NAR Dues Initiative

The results of NAR member surveys indicates that many members believe political advocacy is one of NAR's primary roles.

NAR President Ron Phipps told thousands of REALTORS® at a virtual town hall meeting that "we are at a threshold. Housing is under attack in a way we've never seen before."

"The situation, frankly, is serious, not merely because our livelihood is at stake, but because home ownership in an absolute sense is at stake," said Phipps. "Since World War II, our country has made home ownership a priority, but that's changing. The privileges our grandparents, parents, and we have are being eroded, and we don't want them denied to our children. Our initiative is about an agenda way beyond us. It's about our purpose as a country."

The initiative calls for generating an estimated $195 million over five years through an annual dues increase of $40, which would be dedicated to political advocacy efforts. Two-thirds of that revenue and the services it pays for would be made available to local and state associations.

The dues increase will inject almost $200 million into local, state, and national political advocacy efforts over the next five years to give REALTORS® resources to fight the assault on home ownership.

Mortgage Interest Deduction. Lawmakers are embarking on comprehensive tax reform as part of major efforts to rewrite the federal budget, and MID is expected to be part of the discussion. Even if the 100-year-old tax benefit is preserved for home owners, NAR leaders said, it could face curtailment in other ways, including restrictions on its use for second homes.

Fannie Mae and Freddie Mac. Some lawmakers want to go beyond reforming secondary mortgage market companies Fannie Mae and Freddie Mac to eliminating them outright and, in some proposals, replacing them with no form of federal involvement, leaving mainly FHA to pick up the pieces for borrowers who can't find financing in the conventional market. Their elimination with no new form of federal backstop would threaten the availability of the basic 30-year, fixed-rate mortgage that middle class households rely on and that have proved to be safe and affordable, even during the deepest part of the downturn.

Qualified residential mortgage exemption. As part of the sweeping Wall Street reform law enacted last year, banks are required to hold in their portfolio at least 5 percent of the value of the mortgages they originate that are securitized for sale to investors. That skin-in-the-game provision will lead to mortgage rates rising by an estimated 300 basis points, putting home ownership out of reach for many. However, the law includes an exemption to this 5-percent risk-retention requirement for mortgages that are considered safe. Lawmakers made clear while writing the law that "safe" refers to mortgages that are soundly underwritten to creditworthy borrowers the way typical fixed-rate and adjustable-rate mortgages handled by Fannie Mae and Freddie Mac are. But regulators in writing the rules to the law are proposing to define "safe" as mortgages with a minimum 20 percent down payment, which could raise costs to borrowers for almost 70 percent of the market, according to some estimates. Even a 10 percent minimum down payment would devastate sales.

Tax on services. At the local level, governments around the country are ramping up efforts to pass sweeping taxes on services, including real estate sales, to fill their empty coffers with revenue. "Everything's going to be put on the backs of point-of-sale," says Beth Peerce, president of the California Association of REALTORS®. Even at the national level, there's talk of a national tax on real estate sales and other services as part of the mix to shore up the federal budget, Peerce says. Among those proposals is a 4.5 percent tax on services, which would effectively eliminate today's thin profit margin for brokerages, she says. Peerce wasn't part of the town hall but spoke with REALTOR® Magazine by phone yesterday.

 

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December 2017
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