C.A.R. Opposes Tax on Home Buyers in Senate Highway Transportation Bill

The California Association of Realtors looking out for its members like always.



Bill would put tax burden on home buyers, hinder future efforts at mortgage finance reform

LOS ANGELES (July 28) – The CALIFORNIA ASSOCIATION OF REALTORS® is opposing a provision in the highway bill now being considered by the U.S. Senate that taxes home buyers by increasing the fees Fannie Mae and Freddie Mac charge on their loans. This provision would extend a tax on homeowners that Congress implemented in 2011, which C.A.R. opposed at the time.

“C.A.R. opposes this provision because home buyers are being forced to offset the costs and take on this tax burden,” said C.A.R. President Chris Kutzkey. “Not only will it increase the cost of homeownership and make it more difficult for a buyer to purchase a home, it will hinder future efforts at mortgage finance reform.”

Leading the way...® in California real estate for 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with 175,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

California Realtors Urge Legislators To Vote No On Service Tax

Last week approximately 2,000 REALTORS®from all areas of California showed up in Sacramento, the state capital, for the purpose of spending some in-person advocacy time with their respective legislative representatives.

Legislative Day, as it is called, is an annual event for the California Association of REALTORS®(CAR). No year goes by without a sizeable number of bills being introduced that would affect property rights, housing, and/or the real estate business. The annual appearance of these representatives from the state's largest trade organization (approximately 180,000 members currently) is an effective reminder that someone is watching, and with more than casual interest.

This year, one of the bills that received particular attention from the REALTORS®was Senate Bill 8 (Hertzberg), a proposal to impose taxes on services -- something that is not currently done in California.

Real estate transactions are service intensive. Among the services that would be taxed under the Senate Bill 8 proposal are appraisal, home inspection, natural hazard disclosure reporting, pest control inspection and repair, title insurance, loan origination, and brokerage. They add up to a substantial number.

CAR legislative analysts estimated that service fees comprise about 13% of a sales price. That number seems a bit high to me, although they were including "services to prep for sale (painting, cleaning, landscaping, staging, etc.etc.". But even a more modest estimate -- say 8% - 10% -- yields some significant numbers.

The REALTORS®' point to the legislators was that California doesn't need anything that will increase the already too-high cost of housing. With the state-wide cost of a median-priced home at $447,000 (4th quarter, 2014), California has an affordability crisis. Fewer than 40% of its population can afford the median-priced home. Nationally, 59% can afford the U.S. median. California's home ownership rate has dropped below 55%.

A 5% tax on the typical services for a median-priced California home would increase the transaction costs by more than $2,000; a 7.5% service tax would add about $3,000 to the total cost. Those numbers have real consequences. At today's financing costs, the 5% tax would eliminate close to 25,000 potential buyers from that purchase. The 7.5% tax would similarly affect more than 36,000.

It's easy to look at a tax proposal at a fairly high level of abstraction. Last week, on Legislative Day, 2,000 REALTORS®took it upon themselves to show legislators some of SB 8's possible effects in the real world of high-cost, hard-to-afford housing.

Source: Bob Hunt, RealtyTimes

http://realtytimes.com/todaysheadlines1/item/34594-20150428-california-realtors-urge-legislators-to-vote-no-on-service-tax

NAR to Congress: Ease Up on Mortgage Credit

Everyone who calls themselves a REALTOR, such as myself, does so because they are a member of the National Association of Realtors. They are a national advocacy group for those of us in the real estate profession. Not only are they looking out for the best interest of Realtors like me, but also for the average home buyer and seller. NAR testified before the U.S. Senate Banking, Housing and Urban Affairs Committee yesterday to urge our legislators to have banks ease underwriting requirements for borrowers to make it easier to get a loan. Yes, on one hand we want tougher standards on banks so we don't have a repeat of the 2008 housing collapse where by banks were issues out loans to unqualified borrowers, BUT on the other hand, we don't want banks to go too far. If the banks make it too burdensome for buyers to obtain financing, then that will impact the market negatively - something nobody wants to see.



NAR to Congress: Ease Up on Mortgage Credit

Credit-worthy borrowers are being denied a chance at home ownership due to "unnecessary regulatory burdens" that are preventing them from qualifying for a mortgage, National Association of REALTORS® leaders testified Thursday before the U.S. Senate Banking, Housing and Urban Affairs Committee.

"REALTORS® support strong underwriting standards to protect consumers from the risky lending practices of the past, but we are concerned that the pendulum has swung too far," NAR President Chris Polychron testified. "In some cases, well-intentioned, but over-corrective policies are severely hampering the ability of millions of qualified buyers to purchase a home. I believe, and our members believe, that we have yet to strike the right balance between regulation and opportunity."

Mortgage rates continue to hover near historical lows, yet the number of first-time buyers entering the market is at its lowest point since 1987. The number of homes purchased annually is less than 70 percent of what was purchased prior to the real estate boom and the subsequent collapse, NAR states.

"No one wants to see a return to the unscrupulous, predatory lending practices that caused the Great Recession, but some modifications to existing regulations would help restore the home ownership rate to pre-bubble levels," Polychron said.

Polychron proposed adjustments to several regulations that he said would still ensure safe access to mortgage credit. For example, he urged changes to restrictive condominium polices from the Federal Housing Administration and the Government-Sponsored Enterprises, which he says are limiting opportunities for buyers to own condos. Condos often represent the most affordable buying options for first-time home buyers and minorities.

Polychron also urged the Consumer Financial Protection Bureau to conduct more lending from responsible community banks and provide more flexibility for lending in small specialty markets, such as rural communities.

Polychron voiced the association's support of the Mortgage Choice Act, bipartisan legislation that redefines a provision in the Ability-to-Repay rules that limits mortgage fees and points to 3 percent in order for home loans to be considered "Qualified Mortgages." Polychron urged the Senate to approve the legislation, following the House of Representatives' passage of the act earlier this week.

Currently, the rules "unfairly prevent consumers from obtaining Qualified Mortgage loans through certain affiliated lenders whose joint venture services are collectively counted against the cap, while individual services from large retail financial institutions are each capped separately," according to NAR's testimony. "The discrimination in the calculation of fees and points is being felt by consumers, including lower-end buyers, who are seeing reduced choices and added obstacles in their transactions."



Source: National Association of Realtors via RealtorMag Online
http://realtormag.realtor.org/daily-news/2015/04/17/nar-congress-ease-up-mortgage-credit?om_rid=AAFmZk&om_mid=_BVMVEuB9A4eKHv&om_ntype=RMODaily