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NAR reacts to detrimental Congressional proposal requiring 20% down

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Qualified Residential Mortgage proposal

The above video is of Realtor Magazine Senior Editor, Robert Freedman and Ken Fears, Manager of National Association of Realtors (NAR) Regional Economics discussing how the current proposal to require 20% down on all mortgages would impact the housing sector.

According to the Federal Reserve Board, “Six federal agencies have approved and will submit a Federal Register notice that extends the comment period on the proposed rules to implement the credit risk retention requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The comment period was extended to August 1, 2011, to allow interested persons more time to analyze the issues and prepare their comments. Originally, comments were due by June 10, 2011.”

In light of the extension, Freedman writes, “The good news is that Congress has heard the concerns of NAR and others and asked banking regulators, who proposed the rule, to push back its deadline for accepting public comments on its rule. Dozens of members of the Senate and almost 150 members of the House wrote to the banking regulators asking them to delay the comment deadline, and regulators responded with an extension to August 1 from June 10. The delay makes clear that regulators heard Congress’ concerns about moving too quickly on such a potentially destabilizing rule.”

QRM and the housing crisis

While the housing crisis is still in full swing and history hasn’t written itself yet, there is not a consensus as to where the finger of blame should be pointed, but there is most definitely a consensus that housing is a disaster. Home prices continue to slip in all major metropolitan areas besides D.C., sales of existing and new homes aren’t what anyone would consider to be hot, and although mortgage rates are reasonable, some claim they will soon rise regardless of the status of the economy. One top economist says that there is no double dip yet because we haven’t even hit the bottom. Uh oh.

NAR critics will call the video above fear mongering, but all of the economic indicators we closely monitor are consistent with their claims and we agree that the QRM proposal would be detrimental to the housing sector.

Click here if you cannot see the video above. AGBeat is not affiliated with NAR.

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15 Comments

15 Comments

  1. Bruce Lemieux

    June 13, 2011 at 8:08 am

    These two guys do a terrible job of explaining and arguing the merits of their counter-proposal. If I understood them correctly, it's bad to have the banks keep a 5% stake in loans that don't meet QRM guidelines of 20% down plus other stuff. Instead, they argue for lower down payments and MIP to cover the additional risk. Seems logical to me this would raise the cost of a loan. Now, if a bank has to charge the consumer more for a non QRM loan to cover the additional risk, then the loan cost is still going up. The difference: the bank is covering additional risk instead of the government. Isn't that a better scenario?

    To me, it sounds like NAR is basically saying 'Don't make any real changes'. Keep low down payments, require MIP for all loans with less than 20% down, tighten up underwriting (but not too much – don't want to keep someone from buying a home), and insure securitized loans so that banks and investors are off the hook for any risk.

    For our housing to stand on its own feet, the government can't continue subsidizing private home ownership at such a high level. And, the banks and investors who buy mortgages must take on the risk of keeping the loans. Yes, interest rates will go up. Yes, many people would be unable to buy a home. But that must be the end-game in any scenario.

    If this video is representative of how NAR lobbies our behalf, then they aren't helping to influence a reasonable way out of the housing mess.

  2. Jonathan Benya

    June 14, 2011 at 9:32 pm

    This sort of crap is why Realtors are disenfranchised with NAR. This is a massive risk to our industry, folks, and NAR comes up with ineffectual arguments like this? What happened to the slick marketing and lobbying of the boom years?

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Economic News

Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?

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NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<

#CarsonHUD

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Economic News

Job openings hit 14-year high, signaling economic improvement

The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.

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job openings

Job openings hit a high point

To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.

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The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.

Good news, bad news, depending on your profession

That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.

Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.

What’s next

If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.

If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.

Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.

#JobOpenings

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Economic News

Gas prices are down, so are gas taxes about to go up?

Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.

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Gas taxes and your bottom line

Many industries rely heavily on time in their vehicle, not just truck drivers and delivery trucks. Sales professionals hop in their vehicles throughout the day, as do many other types of professionals (service providers like plumbers, and so forth). For that reason, gas prices and taxes are a relevant line item that must be budgeted for 2015, but with politicians making the rounds to push for higher gas taxes, budgeting becomes more complicated.

Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.

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Supporters and opponents are polar opposites

Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.

Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.

While some are pushing for complete abolition of federal gas taxes, others, like former Pennsylvania Governor, Ed Rendell (D) tell CNBC, “Say that cost the average driver $130 a year. They would get a return on that investment” in safer roads and increased quality of life, he added.

The Washington Post‘s Chris Mooney points out that federal gas taxes have been “stuck” at 18 cents for over 20 years, last raised when gas was barely a dollar a gallon and that the tax must increase not only to improve the infrastructure, but to “green” our behavior, and help our nation find tax reform compromise.

Is a gas tax politically plausible?

Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”

Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”

Others would note that this rating has not crumbled in just a few years, that despite many bridges and roads in need of repair, our infrastructure is still superior to even the most civilized nations.

Regardless of the reasons, most believe that Congress won’t touch this issue with a ten-foot pole, especially leading up to another Presidential campaign season starting next year.

“I think it’s too toxic and continues to be too toxic,” Steve LaTourette (the former Republican congressman best known for his close friendship with his fellow Ohioan, Speaker John Boehner) tells The Atlantic. “I see no political will to get this done.”

Whether the time is fortuitous or not, and regardless of the positive side effects, many point to a fear of voters’ retaliation against any politician siding with a gas hike, so this matter going any further than the proposal stage is unlikely.

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