What We’re Fighting For
What We’re Fighting For
A married couple in Nashville recently got a taste of what the future might hold if some policymakers have their way.
Alice Walker was helping the couple sell their house and buy another one—and she started talking with them about proposals in Washington, D.C., to reduce the value of the mortgage interest deduction to help close the federal government’s budget gap. “They were shocked,” says Walker, ABR, a sales associate with The Wilson Group and president of the Greater Nashville Association of REALTORS®. “They told me they had to have the MID; otherwise, they couldn’t buy. It was integral to their financial plans.”
“I’m fighting for a healthy housing market for my grandchildren.That means creating a new secondary mortgage market that works with private lenders to serve all borrowers in all market conditions. It means preserving the mortgage interest deduction. And it means fighting a regulatory proposal that would require home buyers to put 20 percent down on a mortgage; it’s not needed for sound underwriting and would disproportionately hurt first-time buyers and minorities.”
—Ron Phipps, REALTOR® for 31 years | principal broker of Phipps Realty Inc. | Warwick, R.I. | NAR president
NAR IN ACTION: The association’s elected leaders have testified before Congress and regulators and have mobilized members through the REALTOR® Action Center. A recent Call to Action drew letters from 125,000 REALTORS® asking U.S. House of Representatives members to cosponsor House Resolution 25, affirming the value and importance of the mortgage interest deduction. On opposition to the 20 percent down payment proposal, more than two-thirds of the U.S. House and more than half the Senate have declared their support for NAR’s position.
Walker says she provokes similar reactions whenever she opens clients’ eyes to the ways lawmakers and regulators are looking to change housing policy. “At first when people hear the government-sponsored enterprises Fannie Mae and Freddie Mac have to be replaced, they don’t understand the ramifications of not having these companies in the secondary mortgage market, ” she says. “But once you explain it, they realize, ‘Oh, I understand. We might not have a 30-year, fixed-rate mortgage anymore.’
“Same thing with the qualified residential mortgage proposal: They’ll hear regulators talking about the need for skin in the game, so they think QRM is great. But when they hear a minimum 20 percent down payment would be required, they say, ‘That’s ridiculous.’ None of them have 20 percent to put down.”
Efforts to limit or eliminate the mortgage interest deduction, do away with the government-sponsored secondary mortgage market, or require 20 percent down for an affordable mortgage are just a few of the ways the financial crisis and today’s federal budget debate are upending the generations-old consensus in Washington about the central place of home ownership in the United States. As 2011 NATIONAL ASSOCIATION OFREALTORS® President Ron Phipps said in a virtual town hall meeting he hosted this spring to discuss the association’s sweeping political advocacy initiative, the country has reached a defining moment in its attitude toward home ownership.
“We’re at a turning point,” said Phipps, “not just because our livelihood is at stake, but because home ownership in an absolute sense is at stake. The privileges we’ve had, our parents had, and our grandparents had since World War II are being eroded, and our children face having [those privileges] denied to them.”
“I’m fighting for affordable lending. In my market and other high-cost areas, preserving higher loan limits is essential. Unless Congress acts, on Oct. 1, the high-cost limit for loans that meet FHA and secondary market guidelines will adjust down, and we’ll see a significant drop in housing prices in more than 669 counties in 42 states and the territories. Buyers in higher-priced markets won’t be able to get conventional financing—and there’s little private financing available—so there will certainly be a negative ripple effect on buyers throughout the country at all price points.”
—Gary Thomas, REALTOR® for more than 30 years | Founder and CEO of Altera Real Estate | Aliso Viejo, Calif. | NAR first vice president
NAR IN ACTION: In 2009, NAR was successful in getting higher loan limits extended to Sept. 30, 2011. Now it’s urging Congress to support an extension of the FHA and GSE loan limits and oppose any vote allowing the limits to drop back to their lower level. Make your voice heard at www.REALTORActionCenter.com.
Changing Policy, but also Hearts and Minds
What many NAR members know of the political advocacy initiative is the dedicated $40 dues increase the Board of Directors overwhelmingly passed in May to provide resources for state and local associations. Those resources will be earmarked to fight the growing number of legislative and regulatory battles REALTORS® face, like fights over private transfer fees and property tax increases. The new resources are also to help REALTORS® elect local, state, and federal officials who vote with the “REALTOR® Party” on the centrality of healthy real estate markets to the country’s economy. At the national level, that would mean supporting candidates who would fight reductions in the MID, the 20 percent down payment requirement, the loss of a government-backed secondary mortgage market, and reductions in FHA and conforming loan limits.
But what many NAR members don’t know is that the initiative is much broader than simply its advocacy piece. It also includes sweeping efforts to educate consumers so they understand that the country’s historic support for home ownership isn’t set in stone. The public policies that enshrine home ownership as part of the American dream, including the mortgage interest deduction and readily available 30-year financing, can’t be counted on unless the nation’s citizens become engaged in the political process.
“This isn’t just about the country’s 1 million REALTORS® or even its 75 million home owners,” Phipps has said repeatedly in talks with members about the initiative. “It’s about each of the 310 million Americans who require shelter.”
“I’m fighting to hold lenders accountable.In California, this year, REALTORS® helped pass a law that requires timely responses to short sales and prevents lenders from pursuing deficiency judgments against home owners who are forced to short-sell their home. I’m also on a California Association of REALTORS® task force that’s developing key contacts with local officials. Getting this program going will create vital relationships for years to come, as local officials ascend to the state and national levels.”
—Vince Malta, REALTOR® for more than 25 years | Vice President of Malta & Co. Inc. | San Francisco | NAR vice president & liaison to Government Affairs
NAR IN ACTION: Since 2009, NAR has been working with major lenders and regulators to break down barriers to short sales. Recently, the association got the Federal Trade Commission to agree that new rules designed to clamp down on fraudulent offers aimed at distressed owners wouldn’t be enforced against real estate practitioners helping sellers complete a short sale.
To help with this education process, the association two years ago launched Real Estate Today, a weekly radio show, and HouseLogic, a Web site for helping owners make smart choices about their home. Real Estate Today is now in 160 media markets, and HouseLogic has created more than 100 million earned media impressions through the Web site and social media “pass along.”
The association is also recasting its public awareness campaign, launched 15 years ago to educate consumers about what sets REALTORS® apart from other real estate practitioners, into a public advocacy vehicle. Its spots on prime-time network and cable TV, radio, print, and billboards are now branded as “the public advocacy campaign.” The campaign will start airing messages this fall about the risks gathering around home ownership; the message will be seen or heard by consumers 8 billion times this year.
“This is uncharted territory for us,” says John McArdle, CRB, CRS, broker-owner of Remerica Hometown One in Plymouth, Mich., and chair of NAR’s Communications Committee. “Never has there been a campaign that talks directly to consumers about issues that are being fought on their behalf.”
Augmenting that campaign is the association’s Home Ownership Matters bus, which in July started rolling through a 35-state tour of the United States en route to Anaheim for the 2011 REALTORS® Conference & Expo. The tour started in Atlanta in July, then moved to Alabama, where it made stops in tornado-ravaged Tuscaloosa and Pleasant Grove, to deliver checks totaling some $200,000 from the REALTORS® Relief Foundation.
“I’m fighting to make sure REALTORS® can operate their businesses profitably. In 2002, when I was president of the Florida Association of REALTORS®, the state of Florida wanted to impose a sales tax on services. To contest it, we had to go to the state supreme court—and an individual registered voter, not the association, had to do that. So I personally sued the secretary of state and Gov. Jeb Bush. At the time, Gov. Bush was a client of mine, so he called me up and asked, “What are you doing?” And I said, “You’re imposing a tax that dramatically affects not just our business but everybody’s business.” We won the lawsuit, and it was taken off the ballot.”
—Maurice “Moe” Veissi, REALTOR® for 40 years | broker-owner of Veissi & Associates Inc. | South Miami, Fla.NAR | president-elect
“Words cannot express how much it meant for our members and the residents to see that bus driving through town. It was just incredible,” says Pam Segars-Morris, CRS, broker-owner of SeBro Realty in Hueytown, Ala., and secretary of the Alabama Association of REALTORS®.
Uncharted Territory Ahead
Unlike the bus—on course to arrive in Anaheim in November—the direction of the U.S. economy remains a big unknown. In the past, the housing market has almost always led the economy to recovery, but the housing market today, while showing signs of recovery, remains weak, in part because of all the talk in Washington about changing the rules of the game.
Many buyers are struggling to secure financing as a result of extreme lender caution, particularly in higher-priced markets where the prospect of lower conforming loan limits looms. Other buyers are hesitant to jump into the market because of the drumbeat of bad news they hear in the media. Some consumers, even if their market is doing fine, fear the mortgage interest deduction won’t be there for them down the road.
“I’m fighting for environmental policies that make sense. Eleven years ago, our governor introduced a bill that would have required owners with septic systems to add nitrogen reduction technology when they replaced the system. The goal was worthy—to reduce runoff into the Chesapeake Bay—but the requirement wasn’t. Using the state’s own data, we showed that only about 6 percent of the runoff was from residential households, and the upgrades would have lowered that only to 4 percent. The ruling would have effectively stigmatized the homes of more than 400,000 households. The bill was modified. Now, when owners replace their systems, they can tap into a state fund for the upgrade. Plus, the law now applies to only about 50,000 homes within a certain distance of tidal water. Still, we need to remain vigilant: Now, there’s a proposal that would prohibit any new housing developments that use septic. It’s exactly the kind of issue the new political initiative can make a difference on.”
—Bill Armstrong, REALTOR® for more than 27 years | vice president of Mackintosh, REALTORS® | NAR treasurer
“People are just very uncertain, and all these proposals are making people hesitant,” says Walker.
Catherine Whatley, CIPS, CRS, broker-owner of Buck and Buck Inc., in Jacksonville, Fla., and chair of the NAR presidential advisory group that in 2010 developed the plan for the association’s political advocacy program, says Washington’s ultimate resolution of these contentious housing-related policies will determine whether real estate can ever recover, even when the broader economy starts to show strong growth again. “The last thing we want to see is a situation in which real estate can’t recover once the economy turns around because of all these legislative and regulatory changes,” says Whatley, who was NAR’s 2003 president. “And that’s a real possibility.”
On all these fronts—MID, QRM, the GSEs, and the FHA and conforming loan limits—NAR is playing defense, trying to get proposals turned around to limit the harm to real estate markets. But equally important is REALTORS®’ ability to play offense to prevent harmful proposals from gaining traction in the first place, both nationally and inside Washington. That’s one of the political advocacy program’s most important values, says NAR Treasurer Bill Armstrong.
“Having this pool of resources for local and state associations to tap will be tremendous,” says Armstrong, vice president of Mackintosh, REALTORS®, in Damascus, Md. “It’ll enable them to build relationships with their lawmakers and take action as things come up,” such as efforts to raise revenues through fees on businesses and real estate transactions.
“I’m fighting for a level playing field for our members. With NAR’s help, Ohio REALTORS® in 2005 were instrumental in defeating a proposed constitutional amendment that would have placed onerous restrictions on the ability of PACs such as ours to participate in the political process while exempting labor unions. REALTORS® across the state worked tirelessly to get the message out, putting up yard signs, distributing literature, and speaking at town hall events. Ultimately, we succeeded in defeating the measure by a margin of 65 percent to 35 percent. We’ve also defeated an effort to increase a statewide real estate transfer tax and one that would have imposed a sales tax on real estate commissions, appraisals, home inspections, title services, and property management services.”
—Steve Brown, REALTOR® for more than 30 years | Co-owner of Irongate Inc., REALTORS® | Dayton, Ohio | NAR first vice president–elect
When Whatley explains the advocacy initiative to other members, she emphasizes that it’s actually just a critical expansion of what the REALTOR® organization has been doing all along. In Alabama, for example, REALTORS® this year were successful in a bid to block private transfer fees. “We got a ban on them before they got their teeth into our state because we’ve had such an active presence all along,” says Segars-Morris. “The advocacy initiative will help us do that even more effectively because we can really get in front of things as they come up.”
What makes the additional funding critical, Whatley says, is the 2010 Supreme Court decision in Citizens United v. Federal Election Commission that companies could spend corporate dollars on political advocacy. The decision had the immediate impact of making advocacy more expensive, and it threatened to shrink REALTORS®’ clout. With the additional $40 million that NAR expects to raise from the dues increase, the organization will be working to retain its place as The Voice for Real Estate® in Washington and in state houses and municipalities around the country.
Members of NAR’s Issue Mobilization Committee are now finalizing procedures for state and local associations to request resources and funds. The process will be ready in time for the upcoming election season.
“I’m fighting to prevent governments from taxing our transactions. In 2010, I joined with thousands of REALTORS® and consumers across Missouri to pass a prohibition on state transfer taxes. It was a momentous achievement that revealed the power REALTORS® and citizens have when we energetically come together to tell our legislators how we want our state to run. With this ban in place, I’m convinced that we have created a stronger, safer, and more profitable environment for buying and selling real estate.”
—Elizabeth Mendenhall, REALTOR® for 15 years | CEO of RE/MAX Boone Realty | Columbia, Mo. | NAR vice president and liaison to committees
“When state and local associations are ready, we’re ready to partner with them,” says Whatley. “And that’s what this is: a partnership. We’re in this together, and together we’re going to succeed in ensuring that lawmakers and regulators, whose work affects what we do, understand how important real estate is to the economy.”
On QRM, REALTORS® Don’t Stand Alone
The qualified residential mortgage, a proposal by six financial regulators including the Federal Deposit Insurance Corp. that would have the effect of requiring a minimum 20 percent down payment from borrowers, will make it significantly harder for people to buy a home. It’ll have a particularly deleterious effect on minority buyers, who’ve already been disproportionately hurt by the housing downturn (read “Minority Wealth Gap Suggests a Cautious Future”). That widely held viewpoint has brought together a diverse group of allies.
NAR spearheaded the Coalition for Sensible Housing Policy, which is dedicated to fighting the QRM proposal. The coalition is made up of 47 consumer organizations, civil rights groups, lenders, insurers, and real estate groups.
“I’m fighting to preserve private property rights. We can never take private property rights for granted. Protecting them requires constant vigilance, particularly at the local level where we see efforts to erode those rights for any number of purposes. Property rights are at the foundation of everything we do, and it’s critical that our voice remain strong. That’s one of the reasons, after the Citizens United case, I appointed the group that developed our new advocacy initiative.”
—Vicki Cox Golder, REALTOR® for 37 years | owner of Vicki L. Cox & Associates | Tucson, Ariz. | NAR immediate past president
Learn more: sensiblehousingpolicy.org.