Realtor: Regulations need to be eased

The National Association of Realtors (NAR) recently went before the U.S. Senate Banking, Housing and Urban Affairs Committee to seek the easing of regulatory requirements which are preventing credit-worthy borrowers from obtaining a mortgage.

National

Realtors are in support of underwriting standards preventing the risky lending practices of the past. However, it is felt that banks have gone to the other extreme with overly restrictive policies.

Mortgage interest rates are low and so are the number of first-time buyers entering the real estate market – the lowest level since 1987. The nation’s home-ownership rates have fallen to 1990 levels.

The amount of homes purchased today is less than 70 percent of the number of homes purchased before the economic down turn and the bursting of the real estate bubble.

NAR President Chris Polychron, proposed to Congress changes to regulations that would provide consumers access to mortgage credit while maintaining lending protections. Recommendations included changes to restrictive condominium policies from the Federal Housing Administration and the Government-Sponsored Enterprises (GSE). This market segment offers the most affordable buying opportunities for first-time buyers and minorities.

The Consumer Financial Protection Bureau (CFB) was warned by Mr. Polychron to anticipate potential problems that may surface during the implementation of the Real Estate Settlement and Procedures Act and Truth in Lending Act changes. The changes were to take effect August 1, 2015. NAR seeks a “restrained approach” to enforcement efforts by the CFP at the start.

NAR also asserted before Congress to pass the Mortgage Choice Act. This Act redefines a provision in the Ability-to-Repay rules that limits mortgage fees and points to three percent so that home loans are considered Qualified Mortgages. According to the current rules, specific affiliated lenders whose joint-venture services are applied against the interest cap for Qualified Mortgages. Meanwhile, the individual services charged by retail financial institutions are separately capped. This disparity in the treatment of these fees and points is impacting consumers who are experiencing reduced choices and challenges in getting a mortgage.

NAR also raised concerns about high guarantee fees and loan-leveling pricing adjustments charged by the GSE’s are adversely impacting the housing recovery. Private capital is no longer being attracted to the real estate market. Increasing fees will only increase the cost of home ownership or drive more mortgage loans to FHA without a “private-sector” return.

State

Greenwich real estate agents are now required to have their agents fill out a revised property disclosure form. The Connecticut Assembly passed several statutory changes to the state’s mandatory real estate form. These changes include: whether a property located in a common interest community is subject to any dues/fees; purchaser is to verify with appropriate authorities as to whether applicable building permits and certificates of occupancy have been obtained for the property; a licensed inspector should be retained by the buyer; whether the seller is aware of pending litigation or government agency/administrative action, order, lien on property or hazardous substance; whether there are operable smoke and carbon monoxide detectors; whether an underground storage tank exists or have documentation if removed; and an increase of the fee ($500) should the seller chooses not to complete the Residential Property Condition Disclosure Report.

 

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