NAR has had enough
The United States Department of Housing and Urban Development – HUD, to its friends – has officially begun the formal process of addressing housing regulations, publishing a request to comment pursuant to Executive Orders 13771 and 13777, both of which called on the agency to evaluate its policies with an eye to trimming burdensome regulations.
Phew. Sexy lede, right?
NAR’s letter
That said, as is so tragically often the case, sexy isn’t the same as important. This is important. One of the strongest messages of President Trump’s campaign was a major reduction of regulatory oversight.
And nobody has more regulations or more oversight than housing.
Plus, short of being from space, Dr. Ben Carson, current director of HUD and former neurosurgeon and Trump presidential opponent, is from about as far outside the Beltway as it’s possible to be.
The next year or so may well be the best chance for major reform in housing regulation for a decade.
No surprise, then, that the National Association of Realtors, has jumped in with both feet.
NAR’s comment focused on 4 key areas, all vital for anyone with an interest in the housing industry:
Mortgage Insurance Premiums
One of the key burdens to homeownership is the necessity of mortgage insurance, the yearly payment required of buyers with less than 10% down.
NAR argues that mortgage insurance creates an undue burden on homeowners and a chilling effect on home buying.
Also, that its elimination would increase cash on hand for homeowners, increasing their ability to weather financial setbacks and volatile markets and thereby decreasing the likelihood of default and foreclosure.
FHA Approval in Condominiums
Again with the “not sexy, but important.” It’s no secret that homeownership has been declining badly over the last few decades. One of the few bright spots has been condos: they’ve been one of the few paths to ownership available to first-time buyers, older Americans and folks in general without immaculate credit and/or giant Scrooge McDuck bins of cash on hand to dive into.
NAR argues for two primary reforms to keep that goodness going.
First, they argue for changes to the FHA approval process, arguing that the current process is unnecessarily obstructive, and for loans to be made available on non-FHA approved spaces while the regulations are being reviewed.
Second, they pitch a new zoning model. At minimum, the NAR wants a reduction in the hard limit of condo-approved space being 50 percent residential to 35. At best, it wants the limit removed altogether in favor of determining what spaces are and aren’t appropriate for residential use on a case by case basis.
Clean Energy Loans
NAR states its opposition to a change in HUD regulations made in July of last year, in which default on PACE loans, made available for purchase of property that meets certain renewable energy and tech standards, would be given priority over default or foreclosure payments.
In short, when a loan goes south, NAR would like its money back before the government gets theirs. No surprise there.
Fair Housing
This is the biggest chunk of the letter, and no wonder, because it’s far and away the most substantial issue raised by NAR in its comment letter. While acknowledging the ongoing presence of race-based inequality and de facto segregation in housing, NAR calls on HUD to reduce rather than increase its involvement in the issue, shifting authority from the federal to the local level and significantly decreasing the strictness of its standards.
NAR argues for “home grown” solutions, with HUD as facilitator of a process chosen and put into effect by local interests rather than arbitrator of housing standards.
Years to come
All four issues will be vital to the development of housing over the next decades. The reform process has only begun, and its consequences promises real and exciting change for years to come.
#regulatoryburdens
