A false Facebook post is making the rounds claiming that if you don’t pay the penalty for not buying health insurance, the IRS can file a lien against your home.
The health care reform law requires individuals who don’t meet one of the law’s exemptions to buy an insurance plan that meets minimum requirements or face a penalty. The law set up online state insurance exchanges to simplify cost comparisons among plans and to make purchasing a plan easy. Open enrollment for these insurance plans on the online exchanges began Oct. 1 and runs through March 2014. We’ve outlined all your options in a separate blog post.
Those who choose to have no insurance at all by the open-enrollment deadline will be penalized $95 or 1 percent of their income (whichever is greater). That penalty will go up to $695 or 2.5 percent of income in 2016.
However, it is not true that the IRS can file a lien against your home for failing to pay the penalty.
Though the IRS does have authority to garnish wages and file liens to collect unpaid taxes, the Affordable Care Act explicitly prohibits it from using such measures to collect health-insurance penalties, according to Kaiser Health News, an independent nonprofit news organization dedicated to covering U.S. health policy.
Instead, the IRS will withhold the penalty from your tax return, Kaiser Health News reports. Read the KHN piece here.
Q&A with NAR’s new data analytics chief, Todd Carpenter
NAR this week announced the launch of a division to analyze large amounts of NAR and other data to help members make better business decisions. The new division is called the Predictive Analytics group and it will be led by Todd Carpenter, the association’s new managing director of data analytics. Carpenter is a 20-year veteran of the real estate industry and previously served at NAR as its director of digital engagement. He most recently worked at Trulia, the national home listing site, where he served as senior manager of industry engagement. Carpenter will be joined by a data scientist to develop the mathematical formulae for analyzing data and developing the tools that NAR will eventually be providing to members. To get a little more information on the goals of the new division, REALTOR® Magazine sat down with Carpenter for a brief conversation.
REALTOR® Magazine: What’s the nature of your new role?
Todd Carpenter: It’s to find ways to use large quantities of data to build tools that our members can use to make better marketing and business decisions. We’ll be using data that NAR already collects, such as its monthly existing-home sales data, and data that we’ll be licensing from others. With the NAR data, we have an enormous amount of information already at our disposal, so one of our jobs will be to find ways to analyze it mathematically so we can generate more insightful findings from it. We’ll also be looking into ways to layer consumer data we get from others against property data that we already collect to give us a picture of where different segments of the population are in terms of buying and selling scenarios.
RM: How about an example?
TC: Take the data that’s being collected from lockboxes. As these get accessed more, we know more homes are being shown and that might indicate a particular market or a particular type of home is attracting more interest, which can give us an indicator of sales 90 days down the road for a particular type of house in a particular market. We’ll also look into licensing data sets from others that can tell us something about consumers and their spending habits to help us predict when they’re likely to buy a home. That way our members can identify the best people to market to, which in turn enables them to make better decisions on where to spend their money.
RM: What led NAR to create this division and why is it happening now?
TC: The Center for REALTOR® Technology (CRT) and NAR’s Strategic Planning Committee have been looking at the idea of data mining for quite a while and trying to figure out how the association can better get its arms around it for members’ benefit. Also. the Data Strategies Committee, created last year, was launched in part with this idea in mind. So, data analytics has been at the idea stage for quite a while and it’s happening now because this is where our Strategic Planning Committee has guided us. It’s interesting, because when I first joined NAR several years ago as director of digital engagement [February 2009 to April 2012], part of my goal was to explain the newest digital concept to NAR members and their leadership, and at that time the newest concept was social media. My job this time around is similar to that, only the newest concept is big data.
RM: When can members expect the first of the new tools to come out?
TC: Well, we’re really excited to get started today but you won’t see a product tomorrow. This is going to take some time, and it’s just the first day. We have to look at a lot of data and conduct a lot of experiments first. We want to do this right. CRT will be heavily involved in building a lot of the platforms we come up with, but first we have to find the right data and what to tie it with to derive a prediction of the future or key analytic that’s going to help our members. So, it’s going to take a lot of mathematical experimenting in the beginning. Fortunately, there are a lot of open source analytic programs we can start working with right away. That will give us a strong foundation to build on. Over the next year or so, I hope to work with NAR Research, too, with the goal of helping them come up with even more insightful ways to analyze the data they collect.
The looming debt ceiling crisis and the federal government shutdown have pushed aside pretty much every other issue in Washington today, but it won’t be too long before one of the major real estate issues facing the federal government will be back on the agenda, and that’s reform of the secondary mortgage market. Its importance can’t be overstated, because if the government stops backing conventional, conforming loans—these are the all-important loans backed by Fannie Mae and Freddie Mac–it’s unlikely we’ll have 30-year fixed-rate mortgages in the United States anymore.
That’s a dramatic thing to say, but it’s what the president of Ginnie Mae is saying. Ginnie Mae is the Fannie Mae-equivalent for loans that are backed by FHA, VA, and the Rural Housing Service, and Ted Tozer is its president. He sat down with NAR just before the federal shutdown almost three weeks ago and in that conversation, he made two key observations:
First, the guarantee that the federal government provides through Fannie and Freddie is absolutely essential for lenders to offer interest-rate locks on 30-year loans. Why? Lenders know they can lock in a loan at a set rate and find global buyers of those securities, because to these investors, federally backed securities are attractive interest-rate instruments. Depending on their needs, investors will buy pools of loans at certain interest rates because they don’t have to worry about credit risk. The federal guarantee covers that for them, so MBS purchases become pure interest-rate plays.
Second, the federal guarantee is also key to 30-year, fixed-rate financing, because, again, investors are looking for pools of loans at various interest rates because that’s what they’re managing: interest-rate risk. They’re not managing credit risk. As a result, investors are willing to buy and sell securities with long-term collateral because the federal guarantee makes them marketable assets no matter what interest rates do 10, 15, or 20 years down the road.
Tozer’s views are important because he is in the global market every day and if anybody has his finger on the pulse of global investment strategies, he does. For that reason, lawmakers, no matter their policy goals, would benefit from knowing his views on the importance of the federal guarantee to mortgage securities.
In key aspects, his views align with those of NAR, which has been calling for the federal government to maintain a presence in the secondary mortgage market.
So, once Congress turns its attention to Fannie Mae and Freddie Mac reform, the Ginnie Mae president has views that can help shed light on the debate.
In the video above, NAR Vice President Joe Ventrone talks with Tozer about the workings of the global mortgage-backed securities investment market.
The effects of the government shutdown are rippling through the real estate industry, and practitioners are feeling the pain all over the country. Most of the complaints we’re fielding are about USDA loans, which have been entirely frozen. Real estate pros are seeing deals fall apart, as the Department of Agriculture has shuttered its mortgage division during the shutdown.
But agents and brokers whose clients hold every type of loan are getting slammed. Though the FHA is still operational, it has drastically reduced its staff, causing widespread delays in the processing of FHA loans. And while the IRS is down, it can’t verify tax documents tied to conventional, FHA, or any other loans. That translates to many real estate deals being put on hold — or just disintegrating.
It’s becoming a madhouse out there for many practitioners fighting to keep deals alive as the shutdown puts a stranglehold on the market. We’ve gotten a few of their stories. Continue reading »
If the federal government fails to increase its borrowing authority prior to when the U.S. Treasury says it will run out of money to pay its bills, debt default is not necessarily the first consequence we’ll see, says NAR Chief Economist Lawrence Yun. Rather, the government could decide to pay the interest on its debt, which is about three percent of the U.S. gross domestic product, and ensure that global investors of U.S. Treasury bonds are made whole. That would help protect the dollar as the world reserve currency. But to do that, the government would have to curtail spending elsewhere.
The government spends one dollar for every 75 or 80 cents it takes in, Yun says, so, if the borrowing limit isn’t raised, “it will be a tough decision as to where the tax revenue gets spent. Does it mean that interest costs on past borrowing gets suspended? Is it the case that some people who have been relying on Social Security checks no longer gets those checks, or some of the military jets or tanks that have been purchased will not be purchased any more?”
Should the government decide to pay bills other than interest obligations, we can expect interest rates on Treasury bonds to rise as investors look for more return to compensate for the increased risk of their not getting paid. And if that happens, mortgage rates will rise, because mortgage rates follow Treasury rates.
Yun says home sales can be expected to drop by 350,000 to 450,000 units for each 100 basis-point rise in mortgage rates.
It’s possibe global investors will not over-react, at least in the short term, should the U.S. choose not to make its interest payments. “I believe that the global investors recognize that the U.S. will come through at the end, even if it’s a delay for a couple of weeks or even in a worst-case scenario of a few months. . . . Therefore, I don’t believe there will be immediate bond market panic.”
Even so, since the economy remains weak, with tepid employment growth, any impact on interest rates would be a problem. “You are in a situation in which the economy is at a tipping point, with rising rates, and that’s certainly not a good combination,” Yun says.
In the four-minute video above, Yun talks abut the looming debt crisis with REALTOR® Magazine.
Everyone’s got their game face on as the NFL and NHL seasons get underway, and while sports fans are rooting for the home team, real estate companies are making plays to the home buyers in the crowds. Next up to score: realtor.com®.
NAR’s official listing Web site, which is operated by Move, Inc., announced that it has inked a deal to become the “category exclusive” sponsor of the NHL’s San Jose Sharks. That grants realtor.com® big ad displays at SAP Center in San Jose, Calif., the Sharks’ home stadium, as well as exposure in regional and national television and radio broadcasts of Sharks games. Realtor.com® will also develop giveaways to Sharks fans, co-branded items with the team, and new campaigns that spotlight its mobile apps.
“We continue to look for ways to connect with on-the-go, busy consumers to provide a personalized and powerful real estate experience on their mobile devices,” says Barbara O’Connor, chief marketing officer of Move. “Our agreement with the San Jose Sharks aligns perfectly with the audience we want to reach.” The deal also holds an element of neighbors helping neighbors: The Sharks’ stadium, after all, is only two blocks away from the realtor.com® headquarters, O’Connor notes. Continue reading »
Today is October 1, a big day in the world of health care reform. That’s because today’s the day the online state health insurance exchanges launch. What are the health exchanges? They’re online marketplaces—one for each state—where consumers can shop for health coverage in a way that’s intended to make comparisons easier than before.
Of course, no one has to use the online marketplaces. All the traditional ways of buying health coverage remain in place, so you can think of the online exchanges as just another option, although there’s an important caveat: Whatever coverage you buy, and however you buy it, your coverage must be a plan available on your state exchange (and a few other rules apply) for you to receive premium credits, which are a form of assistance to help you cover your costs if you meet income guidelines.
So, bottom line, if you’re eligible for premium credits (you earn 400 percent of the poverty rate or less), you can get those credits to help you offset your health insurance costs if you buy on your state exchange or if you buy outside the exchange and certain conditions are met. More details on this and other aspects of the health reform law are in a REALTOR® Magazine article, “Health Care Reform: A Guide to Your Coverage Options.”
Do you have to buy your coverage today, now that the online exchanges are launching? No, you don’t. In fact, the individual mandate, which is the part of the law that requires everyone to have health insurance or pay a penalty if they don’t qualify for an exception, doesn’t actually take effect until 2014. What you have between now and 2014 is a three-month period in which you can shop for coverage, whether you do your shopping online or in a more traditional way.
The health care law has a lot of moving parts to it, including several provisions that have already taken effect, such as Continue reading »
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.