Agenda Summary National Association of REALTORS® 2011 REALTORS® Conference Anaheim Marriott Hotel Friday, November 11, 2011 9 a.m. - 11:30 a.m.
Chair: Jeannette Way, Vacaville, CA Vice Chair: Claire Williams, Plymouth, MI Committee Liaison: Bill Brown, Oakland, CA Committee Executive: Megan Booth, Jerome Nagy, Washington, DC
I. Call To Order NAR Ownership Disclosure & Conflict of Interest Policy
II. Approval of 2011 MidYear Meeting Minutes
III. Guest Speaker HUD REO Specialist - invited
IV. Policy Issues and Discussion A. Rural Housing Service and HUD The Rural Housing Service (RHS) continues to experience delays in funding the Section 502 single family loan guarantee program. This program provides zero-downpayment loans to low-income rural families (defined as those making less than 115% of local area median income). In 2009, the program provided financing for approximately 85,000 families in rural communities.
REALTORS® supports fully funding the Rural Housing Service’s programs -- both loans and rental assistance.
B. VA loan fees Due to confusion over a federal law change, some veterans were faced with the possibility of higher fees. Recently however, the Department of Veterans Affairs has stated they will cover the extra costs of veterans who struck deals on home loans and possibly faced higher fees over this confusion.
The VA has been responding to multiple congressional actions that have forced multiple fee changes over a short period of time. Most recently, with the passage of H.R. 2646, the Veterans Health Facilities Act Capital Improvement Act, the VA has lowered their fees effective on November 18, 2011, to what they were prior to October 1, 2011.
IV. Legislative/Regulatory Updates A. FHA Loan limits Following the expiration of the FHA loan limits on October 1, 2011, the Senate has attached an amendment to their Transportation, Housing and Urban Development appropriations bill that would reinstate the old loan limits for another two full years. The Senate and House will now have to reconcile differences between the two-versions of the spending bill.
B. Condominium Policies a) Update- In July, the FHA released Mortgagee Letter 2011-22: Condominium Approval Process for Single Family Housing - Consolidation and Update of Approval Requirements. The Mortgagee Letter was released along with an implementation schedule and the Project Approval and Processing Guide in an effort to clarify, expand, consolidate and update existing guidance. The new guidance provides increased flexibility for FHA to address individual circumstances so that the agency can be more effective at the neighborhood level.
In the new guidance, FHA made permanent the temporary measures from Mortgagee Letter 2011-03. The concentration limit is 50 percent but Homeownership Centers (HOC) may grant exceptions to go beyond 50 percent. FHA requires that 50 percent of units be owner-occupied but FHA will reduce this to 30 percent for new construction. At least 30 percent of units must be sold prior to endorsement of any mortgage by FHA. This pre-sale requirement is not applicable to existing projects or non-gut rehabilitation projects.
One of the more notable changes is in the calculation of delinquent homeownership association (HOA) dues. Previously, FHA permitted no more than 15 percent of units to be in arrears but this did not include bank-owned foreclosures. The new guidance states that the calculation includes all units - occupied, investor, bank-owned, and vacant). FHA did not increase the maximum permitted investor ownership of units or commercial space requirements.
C. REO proposal The Federal Housing Finance Agency (FHFA), the U.S. Department of the Treasury, and the Department of Housing and Urban Development (HUD) have published a Request For Information (RFI), seeking input on new options for selling single-family real estate owned (REO) properties held by Fannie Mae and Freddie Mac (GSEs), and the Federal Housing Administration (FHA).
The FHFA, Treasury and HUD are requesting input on what is essentially a proposal to expedite the disposition of the REO inventory currently on their books, as well as their expected future REOs. The RFI puts forward three different models:
• The GSEs and FHA partner with a third party to rent out a portion of their existing REO inventory. • The GSEs and FHA do a bulk sale of a portion of their REO inventory to investors (anywhere from $50 million to $1 billion in size) who would then be obligated to rent those units out. • The GSEs and FHA do a bulk sale of a portion of their REO inventory to investors with no restriction. This would mean investors could rent and/or sell as many or as little of the properties as they see fit.
The RFI is extremely vague on any details. There is no sunset date, no minimum amount of time that a property must be rented before it can be sold again, no details on what the structure of the partnerships would look like, and no numbers given on how many REOs would be put in this program and how many would continue to be listed individually with REO brokers. In fact the RFI is asking for the industry and interested parties to submit what they believe the answers to these questions should be.
The administration and many others in DC view this as an expedient opportunity to expeditiously eliminate non-performing assets through bulk sales and/or convert non-performing assets into performing ones by transforming them into rental units.
There is great pressure on the administration to take action on the issues surrounding the housing market. Issues this RFI is hoping to address include:
• Reducing the REO portfolios of the GSEs and FHA in a cost-effective manner, • Reducing average loan loss severities to the GSEs and FHA relative to individual distressed property sales, • Addressing property repair and rehabilitation needs, • Responding to economic and real estate conditions in specific geographies, • Assisting in neighborhood and home price stabilization efforts, and • Suggesting analytic approaches to determine the appropriate disposition strategy for individual properties, whether sale, rental or, in certain instances, demolition.
D. Uniform Appraisal Database The Uniform Appraisal Dataset (UAD) standardizes key appraisal data elements to enhance data quality and promote consistency for mortgages purchased by the government sponsored enterprises (GSE), Fannie Mae and Freddie Mac. For appraisals with an effective date (date of inspection) on or after September 1, 2011, the appraisal report must be completed in compliance with the UAD for conventional mortgage loans sold to Fannie Mae or Freddie Mac.
V. Other Business A. RPAC Challenge B. MID fact sheet