NAR testifies before Congressional committee

July 13, 2011, 6:03 am

The National Association of Realtors® (NAR) offered recommendations to Congress yesterday on a number of issues.

Testifying before the House Financial Service Committee’s Subcommittee on Insurance, Housing and Community Opportunity, NAR spokesperson Steve Brown identified several proposed regulations and rules that threaten the housing market.

“As the leading advocate for homeownership, NAR believes that the pendulum has swung too far and now fewer qualified people are able to get a loan,” said Brown.

Home warranties

Brown said the treatment of home warranties under the Real Estate Settlement Procedures Act (RESPA) is one of the issues. Since home warranties are not a requirement for a mortgage origination or home sale, NAR believes that including them under RESPA stretches the meaning of RESPA. Brown urged the subcommittee to pass H.R. 2446, the RESPA Home Warranty Clarification Act of 2011 introduced by Reps. Judy Biggert (R-Ill.) and Lacy Clay (D-Mo.), which makes it clear that home warranties don’t fall under RESPA.

Lender fees

Another area of concern: the definition of points and fees in the Qualified Mortgage provision of the Dodd-Frank Act, which limits the total points and fees collected by lenders and their affiliates – such as title companies – to 3 percent of the loan amount.

According to NAR, the 3 percent limit will cause some companies to offer only limited services to avoid violating the cap. NAR recommends that Congress restore an exemption for affiliates duly constituted under RESPA.

FHA

Brown reiterated the importance of the Federal Housing Administration (FHA) to the nation’s real estate recovery, and he called upon the panel to make permanent the current loan limits set to expire Sept. 30, 2011. Allowing the loan limits to revert to previous levels would result in a significant decline in loan limits in 669 counties and 42 states, and would dramatically impact liquidity across the country.

Loan limits

NAR also expressed strong support for H.R. 1754, the “Preserving Equal Access to Mortgage Finance Programs Act,” introduced by Reps. Gary Miller (R-Calif.) and Brad Sherman (D-Calif.), making the current loan limits for FHA and the government-sponsored enterprises (Fannie Mae and Freddie Mac) permanent. NAR also advocates keeping the FHA downpayment at 3.5 percent and loosening restrictions on condominium purchases.

“With housing markets struggling to recover, the last thing we need to do is to put an avoidable stumbling block in the path of a much needed housing recovery,” said Brown. “Without a housing recovery, the nation’s economy as a whole will struggle to recover its balance.”

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