National Financial Issues Impacting Real Estate Lending

Many of the policies affecting our industry are responded to by NAR. This is the latest report from headquarters.

Mortgage Debt Cancellation Tax Relief

The US Senate Finance Committee just agreed to a bipartisan bill to reinstate about 50 expired tax provisions from 2013, but it’s not law yet.  There are 4 provisions that are important to us:

    1. tax relief for mortgage debt forgiveness
    2. 15-year cost recovery for qualified leasehold improvements
    3. election to expense certain qualified real property
    4. deduction for energy efficient commercial buildings

The bill would make these retroactive for the period of January 1, 2014 to December 31, 2015.

The problem?  A 2 year extension of the mortgage debt cancellation relief will cost about $5.4 billion. Congress and Senators will surely push back against the passage, others will insist that the amount be offset by raising taxes or cuts in spending .

We can help the passage of this important extension of relief:

    • Contact Senators Warren and Markey to urge them to act on the Finance Committee Tax Extenders Bill. 
    • Urge your clients in distressed situations to contact their Representatives and Senators

Why?  NAR says, “The more Senators hear from constituents, the better.”

FHA Premiums

Home purchases are becoming increasingly out of reach for many qualified borrowers who rely on FHA financing because of high insurance premiums and insurance required for the entire life of the loan.

NAR President Steve Brown sent a letter to HUD noting that it is possible to increase the upfront premiums and lower the annual premiums while continuing to replenish the Mutual Mortgage Insurance Fund. This will slow the rate of prepayments that are having a negative effect on the fund, while providing more access to potential homebuyers who are not being served by the private market.

Implementing Flood Changes by FEMA

The Homeowner Flood Insurance Affordability Act (HFIAA) signed into law repealed many critical flood insurance changes.

The two biggest repeals are in FEMA’s authority to increase premium rates at time of sale or new flood maps, and refunds the excessive premium to those who bought a property before FEMA warned them of the rate increase.

At NAR’s urging, FEMA agreed that they understand the urgency to implement these two provisions and are working “aggressively” to develop and circulate the appropriate guidance and information.


RESPA/TILA now has a “Know Before You Owe” guide, for new rules that becomes effective in August 2015. Thanks to work by NAR, the rules are a pared back version of the 2012 proposal.

Only major loan term changes will require a 3-day waiting period and not any change over $100 on the settlement statement that was initially proposed.

Only major changes will require a three-day waiting period, such as

    • if the Annual Percentage Rate (APR) changed by one eighth of a point
    • if the loan type changes
    • or other significant changes to the loan itself like if a prepayment penalty is added.

This is a major improvement, where even minor changes to the closing documents could have required a new three day waiting period in the old version.  NAR has also argued for nearly three years that CFPB should focus on harmonizing the upfront disclosures, the Good Faith Estimate (GFE) and the Truth in Lending disclosure (TIL) and not fundamentally change the settlement process by implementing a broad 3-day waiting period when there are changes to the closing disclosure (Today’s HUD – 1)

FHFA Loan Limits

On March 20, 2014, NAR President Steve Brown submitted comments on the Federal Housing Finance Agencies (FHFA) request for information on lowering the loan purchase limits for Fannie Mae and Freddie Mac (the Enterprises). Former FHFA Acting Director DeMarco published a request for information on reducing the loan limit floor from $417,000 to $400,000 and high cost cap from $625,500 to $600,000. (Read more)

Proposed Rule Issued on AMCs

Six federal agencies issued a joint proposed rule to implement minimum requirements for state registration and supervision of appraisal management companies (AMCs). States will not be required to establish an AMC registration and supervision program, and there is no penalty imposed on a state that does not establish a regulatory structure for AMCs; however, an AMC will not be able to provide appraisal management services for federally related transactions in states that have not established a regulatory structure laid out in the proposed rule.