Hawaii Association of Realtors Present Key Points for Homeowners at Annual Meeting in Washington D.C.
Real Estate Newsflash – Washington D.C. to Maui
Fortunately, I did get to enjoy a little recreation time in D.C.; here I am posing with FDR (President Roosevelt) on one of my bike rides around town
A sense of urgency that I have not seen in over ten visits to Washington D.C. prevailed this week within our membership at the National Association of REALTORS® (NAR) in our annual meetings with Hawaii legislators.
The week ended with a large dues increase for all members of our association to help our organization be competitive with interests that could be in line with our values of promoting real estate and home ownership in the United States. The urgency comes in the form of five main issues that were presented to Congress members Colleen Hanabusa and Maize Hirono, and Senators Daniel Akaka and Daniel Inouye.
Our Hawaii Association of REALTORS® members presented key points on the following issues:
1. Affordable and Available Flood Insurance
Last year, after the expiration of the short term extension of the National Flood Insurance Program (NFIP), 47,000 transactions were not able to close. The present program expires Sept. 30, 2011. House Bill H.R. 1309 has been introduced that will extend the program for five years. NAR supports this program that has been self-sustaining and does not cost tax payers money. With more accurate flood maps, more properties now require flood insurance to obtain financing. Without flood insurance available, more properties in flood areas will become further distressed, and these areas will decline in value and they may not be able to be sold for lack of financing.
National awareness of floods and the affects on home ownership exists, especially with the devastating tsunamis that we have seen in the recent past. Here are two blogs that I wrote about my personal experiences with the most recent Maui tsunamis; Maui Tsunami Warning at Maliko Bay and later that day I experienced this Maui Tsunami Update – Kahului Harbor Gets a Wash Down
2. The Future of the Secondary Mortgage Market
Presently, Fannie Mae and Freddie Mac (The GSEs) constitute about 65% of the secondary mortgage market in the United States. Two bills presently in the House H.R. 1182 and the Senate S.693 both propose shutting down support by the federal government of these two entities without offering a replacement, or phasing in of alternative secondary market options. Private money has all but evaporated from the secondary markets and without the GSEs, FHA, and VA loans, there would be almost no loans available to buyers.
With no loans, inventory will not move and we will see further declines in value across the country to an already distressed market. NAR opposes both of the proposed bills, and seeks extension of the present programs and incentives to promote development of a private secondary mortgage market to keep money available for mortgages. Because of the stringent regulations on mortgages, we are seeing a lot more cash buyers in the Maui marketplace. Read one of Jeremy’s recent blogs on this subject, Cash is King in Maui Real Estate Market
Presently, there is a proposal in the Senate S.693 and House H.R. 1182 that would drop the GSE loan limits to $417,000. A proposed rule would require a 20% down payment for a Qualified Residential Mortgage (QRM). NAR message to our legislators is to keep the present loan limits due to the high average sales prices in Hawaii and to keep affordable, lower down payment programs available to qualified buyers. The higher loan limits expire Sept. 30, 2011.
It is important for us to have affordable loan products like this, so our hard working citizens, like my daughter Brianna Stice, who is a first year Maui police officer in Kihei, can purchase their first homes. The Stice Team is in the process of assisting Brianna with a purchase of a REO/bank owned/foreclosed condo in Kihei and she is utilizing a Homepath loan that allows her to purchase the property with 3% down payment, and her closing costs are lower because there is no appraisal fee.
4. Preserving Home Ownership Tax Benefits
Although no specific bills have been introduced that would change the current tax deductions for mortgage interest deductions, this is an area of great scrutiny, particularly for mortgages over $500,000 and second homes. NAR will continue to remind Congress that any change in the tax rules that apply to home ownership would disrupt the market and cause home values to plummet further.
5. Short Sales
A bill has been introduced in the House H.R. 1498 – Prompt Decision for Qualification for Short Sale Act of 2011, that would require a lender to reply to a short sale request within 45 days of submittal. This bill has yet to be heard. If this bill comes to a hearing, it will allow NAR to testify on the present problems presented to most buyers and sellers with short sales.
As it is now, huge amounts of time are being spent on short sales that ultimately end up in foreclosure, or the seller filing bankruptcy. Buyers shy away from short sales as a result because there is no process to ensure that their commitment to the process will bring forth the result the desire – the purchase of the property.
On a local note here in Maui, we have seen some financial institutions vastly improve the short sale process and recently, my son and business partner Jeremy, just closed his first short sale transaction and has another set to close in 2 weeks. Read about his client’s success story, Deal – Kahana Ridge Short Sale Success Story.
The Stice Team has a renewed sense of confidence in short sales and is now starting to promote them as some of our best buys. Read about one of these short sale best buys, Deal – Fantastic Kaanapali Foreclosure and Short Sale.
What does this mean to Hawaii and Maui buyers?
It is extremely important that we keep our Hawaii loan limits where they are at. It is vital that the secondary loan market remain in place, and it is imperative that the government continue to allow mortgage deductions on both primary residences and second homes. Although the short sale process has greatly improved, it still needs a lot of work and I firmly believe that this is the best interest of the homeowner, the banks, and market as a whole.
Please feel free to contact me if you would like more detailed information on this, and/or if you have any questions.
Report by Tracy S. Stice, Realtor
NAR Director for Hawaii 2011
President, Hawaii Association of Realtors 2010