The reelection victory of President Barack Obama over Republican challenger former Massachusetts Governor Mitt Romney yesterday means initiatives begun in the last four years to address past housing market excesses and help boost the market recovery, including proposed Dodd-Frank banking rules and reform of the secondary mortgage market, could command attention going into the president’s second term.
In his acceptance speech from Chicago delivered after midnight, President Obama said he hoped to meet with Gov. Romney in the coming weeks to explore how the two could work together to move the country forward. He also called for immigration reform and vowed action on two Republican priorities, tax reform and deficit reduction.
“I am looking forward to reaching out and working with leaders of both parties to meet the challenges we can only solve together,” President Obama said. “Reducing our deficit, reforming our tax code, fixing our immigration system, freeing ourselves from foreign oil — we’ve got more work to do.”
The Obama administration two years ago released a white paper that contained options on reforming secondary mortgage market companies Fannie Mae and Freddie Mac, raising the possibility that reform of these companies, which have been in conservatorship for much of Obama’s term of office, could come under consideration in the new Congress.
NAR supports reforms that would pave the way for a return of private lenders into the mortgage market while maintaining an explicit, government-chartered, nonprofit federal presence in the market to ensure mortgage availability in good times and bad.
NAR has expressed support for legislation by Rep. Gary Miller (R-Calif.) that would aim to do that in a balanced and comprehensive way, and that bill could get reintroduced in 2013.
Similarly, important rulemaking by the Consumer Financial Protection Bureau to protect against future mortgage lending abuses, is slated to come to a head in early 2013. NAR has expressed concern with the approach in two of the rules, the qualified mortgage and qualified residential mortgage rules. The QM rule sets standards for lenders to ensure they make loans only to borrowers who have the ability to repay, and QRM requires lenders who originate loans for securitization retain 5 percent of the value of the loans unless they meet prescribed underwriting standards. In both cases, NAR has called for the rules to give flexibility to lenders in meeting consumer protections; otherwise pricing could put mortgage financing outside the reach of households of all but those with the strongest credit records.
In the presidential election campaign, Gov. Romney singled out QM as an example of a Dodd-Frank rule that was already hurting the market and raising the cost of mortgage financing because of the uncertainty it was causing, and he had vowed to reform it in a market-friendly way. It’s unclear under a second Obama administration how much the final versions of the QM and QRM rules will look like their proposed forms. NAR continues to seek changes that would ensure the rules aren’t so prescriptive that lenders pull back on their mortgage lending.
In the near term, NAR will be advocating for the extension of mortgage cancellation relief, which was enacted in 2007 to exempt underwater home owners of taxation on mortgage debt forgiven by a lender in a modification or distressed sale. The tax forgiveness expires at the end of 2012 and could be taken up before the end of the year, when the current Congress adjourns. NAR issued a Call for Action in support of extension earlier this week.
NAR does not particiate in presidential elections but it does get involved in congressional races, and it achieved considerable success in its support of members of Congress who are strong supporters of real estate.
Among six races it targeted for support through its independent expenditure program, five of its candidates won, including Rep. Miller, the author of the secondary mortgage market reform bill NAR supports. Miller, a member of the House Financial Services Committee, has been in office since 1999 and faced a fellow Republican in a redrawn congressional district. He won with 56 pecent of the vote over Bob Dutton, a state senator.
Under its independent expediture program, NAR engages in advocacy efforts on behalf of a candidate independent of, and without any coordination with, the candidate’s campaign.
Its other big independent expenditure campaign victories were on behalf of Rep. Brad Sherman (D-Calif.), who shares NAR’s concerns over the QM and QRM proposed rules; Rep. Tom Latham (R-Iowa), chair of the House Appropriations subcommitee with oversight of the FHA and who fought to protect higher FHA loan limits; and Thomas Reed (R-N.Y.), a member of the tax-writing House Ways & Means Committee and a champion of extending mortgage cancellation forgiveness.
NAR also supported Rep. Mike Fitzpatrick (R-Pa.), a member of the House Financial Services Committee who has championed reforming FHA rules to make condo financing more widely available.
The one defeat was Rep. Judy Biggert (R-Ill.), who took the lead on the successful NAR-backed effort to win long-term reauthorization and reform of federal flood insurance. She lost to Rep. Bill Foster (D) in a battle over a redrawn district.
RPAC’s spending on all races was split roughly 54-46 between Republicans and Democrats.