UPDATE: Read NAR’s Oct. 10 letter to Craig Fugate outlining steps his agency could take to mitigate the sting of rising flood insurance premiums.
Any chance of the federal government delaying the phase-out of flood insurance subsidies coming down the pike rests entirely with Congress, because the Federal Emergency Management Agency (FEMA), which administers federal flood insurance, doesn’t have the authority to take action on the phase-out on its own, the agency’s head told lawmakers yesterday.
“Without some additional legislative support, I am bound and boxed in,” FEMA chief Craig Fugate said at a Senate Banking subcommittee hearing yesterday.
The subsidy phase out was enacted into law last year as part of major flood insurance reform legislation called the “Biggert-Waters Flood Insurance Reform Act,” which helped bring much-needed stability to the program by reauthorizing flood insurance for five years. But the law also instituted reforms to make the program more financially sound, and it’s part of that financial restructuring that Congress included the phase-out of insurance premium subsidies for a small portion of homes and businesses. As a result of the phase-out, some owners will see their share of flood insurance premiums go up starting next month, which is the start of the next federal fiscal year.
Although the number of impacted property owners is not large, for some of these owners, the increase could be significant, especially for those whose property is in a flood-prone area or an area that previously has not been designated a flood area but is now under new or newly updated flood-plain maps.
To slow down the pace of the subsidy phase-out, in part so FEMA can make sure it has the most accurate picture of flood risk in various areas, lawmakers, with NAR’s support, have introduced legislation in both the House and the Senate. The legislation has passed the House but not the Senate, and with the new fiscal year just around the corner, time is short for Congress to act.
Sen. Mary Landrieu (D-La.), who led the effort earlier this year in the Senate to get the phase-out delayed, testified at yesterday’s hearing that, separate from the burden on owners, the higher costs of flood insurance will make some homes hard if not impossible to sell. “Many of our folks are saying they can’t put their homes for sale,” she said. “They have no value.”
The other senator from Louisiana, David Vitter (R), asked FEMA to work with lawmakers by providing its own proposals for addressing the affordability issue that is poised to arise from the phase-out. “When will FEMA make any specific . . . proposals to address affordability?” he asked at the hearing.
Some lawmakers are looking to upcoming legislation to provide short-term funding for the federal government as a vehicle for getting the delay enacted. There will be clarity on whether that will happen or not in the weeks ahead.
In the meantime, NAR recommends agents, if they’re working with buyers or sellers of property in a flood area or an area that might be in a flood zone to let clients know that insurance subsidies could be phasing out, thereby increasing the costs to owners for flood insurance. NAR has developed model language agents can use to make that disclosure. Access that template and read about NAR’s recommendations.
In all, there are several categories of property facing a phase-out of premium subsidies, although not all of them would be included in any delay under the legislation pending in Congress. For some second homes and other properties, the phase-out will continue even if the legislation passes.
Federal banking regulators have re-proposed the qualified residential mortgage (QRM) rule, which requires lenders to hold back 5 percent of the loan amount on securitized home mortgage loans unless they originate the loans based on “safe” guidelines, which are defined in the rule.
Those safe loan guidelines track requirements in the qualified mortgage (QM) rule, which was released last year and which NAR generally supports. (QM defines safe mortgage guidelines for federally backed loans, whether or not they’re securitized. QRM only applies to securitized loans.)
Regulators are now taking public comments on the QRM rule, and although the rule tracks NAR recommendations in key respects, regulators are seeking views on whether an alternative approach should be considered. That alternative approach specifies a minimum down payment requirement, which NAR and its partners in a coalition, the Coalition for Sensible Housing Policy, oppose. So, more work will be needed in the months ahead to let regulators know that the alternative approach raises concerns among industry groups.
Both QM and QRM are to be finalized in early 2014 under the Dodd-Frank financial services reform law that was enacted two years ago.
Whether the New York Jets go big or go home in the NFL’s 2013 season, every game they play is a touchdown for one real estate brokerage.
New Jersey-based Weichert, REALTORS®, has been named the official real estate company of the Jets, which means it stands to get its advertising in front of the team’s 7 million diehard fans — and beyond. The deal will give Weichert signage prominent display at all Jets home games, including spreads on in-stadium TVs. Weichert ads will also be displayed on the highly trafficked NewYorkJets.com Web site, and the company will sponsor the team’s “Jets Talk LIVE” weekly Web program. Radio ads for the company will air during ESPN’s coverage of Jets games.
“Weichert is the largest privately owned real estate company in New Jersey, and the company’s commitment to excellence is similar to ours,” says Marc Riccio, senior vice president of the Jets, whose stadium is in East Rutherford, N.J.
This go-round, though, the Jets’ success could have a big impact on Weichert’s. The team is likely wondering how far they’ll get without star quarterback Mark Sanchez, who’s out with a shoulder injury. But the path to the playoffs started out with a bang this year: The Jets clipped the Tampa Bay Buccaneers to win their season opener Sunday. That bodes well for Weichert. Continue reading »