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2008
Business Issues Committee
National Association of REALTORS®
2008 Midyear Legislative Meetings & Trade Expo
Marriott Wardman Park
Cotillion Ballroom North, Mezzanine Level
Wednesday, May 16, 2008
10:00 AM - 12:00 PM
Chair:
Peter Casey
Vice Chair: Douglas Whitehouse
Committee Liaison: Gary Thomas
Committee Executive: Marcia Salkin, Ken Trepeta
I. Call To Order
II. Opening Remarks
III.
Ownership/Conflict of
Interest
1. When NAR
has an ownership interest in an entity and a member has an ownership
interest* in that same entity, such member must disclose the existence of
his or her ownership interest prior to speaking to a decision making body
on any matter involving that entity.
2. If a member has personal knowledge that NAR is considering doing
business with an entity in which a member has any financial interest**, or
with an entity in which the member serves in a decision-making capacity*,
or wit, then such member must disclose the existence of his or her
financial interest or decision making role prior to speaking to a decision
making body about the entity.
3. If a member has a financial interest in, or serves in a decision-making
capacity for, any entity that the member knows is offering competing
products and services as those offered by NAR, then such member must
disclose the existence of his or her financial interest or decision-making
role prior to speaking to a decision making body about an issue involving
those competing products and services.
After making the necessary disclosure, a member may participate in the
discussion and vote on the matter unless that member has a conflict of
interest as defined below.
Conflict of Interest Policy
A member of any of NAR?s decision making bodies will be considered to have
a conflict of interest whenever that member:
1. Is a principal, partner or corporate officer of a business providing
products or services to NAR or in a business being considered as a provider
of products or services (?Business:); or
2. Holds a seat on the board of directors of the Business unless the
person?s only relationship to the Business is service on such board of
directors as NAR?s representative; or
3. Holds an ownership interest of more than 1 percent of the
Business.
Members with a conflict of interest must immediately disclose their
interest at the outset of any discussions by a decision making body
pertaining to the Business or any of its products or services. Such members
may not participate in the discussion relating to that Business other than
to respond to questions asked of them by other members of the body.
Furthermore, no member with a conflict of interest may vote on any matter
in which the member has a conflict of interest, including votes to block or
alter the actions of the body in order to benefit the Business in which
they have an interest.
________________________________________
*Ownership interest is defined as the cumulative holdings of the member,
the member?s spouse, children, siblings and to any trust, corporation or
partnership in which any of the foregoing individuals is an officer or
director, or owns, in the aggregate, at least 50% of the (a) beneficial
interest (if a trust), (b) stock (if a corporation) or (c) partnership
interests (if a partnership).
**Financial interest means any interest involving money, investments,
credit or contractual rights.
IV.
Approval of Previous Meeting's Minutes and 2007
Committee Goals
V. Action/Discussion Items
A. Net Neutrality - Thomas Navin - FCC Wireline Competition Bureau Chief
B.
Retirement Visa/Silver Card ?
The current visa system does not allow foreign citizens who own a
retirement or vacation home in the United States to use that home on a
full-time basis and/or to enter and exit the U.S. without
restriction.
The measure is likely to be legislative and could be part of a stand alone bill or part of a larger immigration bill.
The creation
of a gray card would boost housing prices and sales, contribute to economic
growth, and increase foreign investment in the U.S.
Individuals
who want to live in the U.S. and/or come and go freely should become U.S.
citizens or meet the requirements of one of the nation's more than 80 visa
categories. Gray card holders would not contribute to the governments which
provide them with public services and could become a burden to the U.S.
health care system. In addition, foreign purchasers will raise the housing
costs of U.S. families and domestic retirees by increasing the demand for
housing.
Research on the feasibility, both technical and political.
Staff has
worked with NAR members and outside consultants on research necessary to
evaluate the necessary components of a "silver card" legislative proposal,
as well as the likelihood that such a proposal could receive the support
needed for passage. Member survey work has found that in some resort
markets, Realtors have indicated that concerns with visa requirements have
been a factor in some foreign nationals' purchase decisions. The results of
outside legal and legislative research into the factors that would need to
be addressed in any retirement visa proposal will be presented to the
Business Issues Committee at the May NAR meetings.
C.A.R. Policy: That C.A.R. recommends to NAR that NAR continue to explore the issue of creating a new U.S. retirement visa designation.
NAR Policy: NAR's Board of Directors has directed staff to explore the feasibility of creating and implementing a retirement visa or "silver card" for foreign nationals who are over 55 years of age, have documented income and own U.S. residential real property.
C. .Patent Reform
S 1145
[LEAHY, D-VT, HATCH, SCHUMER, CORNYN, WHITEHOUSE]
HR 1908 [BERMAN, D-CA, SMITH of Texas, CONYERS, COBLE,
BOUCHER, GOODLATTE, ZOE LOFGREN, ISSA, SCHIFF, CANNON,
JACKSON-LEE]
VI.
Priority Legislation/Regulations
A.
Small Business Health Coverage
Update
Sixty percent
of America's 45 million uninsured citizens go to work every day. They are
self employed individuals or work for small firms who are unable to find
affordable health insurance. Without the ability to negotiate with insurers
or spread their risk across a large number of plan participants, small
business owners and self-employed individuals can only choose from the
standard insurance products offered by insurers.
A broad coalition of trade organizations, including NAR, support
legislation that would allow small businesses to join together through
their trade associations to form small business health plan (SBHP)
programs. SBHP would allow these firms to pool their risks and collectively
negotiate for health insurance coverage for firm employees, principals and
the self-employed. SBHPs would offer a uniform insurance plan to trade
association members, their dependents and employees regardless of where
each member resides. The most recent actuarial study of SBHPs estimates the
potential savings in premium costs for a participant in an small business
health plan to be 12 percent on average.
NAR supports legislation - S. 1955, S. 406 and HR 525 - to allow
professional and trade associations to create small busines health plans
and offer uniform health insurance coverage plans to association members
regardless of where the member resides.
Access to affordable health insurance has increasingly become an issue for
NAR's members. In 1996, 13% of Realtors were uninsured; by 2006, 28% -
roughly 360,000 - REALTORS® - had no health insurance. Given that the
average REALTOR® household includes 2.6 persons, it is possible that the
number of uninsured REALTORS® and dependents is much higher. SBHPs could
enable real estate associations to make health insurance available their
members, their families and employees.
Despite the Senate's failure to take up S. 1955, small business health plan
(SBHP) legislation, on Thursday, May 11, 2006, NAR and the SBHP Coalition
have continued to press the Senate to work out their differences and bring
the bill back up prior to recessing for the year. The bill, cosponsored by
Senators Mike Enzi (R-WY), Ben Nelson (D-NE) and Conrad Burns (R-MT), would
allow trade associations to negotiate health insurance coverage for members
and is pending on the Senate floor. The Senate leader, Senator Frist (R-TN)
has indicated that he is exploring all options for bringing S. 1955 back to
the floor. With the current political climate and the still unfinished
Appropriations bills, it is unclear how much will get done during the
post-election lame duck session.
At the urging of the Senate leadership, House leadership planned to attach
the House's SBHP measure, HR 525, to the House's minimum wage bill in late
July. By including the health insurance provisions favored by small
businesses and Republicans, House GOP leaders hoped to secure a ?majority
of the majority? for the minimum wage bill while also increasing the
likelihood of passing AHP/SBHP legislation this year. Ultimately, estate
tax extenders bumped the SBHP legislation from the bill late Thursday night
just prior to the Friday, July 28, 2006, House vote.
S. 1955 is based on the fully-insured component of the AHP concept long
championed by Senator Olympia Snowe (R - ME). Under the Enzi/Nelson
proposal, insurers working with a sponsoring trade association would be
required to be licensed in every state in which the SBHP enrolled
participants. The insurers would therefore be regulated by the state
insurance commissioner in each state and subject to all state laws with the
exception of mandate and small group market premium rating rules explicitly
addressed in the bill. In order to avoid the potential for adverse
selection and disruption of existing insurance markets, eligible insurers
would also be allowed to offer an SBHP-like insurance product to the
general market.
While an SBHP may offer insurance plans that do not comply with state laws
that require specific types of coverage, if an SBHP product does not comply
with those state mandates then at least one additional plan option must be
offered that complies either with state mandates or with coverages offered
by a state employee plan offered in one of the five most populous states
(California, New York, Florida, Illinois or Texas). Further amendments
planned for consideration but not discussed due to the failed cloture vote
were amendments to require SBHPs to offer all of the mandates required by
26 states and to tighten the bill's small group rating rules.
Despite charges that have been made by critics of the bill, S. 1955 does
not preempt all state insurance laws and SBHPs are required to offer
quality insurance plans. The bill does create a limited preemption of state
mandate and small group rating laws for SBHPs products. As was noted above,
small business health plans are required to follow mandate and rating rules
spelled out in the bill. Exceptions to state mandate laws have been
criticized by the American Cancer Society, American Diabetes Association,
AARP and some provider/practitioner groups.
In addition, the bill establishes a process for encouraging states to
harmonize state insurance laws governing the administrative processes
involved in insurance regulation. Chairman Enzi included these provisions
in an effort to streamline the current hodgepodge of varying state
regulation which he believes have helped to increase costs, discourage
insurers from entering new markets and lessened competition.
Most Recent NAR Actions:
- A September NAR Call For Action was delivered to NAR members. Members
were asked to write and urge their Senators to pass S. 1955 and tell their
Representatives to push the House leadership to work with the Senate to get
small business health plan legislation enacted this year. To date, over
62,000 letters have been delivered to the Senate, while over 20,000 letters
have gone to the House.
- To complement September 2006 REALTOR® grassroots and lobbying activities,
a new NAR print ad ran in Capitol Hill publications, The Hill and Roll
Call. The full page color ad header says, Congress: Pass Small Business
Health Plans...America is Waiting. The message centers on the 89% of
Americans who support the SBHP concept whether from a red state or blue
state, Republican or Democrat and calls on Congress to do the right thing
and do it now.
- President Tom Stevens has met with Senate Majority Leader Bill Frist and
Minority Leader Harry Reid on the need to enact small business health plan
legislation this year.
- Meetings continue to be held with the staff of those Senators who
expressed interest to Senators Enzi and Nelson in continuing to work on
identifying a compromise measure that could be taken up again this year.
Meetings to date have focused on the remaining issues of concern and
possible compromise measures.
- SBHP legislation is one of the primary talking point issues for NAR's
August recess ?REALTOR® Month in the District? programs and has been
featured in RPAC candidate mailings.
- NAR staff met with the disease management and provider groups who were
vocally opposed to the legislation including the American Cancer Society,
the American Diabetes Association, and the American Association of
Chiropractors in an effort to explore possible areas of agreement and/or
compromise. While the meetings were a necessary and important step, it is
unlikely that these groups will reconsider their opposition to S. 1955
without significant changes to the mandate provisions.
- NAR and state associations are working on the placement of op-eds and
letters to the editor citing the continuing need for the Congress to enact
SBHP legislation this year. State association presidents in 47 states also
sent letters to each of their Senators urging them to work with Senators
Enzi and Nelson on a compromise measure that could be adopted this
year.
- NAR in-district "thank you" ads for those Senators who voted for cloture
during the Senate floor discussions were run in the major state capital
papers during the July 4th recess period.
Legislative History:
S. 1955 has been pending on the Senate calendar since the bill was set
aside when S. 1955 cosponsors failed to win the Democratic votes for
cloture necessary to avoid a filibuster on the bill. The procedural cloture
vote, which required 60 votes for passage, failed 55-43. Senators Ben
Nelson and Mary Landrieu (LA) were the only Democrats voting to advance the
bill while Senator Lincoln Chafee (RI) was the only Republican to oppose
moving forward. This is the first time in the 11 year history of small
business health plan legislation that the Senate took up an SBHP bill. The
bill had earlier passed the Senate Health, Education and Pensions Committee
on 11-9 vote in March 2006.
B.
Personal Data Security
As technology
has evolved and become vital for businesses to thrive, a growing number of
public and private entities (including colleges, universities, health
insurance companies and data brokers) that keep and maintain personal
information (financial accounts, social security numbers, phone numbers),
have become victims of security breaches. These breaches have exposed
fundamental security flaws in the way that companies handle consumers?
personal information. Individual privacy has been compromised and these
breaches have put consumers at an elevated risk of becoming victims of
identity theft.
REALTORS® strongly support efforts to protect their clients' sensitive
personal information but believe that any legislation must not overly
burden small firms with limited resources. In addition, any federal data
security legislation should not preempt state laws which may offer state
residents additional protection.
S. 1178
(Inouye, D-HI; Stevens, R-AK; Pryor, D-AR), the Identity Theft Prevention
Act, the first of what is expected to be a series of bills responding to
the rising incidence of database breaches, would require businesses that
collect sensitive personal information to (1) develop a written security
program outlining steps that are to be taken to protect client information,
(2) notify consumers whose information has been lost of the loss in a
timely manner, (3) provide these same consumers with a toll-free telephone
number to contact the firm following a breach and (4) report the breach to
the Federal Trade Commission (FTC). The FTC would also be responsible for
enforcement, although the state attorneys general would also be authorized
to enforce the measure. The bill does not create a private right of
action.
NAR will participate in the upcoming legislative discussions of data
security and breach notification requirements for businesses.
Most observers
believe that data security legislation will be a high priority for each
chamber in the 110th Congress. In the Senate, three bills have been
introduced and considered at the committee level, including S. 495, (Leahy,
D-NH), the Personal Data Privacy and Security Act of 2007, S.239
(Feinstein, D-CA), the Notification of Risk to Personal Data Act of 2007,
and S. 1178 (Inouye, D-HI; Stevens, R-AK). While each bill varies in its
terms, all three would require businesses holding consumers' "sensitive
personal information" to institute a security program, notify those
consumers whose data has been compromised by a data breach and report
breaches to either the Federal Trade Commission and/or the Secret Service.
In the House, H.R. 958 ( Rush, D-IL; Stearns, R-FL), the "Data
Accountability and Trust Act?, was introduced with similar provisions in
February 2007. The bill is pending in the House Energy and Commerce
Committee.
While S. 1178 passed out of the Senate Commerce Committee on a voice vote
on April 25, 2007 and both S. 495 and S. 239 were scheduled for mark-up in
the Senate Judiciary Committee on May 2, 2007, getting a final bill enacted
will be difficult. A total of at least eight congressional committees in
the Senate and House have jurisdiction over some component of the data
security issue. Jurisdictional spats derailed efforts to get a consensus
bill last year. NAR submitted letters outlining its concerns with each of
the bills at mark-up and will continue to work with each of the committees
of jurisdiction to ensure that careful consideration be given to the
potential unintended consequences that these measures could have for the
nation's small businesses, as well as for the ability of states to enact
more consumer protective data security measures.
VII.
Pending Issues
A. RESPA Reform
In June 2005,
the Department of Housing and Urban Development (HUD) released its ?roadmap
to RESPA reform,? a continuation of its efforts to revamp the Real Estate
Settlement Procedures Act (RESPA) regulations. A new proposal has been
delayed after Secretary Jackson initially indicated it would be available
in the spring.
NAR POSITION: NAR advocates a market-based approach to
RESPA reform that encourages fair competition, protects consumer choice and
provides full disclosure of costs and services in the mortgage
transaction.
HUD's withdrawn 2004 RESPA rule would have put lenders in control of the
entire real estate settlement transaction while operating under an
exemption from Section 8?s anti-kickback provisions. The rule could have
lead to increased concentration but less competition within the lending
industry. Any regulation that moves an industry toward greater
concentration should be viewed with considerable caution, as it could lead
to higher closing costs.
A new proposal from HUD has been delayed but efforts are being made to come
out with a proposal in 2007.
At roundtables in 2005, HUD disclosed the provisions of a 2004 "final"
RESPA rule which was withdrawn from the Office of Management and Budget?s
(OMB) consideration. That RESPA rule would have included an enhanced Good
Faith Estimate (GFE) four-page form with yield spread premium disclosure
and tolerances for third party settlement services; a Mortgage Package
Offer (MPO) (formerly the Guaranteed Mortgage Package Offer or GMP), that
would have been exempt from RESPA?s Section 8 anti-kickback provisions; and
a Settlement Services Package (SSP) product that would allow non-lenders to
offer packages including appraisals, title services, recording fees and
other lender required settlement services. HUD?s 2004 rule would not have
required a lender to accept an SSP the consumer brought to the
transaction.
HUD has said it is committed to drafting a rule that would provide greater
certainty of closing costs for consumers. While there is no "formal"
consensus, most roundtable participants seemed to agree that HUD should
pursue an enhanced or improved GFE and should forgo its regulatory efforts
to develop a packaging rule.
2006 NAR President Tom Stevens met with Secretary Jackson and OMB Director
Portman in 2006 and reiterated NARs position. NAR staff met with the HUD
General Counsel in July 2006 gave him a detailed view of NAR's position as
well. In April 2007, NAR President Pat Vredevoogd-Combs sent a letter to
acting General Counsel, Robert Couch asking that he continue to pursue his
predecessor's proposal to issue "no action" letters to firms that seek
approval for activities under RESPA. NAR believes such letters will help
people better comply with RESPA.
Letter to HUD- Online Complaint
Questionnaire
Letter to HUD- Endorsing Effort to Provide Greater
Transparency
B.
Prescreening/Triggers/ ID Theft
Prevention (Letter to FTC)
C.
GAO Title Industry Study
(Full GAO Study)
Title
Insurance- Actions Needed to Improve Oversight of the Title Industry and
Better Protect Consumers
GAO Highlights
Highlights of GAO-07-401, a report to the Ranking Member, Committee
on
Financial Services, House of Representatives
Why GAO Did This Study:
In a previous report and testimony, GAO identified issues related to title
insurance markets, including questions about the extent to which premium
rates reflect underlying costs, oversight of title agent practices, and the
implications of recent state and federal investigations. This report
addresses those issues by examining (1) the characteristics of title
insurance markets across states, (2) factors influencing competition and
prices within those markets, and (3) the current regulatory environment and
planned regulatory changes. To conduct this review, GAO analyzed available
industry data and studies, and interviewed industry and regulatory
officials in a sample of six states selected on the basis of differences in
size, industry practices, regulatory environments, and number of
investigations.
What GAO Found:
The U.S. title insurance market is highly concentrated at the insurer
level, but market characteristics varied across states. In 2005, for
example, five insurers accounted for 92 percent of the national market,
with most states dominated by two or three large insurers. Variations
across states included the way title agents conducted their searches as
well as the number of affiliated business arrangements (ABA) in which real
estate agents, brokers, and others have a stake in a title agency. Finally,
premiums varied across states due to cost and market variations that can
also make understanding and overseeing title insurance markets a challenge
on the national level.
Certain factors raise questions about the extent of competition and the
reasonableness of prices that consumers pay for title insurance. Consumers
find it difficult to comparison shop for title insurance because it is an
unfamiliar and small part of a larger transaction that most consumers do
not want to disrupt or delay for comparatively small potential savings. In
addition, because consumers generally do not pick their title agent or
insurer, title agents do not market to them but to the real estate and
mortgage professionals who generally make the decision. This can create
conflicts of interest if those making the referrals have a financial
interest in the agent. These and other factors put consumers in a
potentially vulnerable situation where, to a great extent, they have little
or no influence over the price of title insurance but have little choice
but to purchase it. Furthermore, recent investigations by the Department of
Housing and Urban Development (HUD) and state insurance regulators have
identified instances of alleged illegal activities within the title
industry that appeared to take advantage of consumers? vulnerability by
compensating realtors, builders, and others for consumer referrals.
Combined, these factors raise questions about whether consumers are
overpaying for title insurance.
Given consumers' weak position in the title insurance market, regulatory
efforts to ensure reasonable prices and deter illegal marketing activities
are critical. However, state regulators have not collected the type of
data, primarily on title agents? costs and operations, needed to analyze
premium prices and underlying costs.
In addition, the efforts of HUD and state insurance regulators to identify
inappropriate marketing and sales activities under the Real Estate
Settlement Procedures Act (RESPA), have faced obstacles, including
constrained resources, HUD's lack of statutory civil money penalty
authority, some state regulators? minimal oversight of title agents, and
the increasing number of complicated ABAs. Finally, given the variety of
professionals involved in a real estate transaction, a lack of coordination
among different regulators within states, and between HUD and the states,
could potentially hinder enforcement efforts against compensation for
consumer referrals. Because of the involvement of both federal and state
regulators, including multiple regulators at the state level, effective
regulatory improvements will be a challenge and will require a coordinated
effort among all involved.
What GAO Recommends:
GAO recommends that HUD and state insurance regulators take actions to
improve consumers? ability to comparison shop for title insurance and
strengthen the regulation and oversight of the title insurance market,
including the collection of data on title agents? operations. Further,
Congress may want to consider, as part of its oversight of HUD, exploring
the need for modifications to RESPA, including increasing HUD's enforcement
authority. HUD generally agreed with these recommendations, and NAIC agreed
they should be explored.
VIII. Reports
A. US District Court Decision: ReMax Ideal vs Ryan Swanberg (Court Decision)
B. NAR Letter to FCC (NAR Letter)
C.
RESPA
Education
NAR continues
its broad effort to educate its members on RESPA enforcement. The effort
began three year ago with the creation of the ?RESPA Realities? program at
Midyear and Annual convention. The session brings together leading RESPA
attorneys and real estate and real estate services practioners to discuss
the latest developments in RESPA enforcement and compliance. There is
usually a lengthy question and answer session involving the audience. The
most recent session in New Orleans attracted 300 REALTORS®. The next
session, at Midyear will be held at the Marriott Wardman Park in the
Virginia Suite on Tuesday, May 15, 2007 at 8:00. For more info visit:
http://www.realtor.org/educsess.nsf/allpages/07mygovRESPA
Following on the development of "RESPA Realities," NAR produced a series of
brochures and laminated cards to educate members of their obligations under
RESPA. The RESPA ?Dos and Don?ts? laminated cards have become popular
across the nation. The brochures incorporate more details and questions and
answers on key RESPA issues for agents and for those involved in affiliated
business arrangements (AfBAs). These materials are available for purchase
through the REALTOR® website:
http://www.realtor.org/RESPA
The REALTOR® RESPA page contains links to the REALTOR® store and other
information on the latest RESPA happenings.
In 2006, NAR undertook to create a RESPA education course that would be
eligible for state continuing education credit. The first approved course
was held in Maryland on April 17, 2007. More than 300 REALTORS® attended.
The course was jointly sponsored by NAR and the Maryland Association of
REALTORS®. NAR secured RESPA expert Phil Schulman to conduct the course.
The Maryland Association and several Maryland brokers promoted the course
to REALTORS®. The Maryland Association worked to secure CE credit and also
handled the onsite logistics for the course. NAR hopes to partner with
other state associations to conduct future courses.
The Future:
NAR plans to continue to expand its RESPA education efforts. The Midyear
2007 session of RESPA Realities will be recorded and made available for a
reasonable fee as an educational tool for agents, brokers, and
associations. The session may even be used as a one credit component of a
larger course should states wish. NAR will continue to partner with states
to offer RESPA education sessions to members across the country. Finally,
NAR continues to remain active in the ongoing debate about RESPA reform.
NAR remains engaged with HUD and OMB as well as other industry players in
an effort to ensure that all REALTORS® are represented in the
decision-making process.
NAR Insurance Task
Force
IX.
New
Business
X.
Adjournment
