Realtors Walk Capitol Hill, Press Real Estate Concerns on Congress

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This week several thousand Realtors ascended on Capitol Hill to persuade their members of Congress to protect affordable and safe financing for American families and to reform government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac.

These Realtors are among more than 7,700 attending the National Association of Realtors annual Midyear Legislative Meetings & Trade Expo here this week. Other top issues they carried to Congress are affordable and available property insurance including the National Flood Insurance Program and natural disaster coverage, and enhancing liquidity in the commercial real estate market.

"You must tell your Senators and Representatives that legislation should not increase buyer down payments," said Jerry Giovaniello, NAR senior vice president and chief lobbyist, at a Realtor rally early this morning. "And that we oppose the amendment by Sen. John McCain (R-Ariz.) that would shut down Fannie Mae and Freddie Mac. The two GSEs are unique in the world and must continue in some form in the future."

Realtors want both the House and Senate to pass H.R. 5072, sponsored by Reps. Maxine Waters (D-Calif.) and Shelley Moore Capito (R-W.Va.), that would strengthen the Federal Housing Administration while still allowing access to safe and affordable financing by responsible borrowers. They also pressed legislators to pass H.R. 2483, by Reps. Brad Sherman (D-Calif.) and Gary Miller (R-Calif.) that would make the current FHA loan limits permanent. The current limit in high-cost areas, set to expire Dec. 31, 2010, is $729,500.

"Congress must restructure Fannie Mae and Freddie Mac in a way that keeps the federal government involved in the secondary market to ensure mortgage liquidity in all markets and in all conditions. In past economic crises, private capital flees the market first," said Giovaniello.

But, he noted, legislative action on GSEs is not likely until 2011.

The Senate and House have not yet agreed on long-term flood insurance extensions or program reform. NAR is urging that Congress reauthorize the NFIP for five years and bring more certainty into the market, instead of the usual short-term reactive extensions that disrupt the flow of business. Since September 2008, Congress has approved seven short-term extensions and allowed the NFIP to expire twice.

Insurers have responded to recent natural disasters by raising premiums or declining to write policies in many parts of the U.S.; and because the standard homeowner's policy does not cover flooding, windstorms or earthquakes, most Americans rely on the NFIP or a state program for coverage for natural disasters. Therefore, NAR supports such legislation as H.R. 2555 by Rep. Ron Klein (D-Fla.) to encourage state property insurance programs to proactively address the need for insurance coverage.

Realtors also urged Congress to take action to enhance liquidity in the commercial real estate market to avoid driving down economic recovery. Most commercial mortgages, unlike residential mortgages, are short-term loans that readjust rates every few years, or must be refinanced. Lenders have not been willing to refinance such loans in the current economic crisis, thus throwing many commercial real estate properties into default.

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