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Housing the Political Spirit: Real Estate and the Presidential Election

by Peter Thomas Ricci

“Member-Driven” Activism
Jamie Gregory is the deputy chief lobbyist for NAR, and within that role, he spends quite a bit of time communicating with various members of Congress and their staffs on Realtor-centric topics, which can be informally divided into three categories.

First, there are the immediate, government-driven issues, which involve pending legislation or expiring acts of Congress that are of particular importance to agents and require direct attention. One example is the National Flood Insurance Program, or NFIP, which was originally created by Congress in 1968 to combat flood damages. The way NFIP works is simple – communities join the program, and are then entitled to flood insurance disaster assistance and mitigation grants; in return, though, they must adopt and enforce local floodplain management regulations. According to the Illinois Department of Natural Resources, 82 counties in Illinois (including Cook and the collar counties) are part of NFIP,  and literature from NAR has stated that nationwide, 21,000 communities (or, 5.6 million property owners) are enrolled in the program – and because of that, flood insurance is required for mortgages. So, given its widespread importance, NAR supported a long-term extension of the program, and in July, after 17 short-term extensions (and shortly after a month-long extension had expired at the end of June), President Obama signed a five-year extension of NFIP.

A similarly notable (and similarly pressing) policy is the Mortgage Forgiveness Debt Relief Act, a 2007 regulation that was passed at the beginning of the housing downturn and excludes forgiven mortgage debt as taxable income. For instance, assume a homeowner engages in a short sale on a primary residence, and $50,000 of the $250,000 he or she owes on the house is forgiven; the Debt Relief Act exempts that $50,000 from taxable income, and the IRS will not tax the funds. Understandably, the act has garnered wide support among agents and homeowners alike, but it’s set to expire at the end of 2012, and with how long distressed sales can often take to complete, the renewing of the act is among the top priorities for NAR; after all, if negotiations for a short sale were to begin in September or October and linger into January or February of 2013 – and the act were to expire in the meantime – it would prove quite troublesome for the homeowners involved.

Second, there are less urgent but still important secondary issues that NAR focuses on, such as the government’s definition of a rural community, which determines what communities are eligible for the hugely attractive zero-percent down USDA loans. Typically, towns with a population of less than 20,000 are considered eligible for USDA financing.

And third, there are the long-term issues, such as taxation and home mortgage reform, that are slow-burning and can take years to come to fruition, either in legislation or new government regulations. The mortgage interest tax deduction – arguably the holy grail of real estate legislation – is a prime example, as is the “qualified mortgage” rule, a central reform in the Dodd-Frank regulation bill that, in its current form, would mandate a 20 percent down payment for all mortgages that do not meet “qualified” status, and would, according to some analysts, severely restrict consumer access to credit.

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Comments

  • Barb Davis-Hassan says:

    The GOP candidate, Willard (Mitt) Romneym Past Governor of the state of MA along with the GOP platform’s position on the Mortgage Interest Deduction is an absolute joke. And the fact that this article spins it as if Romney is a supporter of the MID is as outrageous as Romney’s entire campaign.

    The actual GOP platform wording is “if the GOP failed on tax reform it would favor the retention of the Mortgage Interest break”. What exactly does this mean. Well, Mr. Romney stated last week when asked about specifics in his tax policy the following: “I can’t tell you right now because it’s not fully formulated”.

    While campaiging Mr. Romney clearly stated that he would “eliminate the Mortgage Interest Deduction on second homes and eliminate the HUD”. The elimination of the MID would be ok in his words because he was going to drop the overall tax rate. I would not exactly call this supporting the MID. Of course NAR doesn’t support any specific candidate but to write an article spinning it as if the GOP is in favor of the MID is a bit of a stretch. It’s almost like saying up front “we know the GOP’s tax policy is going to fail, therefore we conclude the GOP will protect the MID”. Nice balancing act guys.

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