan limit to 150 percent of the national limit.During the 109th Session, Congress had reinvigorated its attempt to write GSE regulatory reformlegislation amid continuing scrutiny of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. Proposed GSE reform legislation in the House was used as a vehicle by California Legislators, Gary Miller and Brad Sherman, to attach a high-cost conforming loan limit amendment. This amendment would 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. This would increase the conforming loan limit to $625,500 in California’s highest-cost areas.While the House passed a C.A.R. supported bipartisan bill, they were never able to work out a compromise with the Senate Republicans or the Administration. The first point of contention at the end of the session was the portfolio size of the two GSEs which is estimated at over $4 trillion. The second issue was the creation of an affordable housing fund from the GSE’s profits that Republicans feared would be used by liberal entities to lobby and campaign against G.O.P. candidates.Congressman Barney Frank (D-MA), the new chair of the House Financial Services Committee, which has jurisdiction over this issue, has stated his intent to introduce and mark-up legislation early in the 110th Session.VI. New Business
A. Glossary of Federal Government Acronyms - HandoutVII. Adjournment