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NAR pens assertive letter to HUD about regulatory burdens

(POLITICS) Recently, NAR wrote a letter to HUD on what they’d like to see them tackle, including but not limited to mortgage insurance premiums, condos, and PACE loans.

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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.

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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

Matt Salter is a writer and former fundraising and communications officer for nonprofit organizations, including Volunteers of America and PICO National Network. He’s excited to put his knowledge of fundraising, marketing, and all things digital to work for your reading enjoyment. When not writing about himself in the third person, Matt enjoys horror movies and tabletop gaming, and can usually be found somewhere in the DFW Metroplex with WiFi and a good all-day breakfast.

Politics

FCC looking into how landlords are getting around predatory ISP laws

(NEWS) It became illegal in 2008 for landlords to restrict ISP access to their “partners,” but the FCC is looking into loopholes allowing the practice to persist.

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FCC landlords ISP agreements

The Federal Communications Commission (FCC) recently announced it is seeking comments on broadband access in multi-tenant buildings.

The FCC wants to gain a better understanding of consumer choice and pricing in apartment and office buildings. Even though most cities have multiple internet service providers (ISPs), renters are often stuck with only one option due to agreements between ISPs and landlords. 


The Wireline Competition Bureau is seeking comments about:

  • Revenue sharing agreements between landlords and ISPs, which incentivizes the landlord to steer tenants to a certain provider.
  • Exclusive wiring agreements in which a landlord says only one ISP can provide service to the building.
  • Exclusive marketing agreements in which only one ISP is allowed to market in the building.

In 2008, the FCC banned exclusive contracts for telecommunications services in apartment buildings.

Even so, ISPs and landlords have found ways to circumvent the rules, preventing tenants from having internet options. A landlord is prohibited from contracting with an ISP for sole service to a building.

One way to get around this rule is to deed ownership of the wiring to the landlord, allowing the landlord to decide which companies have access or not. The FCC rules do not apply, because the landlord owns the wiring.

ISPs can also enter into an agreement with landlords to prevent advertising in the building. The landlord can impose fees on companies that need access to install new wiring. All of these practices block competition for tenants, which drives up prices and limits options, and is the focus of the FCC’s push.

The FCC wants to hear from consumers who have dealt with broadband building restrictions. Tenants, landlords, real estate agents and even ISP owners can comment on the FCC proceedings for 30 days following the public notice.

If you’re a property owner, it’s time to review your agreements in this area to make sure you don’t end up in the FCC’s crosshairs now or in the future.

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Politics

Housing supply crisis: NAR insists governments take ‘once-in-a-generation’ action

(POLITICS) After years of sounding the alarm bell regarding housing supply and demand imbalances, NAR is pushing local and federal governments to respond “immediately.”

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housing supply crisis

The National Association of Realtors (NAR) has repeatedly beat the drum for over six years regarding housing supply, so much so that perhaps real estate practitioners have simply accepted it as the ongoing problem that it is. But in a new report by Rosen Consulting Group, released by NAR, housing supply is officially in crisis across all regions.

NAR Chief Economist, Dr. Lawrence Yun has reiterated in most reports for years that the only relief for increasingly tight inventory levels lies an increase in housing starts, placing industry hopes firmly in the hands of American homebuilders who are strapped with lending standards that shifted after the 2008 housing crash, now paired with labor shortages and astronomically skyrocketing pricing on materials.

NAR reports that after decades of under-building and under-investment, housing is now in more of a “dire” status than previously expected. The report, “Critical Infrastructure: Social and Economic Benefits of Building More Housing” asserts that local and federal policymakers must consider “once-in-a-generation” action and that “no matter the approach,” action must be “immediate.”

For an organization that typically employs very tempered wording, this aggressive language is alarming.

As bloggers scream “housing bubble” and analysts warn the script looks nothing like 2008, the timing of this report and the alarm bells being run by NAR are not to be ignored.

“The state of America’s housing stock… is dire, with a chronic shortage of affordable and available homes [needed to support] the nation’s population,” the report asserts. “A severe lack of new construction and prolonged underinvestment [have led] to an acute shortage of available housing… to the detriment of the health of the public and the economy. The scale of underbuilding and the existing demand-supply gap is enormous… and will require a major national commitment to build more housing of all types.”

Dr. Yun notes “It’s clear from the findings of this report and from the conditions we’ve observed in the market over the past few years that we’ll need to do something dramatic to close this gap” between hopeful homebuyers and tightened supply levels.

The report urges lawmakers to “expand access to resources, remove barriers to and incentivize new development, and make housing construction an integral part of a national infrastructure strategy.”

NAR President Charlie Oppler, says that adequate increases in housing construction this decade would add an estimated 2.8 million American jobs and $50 billion in new, nationwide tax revenue. “Additional public funding and policy incentives for construction will very clearly provide huge benefits to our nation’s economy, and our work to close this gap will be particularly impactful for lower-income households, households of color and millennials.”

Earlier this year, NAR encouraged policymakers to reform zoning and permitting policies, also recommending other policies to address national housing supply shortages.

At that time, it sounded like an urgent request. Today, we hear an alarm bell, a demand.

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Politics

Evictions are mounting, affecting renters and landlords

(POLITICS) Eviction moratoriums both ending and extending are causing ripple effects of economic trouble for renters and landlords.

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The United States continues to struggle to find a balance between public health protections to slow the spread of coronavirus and economic measures to prevent Americans from bankruptcy as a result.

While eviction bans initially provided relief for renters who lost jobs and couldn’t afford rent payments, the effects bounced up to property owners who lost those payments. Though the first coronavirus stimulus package renter protections extended to landlords, property owners say banks are still expecting mortgage payments as the relief expires. Many worry the expiration of the additional $600 added to unemployment will exacerbate the problem.

In Texas, the statewide eviction moratorium ended in May. Unlike other major cities which chose to use funds from the federal coronavirus stimulus package to pay for legal representation for tenants, Houston let local protections for tenants expire with the moratorium.

In Houston, there is little recourse for tenants served with an eviction notice. Tenants only have five days to appeal, and there is no legal defense for a tenant who can’t pay at least one month’s rent to the court registry. As a result, tenants facing eviction often surrender and leave. Unfortunately, the result is tenants moving in temporarily with friends and family while they look for new housing, causing overcrowding and presenting a health risk to everyone involved. The CDC has specifically named “poverty and crowding” as a top risk factor for COVID-19.

However, not all evictions are the result of unpaid rent. Marie Baptiste, a landlord in Randolph, Massachusetts reported to the Boston Globe that she has lost recourse against a tenant who not only stopped paying rent long before the pandemic started, but caused water damage and a rat infestation. The tenant argues the structural problems were her reason for withholding rent.

Consequently, Baptiste says she is now $19,000 in the hole for this property, and can do nothing about it. In July, Governor Charlie Baker extended the eviction moratorium to mid-October. In a survey conducted by MassLandlords, one-fifth of landlords are uncertain how they will keep up with mortgage payments. Many fear they will be forced to sell or face foreclosure without relief.

Without protections for both tenants and individual property owners, the eviction moratoriums could have long-term consequences for housing in large cities. Urban centers, already struggling with rent inflation and lack of affordable units as large developers take over, could see this problem exacerbated for years to come. It is imperative that the next stimulus package consider how relief for both renters and property owners can be leveraged to prevent these challenges.

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