NFIP Jeopardizes Home Sales
via the WCAR….
Lapses Of The National Flood Insurance Program Jeopardize Home Sales
by Selma Hepp, Research Economist
The National Flood Insurance Program (NFIP) is essential to successfully completing half a million home sales annually. When NFIP lapsed from May 31 to July 2 in 2010, the REALTORS® Confidence Index showed 6 percent of REALTORS® had at least one delayed or cancelled home sale, amounting to 46,886 transactions during that 33-day period or 1,421 per day. Because the survey was conducted in June, one of the busiest home-sales months, and the first time homebuyer tax credit influenced the 2010 June activity, the National Association of REALTORS® (NAR) conducted further analysis to evaluate the survey result’s sensitivity; NAR found that its initial estimate was robust to additional analysis.
Based on more generalized analysis, NAR estimates that each day that NFIP lapses results in the delay or cancellation of 1,332 home sale closings nationwide. This provides additional support for NAR’s earlier estimate that each lapse would jeopardize closings across the nation on the order of 40,000 per month. To arrive at the refined estimate, NAR calculated the average sales throughout the year using the 2008 through 2010 sales activity as the basis. Nationwide, about 8 percent of the housing units, or over 10 million homes, are located in FEMA’s 100-year floodplains, called Special Flood Hazard Areas (SFHAs). Some regions have a larger share of the housing stock located in SFHAs and account for a greater share of the home sales activity; thus we aggregated at the regional level before reducing the combined annual figure to its daily equivalent.
We know in Middle Tennessee just how quickly natural disasters can change our lives forever. Contact your member of Congress and ask them to support reauthorization of the National Flood Insurance Program!
Consumer Financial Protection Bureau Moves to Simplify Mortgage Disclosures
Last month the Consumer Financial Protection Bureau (CFPB) received additional input and discussed the plan going forward for combining the Truth in Lending (TIL) and the Good Faith Estimate (GFE). Most of the comments revolved around minor proposed changes to the sample forms. While some comments focused on the confusion caused by including Annual Percentage Rate information in the disclosures, CFPB is reluctant to change this feature.
The good news is that CFPB plans to synchronize the new loan disclosure forms. CFPB will continue to modify the forms and take comments over the next month or more. In addition to online comments, the CFPB will accept letters and other communications.
NAR Submits Comments on Proposed Qualified Residential Mortgage Rule
On August 1, 2011, NAR President Ron Phipps submitted NAR comments on the proposed rule to implement the risk retention requirements of the Dodd-Frank Act. The Act requires entities that securitize mortgage loans to retain 5 percent of the credit risk unless the mortgage is a qualified residential mortgage (QRM) or is otherwise exempt (GSE loans (while in conservatorship) and FHA loans would be exempt). NAR asks the six federal regulators to withdraw, revise, and republish the rule for public comment because the rule:
- Is inconsistent with the standards set forth for risk retention in title IX of the Dodd-Frank Act and violates congressional intent.
- Unnecessarily defines the QRM exemption from the risk retention requirements to include only a narrow slice of the mortgage market. REALTORS® believe that imposing a minimum 20% downpayment, stringent debt-to-income ratio requirements, and rigid credit standards will deny millions of creditworthy Americans access to the lowest cost and safest mortgages.
- Jeopardizes the fragile housing market and general economic recovery.
- Reduces liquidity for commercial real estate.
New Appraisal Rules Take Hold
Starting in September, appraisers will be operating under new federal regulations that require home mortgages sold on the secondary market to organizations like Fannie Mae and Freddie Mac to be appraised with a new, more detailed form known as the Uniform Appraisal Dataset (UAD). While thee were rumors that implementation of these rules might be delayed, NAR has confirmed that they are going into effect as scheduled on September 1, 2011. Additional information on UAD requirements are available at the Fannie Mae or Freddie Mac UAD web pages.
Loans insured by the Federal Housing Administration (FHA) on or after January 1, 2012 will also require the same compliance with the UAD requirements. This also applies to HUD Real-Estate Owned (REO) and pre-foreclosure sales. Lenders may submit loans for endorsement with UAD-compliant appraisals prior to this date but are not required to do so.
Appraisals for properties receiving FHA insurance still must comply with other current rules that specify how to determine property value and marketability.
Tennessee Bans Private Transfer Fees, Thanks to REALTOR® Efforts
Earlier this year, Tennessee passed a ban on private transfer fees. The 2011 state legislative season was an active one for private transfer fee legislation, and an additional 14 states enacted prohibitions, bringing the total number to 33.
States that had enacted private transfer fee bans before 2011:
AZ, DE, FL, HI, IL, IA, KS, LA, MD, MN, MS, MO, NJ, NC, OH, OR, TX, UT
States that enacted private transfer fee bans in 2011:
AR, CO, ID, IN, ME, MT, ND, NV, ND, OK, PA, SD, TN, VA, WA
At the federal level, the Federal Housing Finance Agency (FHFA) has announced a plan to publish new federal regulation on private transfer fees. The newly proposed rule would limit Fannie Mae, Freddie Mac and the Federal Home Loan Banks from dealing in mortgages that have private transfer fees covenants attached to the properties. There are exceptions in the regulation for private transfer fees paid to homeowner associations, condominiums, cooperatives and certain tax-exempt organizations that use private transfer fee proceeds to benefit the property. Bottom line: fees that do not directly benefit the property would be barred.
By clicking here you can find the final report of what happened in the last days of Legislative Session and see how the industry fared this year:
Williamson County has released the Third Module of the revised Comprehensive Land Use Plan for public comment and review. You may access the latest module and the two previous modules at:
Please contact Allison King at firstname.lastname@example.org if you have any questions or concerns regarding the revised plan.
My REALTOR Party Web Site Launches
The “My REALTOR® Party” website (www.myrealtorparty.com) launched on August 30, paving the way for REALTOR® Associations — large and small, state and local — to design your own package of community involvement and political leadership programs. By accessing any number of the 60-plus tools, funds and turn-key implementation services, you can custom build the community outreach and advocacy package that best fits your association’s unique needs.
Services are far-reaching and varied, including programs to enhance your community involvement; run issue and candidate campaigns, raise RPAC money and build REALTOR® Party strength. All are provided to REALTOR® Associations at no cost.