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Introducing NAHREP's Washington Policy Update!

Dear NAHREP Member,

Hello from the nation's capitol and welcome to the inaugural edition of the Washington Policy Update. We will be publishing this monthly update in an effort to keep you informed about major policy developments of interest to the organization.

The leadership of NAHREP recognizes how important it is to keep members informed about the government's activities now more than ever. Congress is poised to begin lengthy and broad deliberations on how to restructure our nation's housing finance system. When Congressman Barney Frank, the Chairman of the House Financial Services Committee, declares that Fannie Mae and Freddie Mac should be abolished and then announces a hearing on the future role of government in housing finance, all NAHREP members should take notice. Such developments give rise to many questions among members, especially the question about what will take the place of Fannie and Freddie. So it is very timely that Chairman Frank will give a keynote address at this year's Washington Policy Conference. The conference will be a very important opportunity for members to be informed and be heard.

Of course, all the action isn't just on Capitol Hill. Executive branch regulators and policymakers are busy administering programs to keep our credit markets functioning, help homeowners in trouble, better regulate the financial industry, and protect consumers from future catastrophes. Regulators are moving quickly with the authorities they currently have to fix problems and prevent future ones. Their actions will often have a much more direct and immediate impact on people and business.

The point I hope you will take away from this inaugural Update is an appreciation of the magnitude of the changes underway in our financial system, especially the mortgage market. Our housing finance system, including the government's role, will look very different in 5 years. Washington policymakers will begin this year to consider options and formulate positions, then begin next year to move legislation.

Anyone who makes a living in the real estate sector should be paying close attention to the progress of the government's deliberations and the legislative process. We will do our best to help you follow the key developments and understand the implications for the NAHREP family. Please watch for future updates.

Armando Falcon
Government Affairs Consultant

Legislative and Regulatory Changes Begin Taking Shape

There have been many developments since our last update. Treasury Secretary Tim Geithner appeared before a congressional panel to begin laying out the administrations thoughts on the future of the U.S. housing finance system. No legislative proposal was offered, but he shared a broad set of principles of what to do with Fannie Mae and Freddie Mac. In addition, the Treasury has solicited comment on seven broad questions relating to the future of the housing finance system. The principles and questions are available on the departments website. http://www.ustreas.gov/press/releases/tg639.htm

Secretary Geithner said the government would continue to provide some measure of support to the housing market regardless of the ultimate fate of Fannie and Freddie. The White House plans to unveil its proposal for overhauling the housing finance system sometime in early 2011.

Accompanying Congresss recent discussions on the governments role in supporting the housing market was news that the Obama administration is seeking to alter its anti-foreclosure strategy considerably. As part of a new initiative to be implemented over the coming months, mortgage lenders will be required to slash jobless borrowers' payments for three to six months, and will also be able to refinance borrowers into FHA-insured loans, provided that certain conditions are met. Meanwhile, the administrations Home Affordable Foreclosure Alternative is set to kick off this month, which will seek to encourage the use of short sales and deeds-in-lieu of foreclosure arrangements by providing payment incentives to both lenders and borrowers.

For the past several months, an essential question policymakers have faced regarding the FHAs finances is this: How can/should the FHA reconcile its public mission to provide access to homeownership for deserving borrowers (now more urgent than ever), with its equally clear need to protect the agencys solvency? This month, the House Financial Services Committee took up the issue in its consideration of an FHA reform. In response, NAHREP joined a coalition of industry groups to support provisions of the bill which sought to give the FHA greater latitude to exercise risk management, while also continuing to provide access to mortgage finance for qualified borrowers. NAHREP joined the coalition in a letter to the Committee urging the rejection of an amendment that would have increased FHAs minimum down payment requirement from 3.5% to 5%. The amendment was defeated.

Also, NAHREP filed a comment letter to a Federal Housing Finance Agency proposed regulation designed to promote the utilization of minority- and women-owned businesses in the contracting processes of Fannie Mae, Freddie Mac and the Federal Home Loan Banks. NAHREP filed a comment letter in support of the regulation, while also suggesting changes that would 1) broaden the application of the regulation to the subcontracting activities of certain large contractors, and 2) eliminate potential fraud by requiring that minority-owned businesses receive certification of that status by a reliable third party.

Finally, the Senate has finally begun floor consideration of the Senator Dodds financial services reform bill. The debate and amendment process could last for 2 -- 3 weeks before a final vote is taken. Most observers, even opponents of the bill, expect it to be enacted.

Armando Falcon
NAHREP Policy Advisor

Washington Policy Update
Thursday June 24th, 2010

Dear NAHREP Member,

The House and Senate banking committees are heavily engaged in a conference committee process to resolve the differences between their versions of financial services reform legislation and get a bill to the President before Congress adjourns for the July 4th recess. The final legislation is sure to result in many significant changes to our financial services industry and how it is regulated. In addition, the legislation contains some provisions of particular interest to NAHREP members.

Most notably, the conferees have agree to include in the final bill a provision establishing an Office of Minority and Women Inclusion at the various Federal financial regulatory agencies and departments. A key function of the Offices will be to develop standards for "increased participation of minority-owned and women-owned businesses in the programs and contracts of the agency." The provision further extends its application to contractors and subcontractors of the agencies, requiring that they "ensure, to the maximum extent possible, the fair inclusion of women and minorities in the workforce." Since the new requirements will apply to "all contracts of an agency for services of any kind," it could result in much greater opportunities for NAHREP members to obtain government contracts. The language of the legislative provision can be found starting at page 384 of the bill, at the following link: http://financialservices.house.gov/pdf/AYO10F74_xml.pdf.

Recognizing the importance of this provision, NAHREP Chairman Alex Chaparro traveled to Washington, D.C., last month to testify before the House Financial Services Committee in favor of the legislation. He reminded the Committee that "it is extremely important that the federal government become increasingly vigilant to insure that minority owned firms receive a fair share of supplier contracts." Chairman Chaparro's testimony was very well received by the Committee, and I encourage you to read his testimony or view the archived webcast at http://www.house.gov/apps/list/hearing/financialsvcs_dem/hroverhousing_050510.shtml.

Armando Falcon
NAHREP Policy Advisor

Washington Policy Update for July 21st, 2010
NAHREP Members: The Dodd-Frank Bill Affects You!

Dear NAHREP Member, Today President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. The legislation will institute a sweeping new set of rules that will have a material impact on the day-to-day activities of both the financial community and consumers alike. Naturally, the impact of this landmark legislation will soon also be felt by real estate professionals.

Armando Falcon NAHREP Policy Advisor

Most significantly, the bill will bring regulation of all mortgage products and services under the purview of a new Consumer Financial Protection Bureau to be housed at the Federal Reserve, and will also execute a number of mortgage reforms. Some of these include:

• Requiring mortgage lenders to ensure a borrower's ability to repay
• Establishing penalties for irresponsible lending
• Prohibiting financial incentives that encourage lenders to steer borrowers into more costly loans
• Expanding consumer protections for high-cost mortgages and
• Requiring lenders to disclose a host of additional information to consumers.

Another area of the bill which could have a noticeable impact for many NAHREP members, in particular, is a provision which establishes new Offices of Minority and Women Inclusion at each of the major federal agencies. Accordingly, these new offices are intended to promote and enhance the ability of minority- and women-owned businesses to obtain government contracting opportunities. I should note that the retention of this initiative comes as a small victory of NAHREP, which has been directly involved in its support and promotion for the past several months.

Yet just as the financial reform debate is beginning to wind down, the policy discussion on reforming Fannie Mae and Freddie Mac is starting to accelerate at a rapid pace. The White House recently confirmed that Treasury Secretary Tim Geithner and his economic team have indeed been hard at work crafting their proposal for housing finance reform. In addition, House Financial Services Committee Chairman Barney Frank indicated he will try to issue a proposed bill sometime in September.

The Federal Reserve and the FDIC, for their part, have also have announced plans to co-host a two-day policy-oriented research conference this fall, which will focus specifically on the future of the housing and mortgage markets. Meanwhile, many prominent industry groups continue to release a variety of proposals, and the Financial Crisis Inquiry Commission, a bipartisan panel commissioned to investigate the root causes of the economic crisis, is scheduled to issue its recommendations on housing finance reform at the end of the year. For these reasons, much of NAHREP's focus in the coming months will center on the unfolding debate over housing finance reform, so expected further details on this matter as the policy discussion matures.

Regards,
Armando Falcon
NAHREP Policy Advisor