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In This Issue:
 REALTOR® Insider: D.C. News and Events
Business Report
Conventional Residential Lending Report
Environment Report
| | REALTOR® Insider: D.C. News and Events
| | | Most Real Estate Professionals Not Required by Law to Provide Census Data on Listed Properties | | Real estate brokers and agents with a typical residential listing agreement for the sale of a property are not required by law to respond to census enumerator's questions about the occupants of such property. That's the conclusion of NAR consultations with the U.S. Census Bureau. NAR has heard from a growing number of residential brokers and agents that census workers, in some cases, were aggressively seeking information about the occupants of homes among their listings. Some census workers claimed that the law requires brokers and agents to respond to such inquiries. In fact, Census Bureau officials acknowledge that the law does not generally apply to the "ordinary" case of a residential real estate broker or agent taking an exclusive listing for a residential property and marketing that property in the variety of ways that real estate professionals commonly do. A full explanation and advice for handling census inquiries is included in an NAR legal advisory. NAR Legal Advisory > Contacts: William Gilmartin, 202-383-1102 Contacts: Ralph Holmen, 312-329-8375 | | | | | | Business Report
| | | HUD Issues Advance Notice of Proposed Rulemaking on "Required Use" | | HUD issued an advanced notice of proposed rulemaking (ANPR) on the issue of "Required Use" under RESPA on Thursday, June 3, 2010. The Required Use rule was originally proposed in the 2008 RESPA rule but was fought in the courts by the National Association of Homebuilders. HUD withdraw that portion of the rule in early 2009. The ANPR is seen as an effort to restart the rulemaking process on Required Use. The final rule Required Use provision was narrowly taliored and did not affect most real estate professionals. However any new provision could impact real estate professionals and therefore NAR will be commenting again on this issue. Comments are due September 1, 2010. HUD will likely issue another final rule proposal some time after the expiration of the comment period. HUD Notice of Proposed Rulemaking > Contacts: Kenneth Trepeta, 202-383-1294 Contacts: Marcia Salkin, 202-383-1092 Contacts: Scott Rinn, 202-383-7508 | | | | | IRS Offers Details on New Small Business Health Care Tax Credit | The Internal Revenue Service issued new guidance to make it easier for small businesses to determine whether they are eligible for the new health care tax credit under the Affordable Care Act and how large a credit they will receive. The guidance makes clear that small businesses receiving state health care tax credits may still qualify for the full federal tax credit. Additionally, the guidance allows small businesses to receive the credit not only for regular health insurance but also for add-on dental and vision coverage. Notice 2010-44 provides detailed guidelines, illustrated by more than a dozen examples, to help small employers determine whether they qualify for the credit and estimate the amount of the credit. The notice also requests public comment on issues that should be addressed in future guidance. Included in the Affordable Care Act approved by Congress in March and signed into law by the President, the small business health care tax credit, which is in effect this year, is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees in 2010. The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ moderate- and lower-income workers. For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. The maximum credit goes to smaller employers —— those with 10 or fewer full-time equivalent (FTE) employees —— paying annual average wages of $25,000 or less. The credit is completely phased out for employers that have 25 FTEs or more or that pay average wages of $50,000 per year or more. Because the eligibility rules are based in part on the number of FTEs, not the number of employees, businesses that use part-time help may qualify even if they employ more than 25 individuals. Eligible small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011. Detailed Guide to the Credit >
3 Simple Steps for Claiming the Credit > Contacts: Marcia Salkin, 202-383-1092 Contacts: Ken Wingert, 202-383-1196 Contacts: Kenneth Trepeta, 202-383-1294 | | | | | FTC Delays Red Flag Rule Enforcement Again | | Once again, on the eve of the Federal Trade Commission's (FTC's) planned enforcement of the Red Flags Rule, the Commission announced another enforcement delay, this time until December 31, 2010. The Commission has delayed its enforcement of the Rule several times (most recently until June 1, 2010). In the press release announcing this development, the FTC again stated that Congress requested the additional enforcement delay. The Red Flags Rule requires "financial institutions" and "creditors" that maintain "covered accounts" to implement written, board-approved identity theft prevention programs for new and existing accounts. Unless modified, it is estimated that the Rule potentially is applicable to more than 11 million businesses. FTC Press Release Announcing Enforcement Delay > Contacts: Scott Rinn, 202-383-7508 | | | | | NAR Submits Comments on Draft Privacy Bill | | On May 4, Rep. Rick Boucher (D-VA) and Rep. Cliff Stearns (R-FL) unveiled a long-awaited draft proposal to protect the privacy of consumers' personal data on the internet, as well as offline. Under the comprehensive draft proposal, any entity that collects covered information about individuals would be required to provide a clear, understandable privacy policy that explains how that information is collected, used, and disclosed. NAR submitted written comments expressing concerns with the draft including its broad application, the burden of supplying privacy policy notifications for offline data collection and the conflicts that arise with existing Federal privacy laws. NAR will continue to work with the bill authors and with other similarly interested business coalitions to improve the legislation and to reduce the regulatory burden on REALTORS®. NAR Comments > Contacts: Melanie Wyne, 202-383-1234 Contacts: Ken Wingert, 202-383-1196 | | | | | Employer-provided Health Insurance and IRS Reporting | | Internet reports have created fears that any health insurance premiums that an employer pays on behalf of an employee will be taxable income for the employee, even though no cash is received. Not so! The health insurance reform legislation includes a new requirement, effective for 2011 and after, that an employee's Form W-2 (Statement of Wages) must include information about the expenditure that an employer makes for the employee's health insurance. That amount, however, will NOT be included in gross income. The information about health insurance will be treated in a manner that is similar to current law treatment for life insurance premiums that an employer pays on behalf of an employee. For decades the law has required that employers provide information on the W-2 about life insurance premiums. The lilfe insurance premium amount is included in income (and taxed) ONLY when employees earn more than $50,000. The new health insurance reporting format will be similar to the life insurance reporting, EXCEPT that no amount of the health insurance premium will be included in the worker's income. The health insurance premium amount will remain untaxed, as it is under current law. Congress added this reporting provision to health care reform at the insistence of Chairman Baucus. The intent is that this information will begin an education process so that employees can see just how valuable employer-paid insurance is. It 's worth noting that excluding health insurance premiums from taxation (even though the insurance is a very valuable asset) is the largest single tax expenditure (MID is #3 — 20 years ago it was #1, but has slipped as low as #4, and is currently #3.) Contacts: Linda Goold, 202-383-1083 Contacts: Samuel Whitfield, 202-383-1131 Contacts: Kenneth Trepeta, 202-383-1294 | | | | Conventional Residential Lending Report
| | | Lenders Likely to Double Check Borrower Eligibility before Closing in Response to Fannie Mae Loan Quality Initiative | | On March 2, 2010, Fannie Mae announced changes to its Selling Guide as part of its Loan Quality Initiative designed to improve the quality of loans it purchases. The Selling Guide has required that every mortgage loan delivered to Fannie Mae be underwritten in accordance with Fannie requirements to determine the borrower has the willingness and ability to repay the debt. Among numerous other changes, the update requires lenders to determine that all debts of the borrower as of the date of closing are disclosed on the final loan application and considered in underwriting the loan. In other words, borrowers who take on additional financial responsibilities after their loan is initially approved but before closing will be subject to a lender review to determine if they still qualify for the loan, probably based on an up-to-date credit report and score. If the lender fails to do so, Fannie may require the lender to buy back the mortgage, so lenders are expected to take this new guidance seriously. Fannie Mae Announcement SEL-2010-01 > Contacts: Jeff Lischer, 202-383-1117 Contacts: Tony Hutchinson, 202-383-1120 Contacts: Jerome Nagy, 202-383-1233 | | | | | Fannie Mae and Freddie Mac Release Their HAFA Guidelines | On June 1, 2010, Fannie Mae and Freddie Mac each released guidelines for implementing the Treasury Department's Home Affordable Foreclosure Alternatives Program (HAFA). These new guidelines apply instead of the HAFA guidelines for non-GSE mortgages. Servicers are required to implement these policies no later than August 1, 2010. While largely consistent with the HAFA guidelines for non-GSE mortgages, Fannie and Freddie have each made some important differences. To be eligible under the non-GSE HAFA program, the borrower must be delinquent or default must be reasonably foreseeable. Under Freddie's requirements, a borrower must be more than 60 days delinquent and have cash reserves less than the greater of $5,000 or three times the current monthly mortgage payment. Fannie allows borrowers to be at imminent risk of default. Fannie also prohibits a borrower from participating in HAFA if the borrower has the ability to continue making the mortgage payments, but chooses not to do so (sometimes called strategic default); has substantial unencumbered assets or significant cash reserves equal to or exceeding three times the borrower's total monthly mortgage payment or $5,000, whichever is greater; or has high surplus income. Fannie and Freddie provide that the real estate commission is the amount in the listing agreement, but not more than 6 percent. Fannie and Freddie allow for servicer incentives of $2,200 for a short sale and $1,500 for a deed-in-lieu of foreclosure (DIL). This is in contrast to the $1,500 servicer incentive for both a short sale and a DIL for non-GSE mortgages. For both Fannie and Freddie, each subordinate lien holder in order of priority may be paid no more than 6% of the unpaid principal balance of its loan, until the $6,000 cap is attained. This policy remains unchanged from the non-GSE HAFA program. Consistent with the non-GSE HAFA program, Fannie and Freddie guidelines do not permit subordinate lien holders to require contributions from the real estate agent or borrower as a condition for releasing its lien and releasing the borrower from personal liability. NAR will provide additional information on its short sales web site. Fannie Mae HAFA Overview (including links to detailed guidelines) >
Freddie Mac Bulletin 2010-12, Home Affordable Foreclosure Alternatives >
Freddie Mac HAFA Web Site (including links to detailed guidelines) >
NAR's Short Sale Web Page > Contacts: Jeff Lischer, 202-383-1117 Contacts: Tony Hutchinson, 202-383-1120 | | | | Environment Report
| | | NAR Sends Out Call-For-Action To Reauthorize the NFIP | A NAR Call-For-Action was sent out to all members on Tuesday, June 1, after Congress adjourned without authorizing the National Flood Insurance Program (NFIP). The NFIP lapsed at midnight on Monday, May 31, the third time Congress has allowed it to do so this year. A lapsed NFIP means that it is unable to write new flood insurance policies or renew policies that are expiring during the period in which the program is lapsed. A lapsed NFIP can cause delays or even cancellations in real estate transactions nationwide. The Call-For-Action urges Congress to reauthorize and extend the program as soon as they return from their Memorial Day recess on May 7. In addition, this issue was a Talking Point at the most recent Mid-Year Meetings in Washington, DC. Please go to NAR's Flood Insurance webpage for the latest information on renewal of the NFIP, plus additional resources on the NFIP. Visit NAR's Homepage on Natural Disaster/Flood Insurance >
Take Action Now! > Contacts: Austin Perez, 202-383-1046 Contacts: Russell Riggs, 202-383-1259 Contacts: Helen Devlin, 202-383-7559 | | | | | | Monday, June 7, 2010 | | |
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