Sheraton Grand Hotel
Grand Nave Ballroom, Gardenia Room
Sacramento
California
Thursday, June 5, 2008
9:00 a.m.- 11:20 a.m.
Presiding:
Patricia Bouie Hinds, Chair
Jimmy La Peter, Vice Chair
Quincy Virgilio, Vice Chair
Malcolm Bennett, Executive Committee Liaison
Beth Peerce, N.A.R Committee Representative
Diane Carlton, GAD Liaison
C.A.R. Staff:
Matt Roberts, Federal Government
Affairs Manager
Stan Wieg, Legislative Advocate
David Milton, Legislative Advocate
I. Opening
Comments
II. Freddie Mac Guest
A. Tricia McClung, Vice President, Single Family Sourcing, Customer
Outreach and Offerings Deployment
III. State Issues
A. C.A.R. Sponsored
Legislation
1.
AB 1356 (Houston) Agents of Equity Purchasers;
Westminster case - Existing law,
prior to the decision in Schwitzer vs. Westminster Inv., effectively (and
inappropriately) precluded legitimate agents from representing investor
purchasers of properties in foreclosure because buyers' agents were
required to purchase a bond, that is not available, for twice the value of
the property. As currently written, this bill will allow an alternate means
of demonstrating financial responsibility that includes maintaining E&O
insurance, with coverage up to $1 million, and certifying that the licensee
is in good standing with the DRE. In early 2007, the California Supreme
Court decided not to hear an appeal of Schwitzer vs. Westminster Inv. which
has overturned the bond requirement, thus making this bill
unnecessary. C.A.R. has requested that the bill not be moved forward.
Currently, unrelated amendments are under discussion. Position: Watch as
Amended Status: Senate Judiciary Committee
2. SB 1054 (Machado) Mortgage broker disclosure
of dual roles - As the lending function has become
increasingly complicated and the subject of disputes, calls for more
supervision or separation of the lending function from the rest of the real
estate license have increased. Legislative pressure for reform continues to
increase, aggravated by fears of increased defaults among non-traditional
mortgages. Upon recommendation of the Mortgage Broker Task Force, this
C.A.R. sponsored legislation requires a prominent disclosure to all
parties whenever a licensee represents a buyer and originates a loan in a
"1-4" transaction. This legislation will help to alleviate the
perceived conflict created by the loan originator's obligation to ensure
that the loan application is accurate and adequately underwritten, and his
or her natural inclination to press for closure of the transaction. Status:
Assembly Business and Professions Committee
B. Legislation of Others; please see Legislative
Program bill report on the C.A.R. website for a more complete listing of
California legislation on which C.A.R. has taken active positions.
1. SB 1137 (Perata) Mortgage
foreclosure rules - This bill would have required lenders who made
loans on or before December 31, 2007, to conduct an in-person meeting with
borrowers to explore their options for avoiding foreclosure before a notice
of default could be recorded. C.A.R. joined with a coalition of lender and
business groups that opposed the bill until it was amended to allow
reasonable efforts to satisfy negotiation requirements and to correct the
tenant notice rules. As amended, the coalition, and C.A.R., is neutral.
Position: Watch as Amended Status: Assembly
Banking and Finance Committee
2. SB 1053 (Machado) Mortgage broker
registration, reporting and enforcement
- Existing law provides for the
licensure and regulation of real estate licensees. SB 1053 requires real
estate licensees acting as mortgage brokers to notify The Department of
Real Estate (DRE), in writing, upon commencing or discontinuing that
activity. Brokers would be required to file reports annually with the DRE
that include a review of compliance and a review of trust fund financial
statements by a licensed independent public accountant. Finally, the SB
1053 would require brokers to keep all documents and records related to a
loan transaction for 3 years. C.A.R. supports SB 1053 because it seeks to
improve the supervision of mortgage brokers, without creating a special
license. Position: Support Status: Senate Appropriations Committee
3. AB 2880 (Wolk) Bonding and new duties for DRE-licensed mortgage brokers
- This bill attempts to create new
regulatory restrictions for mortgage loan originators by requiring real
estate brokers to carry a bond ranging from $100,000 to $500,000 based upon
their volume of business. After consummation of the loan, AB 2880 imposes a
ban of one year on any direct marketing or communication to the borrower
with regard to refinancing that consumer loan. C.A.R. opposes AB 2880
because it creates an impossibly ambiguous standard for licensees to abide
by, and inappropriately limits a mortgage broker's ability to help
borrowers re-finance loans when their circumstances improve. Additionally,
C.A.R. opposes imposition of a bond requirement upon mortgage brokers
because they are of limited utility and very costly. Position: Oppose
Status: Assembly Appropriations Committee
4. AB 2105 (DeSaulnier)
Mandatory reporters of suspected elder abuse - The Elder Abuse and
Dependent Adult Civil Protection Act established procedures for the
reporting, investigation, and prosecution of elder and dependent adult
abuse. These procedures require persons, defined as "mandated reporters,"
to report known or suspected instances of elder or dependent adult
abuse. Under current law, only care custodians of dependent adults,
local law enforcement agencies and some financial institutions are
classified as mandated reporters. AB 2105 would expand the category of
mandated reporters for financial abuse to include both real estate brokers
and residential mortgage lenders. C.A.R. opposes AB 2105 because real
estate licensees engage in a broad array of customer services within the
scope of their licensed activities and it would be impossible for them to
reasonably comply with the mandates of this bill without massive over
reporting. C.A.R. has suggested amendments that would, instead of a
mandate, publicize a safe harbor for confidential, voluntary reports, and
encourage education efforts publicizing the ability to make a confidential
report without liability. The bill was recently amended to exclude property
management activities but will still force licensees to over-report
potential abuse on a "just in case" basis in order to avoid liability.
Position: Oppose Status: Assembly Appropriations
Committee
5. AB 2359 (Jones) Assignee
liability for mortgages - This bill would prohibit lenders from
requiring borrowers, as a condition of the agreement, to waive their rights
(such as agreeing to arbitration instead of a jury trial) for a residential
mortgage or mortgage foreclosure when the borrower is seeking a high-cost
loan, subprime loan, or nontraditional mortgage. This bill would also
eliminate the "holder-in-due-course doctrine" for certain mortgage loans by
imposing liability on assignees for loan officer misconduct. Creating
"assignee liability" will further exacerbate the liquidity problem in the
mortgage lending market. AB 2359 also proposes to impose liability on the
government-sponsored entities in the secondary mortgage market (such as
Fannie Mae and Freddie Mac) to be responsible for mistakes made by
originators of the loans they purchase. C.A.R. opposes AB 2359 because it
will reduce financing options for borrowers and increase the cost of
mortgage loans. Position: Oppose Status: Assembly Floor
6. AB 2187 (Caballero) Foreclosures -
Existing law regulates the process of foreclosing on real property. As
introduced, AB 2187 would have required lenders mailing a notice of default
to a borrower whose real property was subject to foreclosure to also mail
that borrower a copy of a "homeowner's bill of rights." The bill also
requires a lender to notify the local government of its plan for managing
the maintenance of the property upon the completion of a foreclosure.
Lenders failing to maintain the property would have been required to
reimburse local governments reasonable costs in order to prevent or remedy
blight in the community. C.A.R. opposed AB 2187 because it did not define the "homeowner's
bill of rights," and left the phrase "wide open" for individual
interpretation by lenders and brokers alike; in other words, the measure
encouraged potential litigation. As amended, AB 2187 was
completely re-written to instead require foreclosing lenders to mail,
with the notice of default, a foreclosure statement describing the
foreclosure process and informing borrowers of their rights. The bill
would also require notices of default be provided to borrowers in
Spanish, Chinese, Tagalog, Vietnamese, or Korean. Finally, AB 2187
requires foreclosing lenders to maintain vacant residential properties
and requires local governments to provide lenders with a notice
detailing violations should lenders fail to appropriately maintain those
properties. Lenders would be given a 14 day window of opportunity to
correct the noticed violations prior to the imposition of any fines that
could result in maximum fines of $1,000 per day. C.A.R. does not favor
the passage of AB 2187 in its current form because it would place
additional burdens on lenders and could result in more stringent
underwriting requirements than already exist. Position: Not Favor
Status: Assembly Appropriations Committee
7 . AJR 45 (Coto) Conforming loan limits -
AJR 45 (Coto) Federal Conforming Loan Limit - This measure, sponsored by
the California Building Industry Association, requests the President and
Congress of the United States to permanently increase the federal
conforming mortgage loan limit from $417,000 to $729,750. C.A.R. supports
AJR 45 because California has the nation's highest housing costs and is
home to 21 of the 25 least affordable housing markets in the United States.
Position: Support Status: Senate Education Committee
IV. Federal Issues
A. Discussion/Reporting Items
1. Stimulus
Package and Temporary FHA and GSE Loan Limit Increase
C.A.R.
Position:
C.A.R. is
supporting the House proposed Housing Stimulus Package that includes:
-
Permanent
extension of the temporary increase in the GSE and FHA loan limits from
Stimulus I,
-
Reforming the
GSE and FHA programs,
-
Creating a tax
credit for first-time homebuyers,
-
A FIRPTA fix,
and
- Expanding
FHA so it may insure troubled mortgages from lenders.
I
n April, the
Senate passed their second Economic Stimulus Package of 2008. The
intent of the package is to help homeowners avoid foreclosure. In
actuality, the bill passed by the Senate would do little to help
individuals avoid foreclosure. The final bill was full of tax
incentives directed towards lenders and homebuilders, along with a version
of FHA Reform that would severely cut the current higher loan limits
implemented under Stimulus I.
As
expected, the House started from scratch on its own Housing Stimulus Plan;
which it passed on May 8, 2008. The House bill will:
- Permanently
extend the temporary increase in the GSE and FHA loan limits from Stimulus
I,
- Reform the
GSE and FHA program,
- Create a tax
credit for first-time homebuyers,
- Include a
FIRPTA fix, and
- Expand FHA so
it may insure troubled mortgages from lenders.
It is unclear if the Senate and the House will be able to workout the
differences between the two bills. Additionally, the Administration
is not supporting the House bill and has threatened a veto.
On May 20, the
Senate Banking, Housing and Urban Affairs Committee marked up the
Federal Housing Finance
Regulatory Reform Act. This bill was introduced by Senator Dodd,
(D-CT), who chairs the Committee, and was a product of intense negotiations
with the ranking member, Senator Shelby (R-AL). The bill will reform
regulatory oversight of the GSE and permanently cap the GSE loan limit in
high-cost areas to 132 percent of the conforming loan limits
($550,440). The bill also includes a version of the FHA Rescue
Program, but would divert GSE contributions from the proposed affordable
housing fund to offset the cost of the FHA Rescue program.
It is still not
yet known if the Senate will bring Dodd's GSE Reform bill to the floor of
the Senate for a vote or move to negotiate a Stimulus Package that includes
GSE Reform and an FHA Rescue Program since they are already included in the
House Stimulus Package.
2. FHA Rescue
Program (Please see IBP)
C.A.R.
Position:
C.A.R.
supports allowing the government housing programs to purchase mortgages from
lenders that are at risk of defaulting. C.A.R. believes that the
government housing programs should not be utilized as a taxpayer funded
bailout; but, that lenders and homeowners should share in the responsibility
and cost.
While
there are a number of proposals from Congressmen, Senators and federal
regulators that would address the current housing downturn, the two bills
that have the best opportunity of passage are those by Representative
Barney Frank and Senator Christopher Dodd. Frank and Dodd jointly
announced their bills on March 13, and while there are some differences the
primary intention of the two proposals is to utilize the FHA to insure
troubled mortgages.
3. 2009 OFHEO Conforming
Loan Limit Rule
OFHEO
announced in March 2008, that they would NOT decrease the
2009 conforming loan limit. This is a reversal of a previous OFHEO
announcement stating their intention to lower the 2009 loan limits.
This has no impact on the temporary increase of the conforming loan limits
in high cost areas that was enacted by Stimulus I.
4. GSE Appraisal Deal with
N.Y.
(C.A.R. Comment
Letter)
C.A.R.
Position: C.A.R.
is opposed to not only the proposed Code, but the manner in which the Code
was created and is being enacted.
In March, Fannie Mae,
Freddie Mac, and OFHEO announced they had reached a deal with the Attorney
General's Office of New York over appraisal standards that will reshape the
appraisal industry across the country. Facing investigations by the
N.Y. Attorney General, Fannie and Freddie reached a compromise so the AG
would stop his investigation.
C.A.R. is
staunchly opposed to this agreement as it will preempt all state laws and
hinder the loan process. Under the agreement Fannie and Freddie will
only be allowed to purchase loans from lenders who meet the new appraisal
requirements regardless of what state the loan was originated in.
C.A.R. believes this agreement sidestepped the proper and legal routes for
the GSE to enact new rules. Many lenders have already hinted they
plan to challenge the legality of the
agreement.
The deal will create a Home Valuation Code of Conduct that is intended to
create and protect the independence of home appraisals. The original
publication of the Code caused much angst due to vague writing that led
many in the industry to believe lenders and mortgage brokers would be
unable to communicate with appraisers. REALTORS® are hoping the final
draft language will clarify that communication is allowed so long as their
intention is not to fraudulently influence the appraiser.
One drastic change the Code
creates is removing the ability of mortgage brokers to order
appraisals. Only lenders would be allowed to order independent
appraisals for properties under the Code.
5. Federal Mortgage Broker
License
Requirements
C.A.R. Position:
C.A.R. is supporting Senator
Feinstein?s mortgage broker license requirements bill.
There has been
growing concern by members of Congress over the education, oversight and
regulation of mortgage brokers. Of great concern to members of
California's Congressional Delegation is the Department of Corporations'
California Finance Lenders License (CFL). Because there are no
education requirements or licensing requirements for employees of CFL
companies, Congress is looking to implement minimum standards on loan
originators.
Senator Feinstein has
introduced the SAFE Mortgage Licensing Act that would ensure all mortgage
professionals are trained in federal lending laws, ethics, consumer
protection, and the sub-prime mortgage marketplace. It would also
create a national database for consumers to use to verify the credentials
of their brokers and lenders. The bill will require mortgage brokers
to meet minimum education requirements on an annual basis, but will not
require an annual license renewal.
The bill has
been marked up out of the Senate Banking, Housing and Urban Affairs
Committee as part of the Dodd GSE Reform bill and may be included in a
final version of the Housing Stimulus Package.
6. Neighborhood
Stabilization
Act
C.A.R.
Position: C.A.R.
has no position on this issue.
Introduced in April of 2008
by Maxine Waters, the Neighborhood Stabilization Act, H.R. 5818, was passed
by the House on May 8, 2008, by a vote of 239 -188.
The bill would provide
grants and loans to states to purchase foreclosed housing for resale to
families having incomes up to 140% of the area?s median income, rental of
such housing by low- and moderate-income families, and the rehabilitation
of such homes for the purpose of reselling them.
While this bill was passed
separate from the Housing Stimulus package, there will be efforts by
Democrats to include it in any final version.
7. Treasury
Restructuring
Blueprint
C.A.R.
Position: C.A.R.
has no position on this issue.
On March 31,
2008, Secretary Paulson announced the Treasury Department's Blueprint for a
Modernized Financial Regulatory Structure. The plan includes short,
intermediate, and long-term recommendations.
Of most
immediate importance to REALTORS® is the proposal to create a Mortgage
Origination Commission to set minimum state licensing standards for state
mortgage market participants. Most believe Congress will not act on this or
other elements of the plan this year, but the Commission could be an
exception.
In the section
on long-term issues, Treasury supports allowing holding companies to own
both banks and commercial firms. REALTORS® are strongly opposed to mixing
banking and commerce. This section of the Blueprint would take many, many
years to enact and be extensively revised along the way.
Read
below for more details and a link to the Treasury website on this
subject.
========================================
Short-Term
Recommendations:
- Create a
federal Mortgage Origination Commission (with federal and state regulators)
to set minimum licensing standards for state licensing of its mortgage
market participants. Treasury decided not to propose preemption of state
rules in this area. (But setting minimum standards for state entities may
be seen as a form of preemption.) The Fed would continue to issue
regulations implementing national mortgage lending
laws.
-
Enhance the mission of the President's Working Group on Financial Markets
(PWG), made up of the Treasury, the Federal Reserve Board, the SEC, and the
CFTC. The Blueprint would enlarge PWG membership to add the missing bank
regulators: OTS, OCC, and FDIC.
- Consider the
role of the Fed in providing additional liquidity for participants in the
financial
markets.
Intermediate Term Recommendations:
-
Repeal the thrift charter
and abolish OTS, the thrift federal
regulator.
- Improve oversight of the payments system by establishing a new federal
charter for the major players.
- Merge the SEC
and the CFTC (the commodity futures regulator).
- Authorize an
optional federal insurance charter. Congress would establish a federal
Office of Insurance Oversight within Treasury.
- Study the
federal regulation of state-chartered banks (some now regulated by the Fed
and others by the FDIC), and consider the appropriate federal regulator for
state-chartered banks, to promote efficiency and minimize
duplication.
Long-Term
Recommendations:
The Blueprint proposed a complete restructuring of the current regulatory
structure. Secretary Paulson acknowledges this will take many any years to
achieve. There would be 3 regulators:
- Market Stability
Regulator.
The Fed would oversee all the various actors in the financial markets, to
promote market stability. This is a major expansion of Fed
powers.
-
Prudential
Regulator.
There would be a safety and soundness regulator for institutions with
explicit government guarantees-insured depository institutions and
insurance companies. The OCC would be the model. Treasury recommends
continuing a separate regulator for the GSEs, to avoid the implication the
Federal government guarantees GSE
obligations.
-
Business Conduct
Regulator. There
would be a new entity to monitor business conduct to protect consumers and
investors.
Key Long-Term Issues
The
Treasury Blueprint includes a discussion of key long-term issues, including
its proposal for a Federal Insured Depository Institution (FIDI) Charter.
The Treasury recommendation contains a number of extremely troublesome
recommendations.
- First, in the
Treasury's opinion of an optimal structure would allow FIDIs to affiliate
with commercial firms (see page 163). This would permit banks to own real
estate brokerage and management firms. NAR's position opposing mixing
banking and commerce is
well-established.
- Second, banks with state charters would also be required to have an FIDI
Charter. Federal preemption would override state laws and permit the state
banks to engage in the same activities as banks that hold only an FIDI
Charter. This would mark the end of the state banking system, for practical
purposes, since few institutions would retain a state charter. The role of
the state regulator would be limited to developing and enforcing business
conduct regulation.
This
Treasury page includes links to the Paulson statement, a Fact Sheet, the
full Blueprint, and related information:
Treasury Link
8. Mortgage
Reform
C.A.R.
Position: C.A.R.
opposes federal preemption of state laws. Additionally, C.A.R.
supports strong consumer protection laws, but those laws must not be so
stifling as to hinder the flow of capital to the markets.
The
continued crisis in the subprime market has caused both the Senate and the
House to introduce subprime and mortgage reform bills to address what many
politicians and consumer groups perceive as predatory practices. The
hope of the legislation is to protect consumers while not crippling the
subprime market; which, when properly utilized by home buyers serves as a
valuable resource for home ownership opportunities to those not able to
procure prime rate financing.
The
House bill, H.R. 3915, was passed on November 15, 2007, by a vote of
291-127. The House bill primarily proposes the following:
- Create
minimum standards for state licensing of "mortgage loan originators" and
create a federal registration for them. This would not include real
estate agents; and is intended for mortgage brokers and bank employees who
originate
mortgages.
-
Require creditors to ensure the borrower has a reasonable ability to repay
the loan, and for refinancing there must be a net tangible benefit to the
consumer.
-
Tighten Home Owners Equity Protection Act (HEOPA) requirements so the APR
and fee triggers are
reduced.
-
Prohibit the financing of points and fees, balloon payments, or excessive
fees for payoff information, modifications, and/or late payments.
The
Senate bill, S. 2542, which was introduced at the end of 2007 by Senator
Dodd is waiting to be heard in the Senate Banking, Housing, and Urban
Affairs Committee. While both Democrats and Republicans will make
recommendations and amendments to Dodd?s bill, as introduced it
would:
- Redefine a
HOEPA loan to 8% above Treasury on the first, 10% for the second, or 5% of
fees (including
YSP),
- Define a
"subprime mortgage" as 3% above Treasury on the first, 5% for the
second,
-
Prohibit any Yield Spread Premium (YSP) and prepayment penalties on HOEPA,
subprime, and nontraditional
mortgages,
-
Give borrowers the ability to "unwind" or rescind a loan that violates
provisions laid out in the legislation (it would actually be up to the note
holder to help make the home buyer whole; we will have to see the actual
text of the legislation to better understand this
provision),
- Require mortgage brokers to have a fiduciary duty to their
customers and hold them accountable under the Truth in Lending Act
(TILA),
-
Prohibit
Steering,
-
Allow "YSPs only in the case of no-cost loans" that are prime (Where YSPs
are paid, brokers may not receive any other compensation from any other
source and prepayment penalties are prohibited),
and
-
Address appraisals, loan servicers, and foreclosure prevention.
Dodd's
bill was drafted and introduced with little to no consultation from many
within the industry and appears to be more of a wish list for consumer
groups. If Dodd is serious about moving his bill there will be many
amendments made.
9. Banks in
Real
Estate
C.A.R.
Position:
C.A.R. supports the
separation of banking and commerce.
On December
26, 2007, President Bush signed into law the FY2008 omnibus appropriations
bill which includes a two-year provision prohibiting banks from entering
the real estate brokerage, property leasing and management business. NAR
was well position to secure a permanent ban. However, due to a last minute
objection by Senator Robert Byrd (D-WV), Chairman of the Senate
Appropriations Committee, the permanent language was struck and replaced
with a two-year ban. In 2008 NAR will be advocating Congress to approve its
Community Choice in Real Estate bill (H.R.111/S.413).
V. VA & HUD
Issues
A.
Secretary Jackson Steps Down
In March, then HUD Secretary
Alphonso Jackson announced his resignation. While stating the need to
focus on "personal and family matters," Jackson resigned amid several
ethics investigations that have yet to be resolved. President Bush
has nominated Steven Preston who currently serves as the Administrator of
the Small Business Administration. While Preston would appear to have
little to no housing background, at least one Senate hearing has been held
and his confirmation would appear to be all but assured.
B. HUD RESPA
Proposal
On May
7, 2008 the Department of Housing and Urban Development (HUD) announced a
30-day extension, to June 12, 2008, for the public to comment on the
proposed Real Estate Settlement Procedures Act (RESPA) rule. The
announcement came just six days before the initial comment period was to
end on May 13, 2008 and two days after HUD received a Congressional written
request for a 60-day extension signed by 149 members of Congress. The
Congressional letter, organized by Rep. Ruben Hinojosa (D-TX) and Rep. Judy
Biggert (R-IL), referred to the extensive nature of the RESPA reform
proposal and the fact that some aspects had not previously been the subject
of public comment.
In addition, the letter stated that further analysis was needed on the
proposed rule's interaction with state and federal laws and regulations
including the Federal Reserve Board's proposal to amend its Truth in
Lending Act (TILA) regulations. REALTORS® worked closely with the offices
of Representatives Hinojosa and Biggert to help collect signatures for the
letter. The fact that HUD provided a 30-day extension rather than the
60-days requested by Congress will be revisited in the future and another
extension request may be made if warranted.
REALTORS® have been working with its members and
industry partners to analyze and determine the proposal's impact on
association members and the settlement service industry. REALTOR® Gary
Thomas, along with other settlement service industry representatives
participated in a Small Business Roundtable on April 24, 2008 and expressed
REALTORS®' concerns about the proposed rule, including the comprehensive
nature of the proposal which goes well beyond the anticipated reform
narrowly focused on improved disclosures, the timing of provisions
requiring significant changes to the real estate settlement process, and
comments directed at specific provisions including volume discounts,
average cost pricing, price tolerances, a new definition of "required use"
and a new "closing script" which must be read aloud at
closings.
NAR will submit comments to HUD on these and other
aspects of the proposed rule and encourages members to submit their own
comments to HUD by June 12, 2008.
Proposed Good Faith Estimate
Proposed Instructions for Closing Script
Proposed Rule
C. Home Ownership
Opportunities for
Veterans
C.A.R. Position:
C.A.R.
supports increasing homeownership opportunities for California and the
nation's veterans.
The House
Veterans Affairs Committee has favorably reported H.R. 4884, the "Helping
Our Veterans to Keep Their Homes Act of 2008". This bill, sponsored by Rep.
Filner (D-CA), will reform the VA loan program so that it is able to
adequately serve the many deserving veterans who could use its benefits.
The bill does 3 major things:
-
Permanently
increase the VA loan limits to 175% of the Freddie/Fannie limits (currently
that would be equal to $729,750);
-
Streamline
refinances for veterans by eliminating the equity requirement and raising
the refinancing loan limits to the same level as the purchase loan limits;
and
- Extend the authority of VA to offer Adjustable Rate Mortgages
(ARMs).
This bill is
expected on the House Floor in the next few weeks. Similar legislation has
not yet been
introduced in the Senate.
An additional piece of
proposed legislation to help veterans with their homeownership
opportunities is the Qualified Veterans' Mortgage Bonds (QVMB)
program. As home prices have risen in California, only a few select
veterans in California and four other states have benefited from
low-interest rate mortgages secured by Qualified Veterans' Mortgage Bonds
(QVMB). The bonds are tax exempt government obligations and are
backed by the full faith and credit of the issuing state. Veterans
who finance their homes through QVMBs can receive an interest rate of
.50-.75 percentage points less than that of a conventional
loan.
Under current law, to qualify for a QVMB a veteran must have served on
active duty prior to January 1, 1977 and applied for financing before their
thirty-year anniversary of leaving the service. This prohibits
veterans of more recent or ongoing military conflicts such as Operation
Iraqi Freedom, Operation Enduring Freedom, Kosovo, Somalia, and the 1991
Persian Gulf War from being able to benefit from these loans.
H.R. 551, the Home Ownership for America's Veterans Act of 2007, was
introduced on January 18, 2007 by Rep. Davis (D-CA). Most of the
provisions in H.R. 551 were rolled in H.R. 3997, the Heroes' Earnings
Assistance and Relief Tax (HEART) Act of 2007. While it did not
address every issue found in H.R. 551, it did include language that would
make permanent the exception that allows QVMBs to be eligible for any
housing, not just a first-time homebuyer, and included the change that
instead of having to serve prior to January 1, 1977, you now would just
have to apply for the QVMB within 25-years of your last date of active duty
service. The Senate passed the latest amended version of H.R. 3997
just prior to the Winter 2007 recess. It was believed that H.R. 3997
would be picked up again early in the 2nd session of the 110th Congress;
however, so far H.R. 3997 has remained idle in the House.
The House passed H.R. 6081, the Heroes Earnings Assistance and Relief Tax
Act, on May 20, 2008, by a vote of 403-0. Included in H.R. 6081 are
the same QVMB provisions that were found in H.R. 3997.
VI. Other
Business
VII. Adjournment
