What’s the relationship between the National Association of Realtors (NAR) and upcoming presidential elections? As the largest trade association in America, NAR advocates every day on behalf of the nation’s 1 million REALTORS® and 75 million property owners. NAR is widely considered one of the most effective advocacy organizations in the country. With numbers like that, it’s no wonder candidates pay attention to the collective needs and wants of NAR members.

But the interest goes both ways and according The Voice for Real Estate, NAR will be watching this year’s presidential election with a keen eye.

The housing recovery in particular is expected to play a large role in the outcome between the parties. According the NAR’s President Moe Veissi, NAR is working with policymakers “to ensure that mortgages are more readily available for qualified buyers.”

What is the goal here?

The goal is to help potential and creditworthy home seekers to obtain mortgage financing and help more people keep their homes or avoid foreclosure through a streamlined short sale process. The realtors believe housing recovery shouldn’t be a partisan issue, but lawmakers must understand the steps needed to keep the upward momentum that has finally begun, going, and cited several initiatives implemented by the present administration that has helped turn the market around.

Republican and Democratic candidates for president often touch on issues important to real estate while on the campaign trail. NAR follows candidates’ proposals carefully, but NAR Deputy Chief Lobbyist Jamie Gregory provides a reminder that proposals must travel a long road through Congress before anything happens: 

“Candidates are posturing and positioning to the voters and trying to attract their votes. So while [the candidates] are saying what their ideal plans are, even if they get elected they can’t do it alone. They still have to go to Congress; they still have to have a partner in this process. And Congress will have a lot of day about what happens.”

Staying up to speed

Current issues regarding NAR and political advocacy on Capitol Hill can be found on NAR’s Political Advocacy Page.

Below, NAR explains more in depth their connection and involvement in the upcoming elections:

#2016election

With the resignation of Congressman Aaron Schock, there is a seat in Illinois that desperately needs to be filled. Schock resigned in light of several allegations that he defrauded his constituents by misspending their money, received inappropriate gifts, and sponsored zero bills during his three-plus terms.

A bit about Brady

Enter Ed Brady. His name will more than likely ring a bell. He is the National Association of Home Builder’s (NAHB) Vice Chairman of the Board and a home builder from Bloomington, Illinois. He has been active in the NAHB leadership structure at the local, state, and national levels throughout his career. Brady has served on the NAHB board of directors for more than ten years and has been a member of the NAHB Executive Board since 2005.

Brady also served as a member of the Bipartisan Policy Center Housing Commission from 2012 to 2014, which was formed in the wake of the housing market crisis to examine the nation’s housing policy and suggest new ideas and approaches to contribute to the dialogue and help further the housing policy reform debate and now, he has thrown his hat into the Congressional arena.

The NAHB pledges their support

Tom Woods, chairman of the NAHB, has issued a statement regarding Brady’s run for the United States House of Representatives: “Ed has been recruited by many in his home district to consider running for the congressional seat being vacated by Rep. Schock. This should come as no surprise, given that he has been active in politics for over 27 years.”

“While Ed remains dedicated to NAHB, he has told his fellow officers and leaders of the association that he feels a strong sense of duty to explore this opportunity to run for Congress. Whatever he may decide, he will have the unwavering support of this association. Ed has said he will decide early next week what his next steps will be.”

Until he makes an official announcement, we can only hope that one of real estate’s own will make an entrance into the office that was so unappreciated by its last occupant.

#RepBrady

Congress has recently begun its lame-duck session with a number of items on the agenda. One of the top priorities for Realtors® and underwater homeowners is likely the extension of the Mortgage Debt Relief Act (also called the Mortgage Forgiveness Tax Relief Act), which expired at the end of 2013.

What is the Mortgage Debt Relief Act? Initiated by President Bush, this IRS Act was a tax break that saves struggling homeowners from paying thousands of dollars to the IRS. As it stands right now and continuing through the end of 2013, distressed borrowers in certain situations are not be responsible for paying taxes on any of the forgiven debt associated with a short sale, a foreclosure, or a deed-in-lieu of foreclosure. (Note that the amount of debt forgiven is reported on the 1099-C, and sent to all borrowers. It is the borrower that would be responsible for addressing the debt forgiveness when completing a tax filing.)

Prior to the enactment of the Mortgage Debt Relief Act of 2007, if the short sale lender forgave $50,000 in debt, borrowers were responsible for paying the income tax (on the $50k) at their current tax rate.

Essentially, the Mortgage Debt Relief Act got rid of the fact that homeowners needed to pay income taxes on “phantom income.”

Short Sales Continue in 2015

In a November 12th Realtor® Call for Action, the National Association of Realtors® stated, “Today’s housing market is finally recovering. However, there are still too many homeowners unable to meet their mortgage obligations. Estimates show that about 5.3 million homes are still under water. In addition, there are still more than 1 million homes in the process of foreclosure.”

The Call for Action continues, “If The Mortgage Forgiveness Tax Relief Act is not enacted, hundreds of thousands of American families who did the right thing by short-selling their home or received a much needed loan reduction from their lender will have to pay income tax on phantom income.”

According to Ken Harney of the Washington Post, “Most Capitol Hill experts say there’s a good chance the bill will pass.” But, what if it does not?

Are Other Options Available to Short Sale Sellers?

While it is pretty disconcerting that taxpayers may have to pay taxes on income that they did not actually earn, there may be another way. According to the Internal Revenue Service, “A taxpayer is insolvent when his or her total liabilities exceed his or her total assets. The forgiven debt may be excluded as income under the ‘insolvency’ exclusion. Normally, a taxpayer is not required to include forgiven debts in income to the extent that the taxpayer is insolvent.” While I am not an accountant and I’d be doomed if I gave tax advice, if you or anyone you know sold as a short sale in 2014, they may want to discuss their situation with an accountant and see if there are other remedies—such as insolvency—available to them.

Currently, we are trending towards a buyer’s market throughout much of the United States. If property values do not continue to increase, we may see some more short sales in the coming year. As such, it is a good idea for Realtors® to know where the government is at with this extension, so that we can all advise our clients accordingly.