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VOL. 35 | NO. 20 | Friday, May 20, 2011

Realtors go to Washington, come home happy

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Each year, in early May, the National Association of Realtors (NAR) organizes and implements Realtor Day on the Hill in Washington, D.C., during its mid-year meetings. That’s right, the mid-year meetings are in early May. But it is Washington, and they are Realtors, so they never let a calendar get in the way of a good event.

During this session, Realtors representing local and state associations from across the country descend on the District for some old-fashioned, grassroots lobbying.

The week offers opportunities for Realtors to gain insight into the legislative process and allows the elected officials to hear firsthand the issues facing Realtors and their clients. Realtors’ clients, of course, include everyone. So these are not just Realtor issues, but issues that affect homeowners, potential homeowners and renters.

The Nashville area was represented by the Greater Nashville Association of Realtors (GNAR) with its president, Alice Walker, president-elect Kendra Cooke, secretary-treasurer Price Lechleiter, vice president Hagan Stone, and legislative committee Kim Cunliffe, along with the omnipresent CEO Don Klein.

This year there were four issues that NAR had identified as the most pressing at this time:

• Extension of the flood insurance program that expires at the end of June. In addition to the extension, it was requested that the flood insurance program be made permanent so it does not expire for at least another five years. Obviously, those in this area are sensitive to this program, as was the Memphis delegation. For the record, both Tennessee senators, Lamar Alexander and Bob Corker, supported this, as did all of the House members.

• The extension of the mortgage interest deduction on the interest paid on residences. There are those on the Hill that feel this deduction should be eliminated. Realtors feel the mortgage interest deduction provides incentive for home ownership. With the market in turmoil and prices declining, it is more important now than ever. The program allows for some $220 billion in tax breaks, but everyone in the Tennessee legislative delegation feels that the deduction important to the economy and the health of the housing industry overall.

• Alarmingly, there is a bill being floated that would require a down payment of at least 20 percent of the purchase price in order for anyone to receive a loan for the purchase of real estate. Those in the industry see this as excessive as there has been no such requirement for the last 50 years and housing has flourished with lesser down payments with no negative consequences. It is only when lenders provide mortgages with no money down that the problems occur.

In the past, most borrowers that put 20 percent down did so with the wealth accumulated in their homes. With 2011 home prices hovering around prices that the same property would have sold for in 2004, there has been no wealth generated out the housing market in seven years. Such an enormous payment would be devastating to housing.

Sen. Corker had proposed legislation that would require 5 percent down, but that met opposition from Realtor groups. The FHA requirement of 3.5 percent down seemed more desirable. However, 5 percent is much more palatable than 20 percent, so the Realtor group is supportive of the senator’s bill.

• Lastly, the government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac are in trouble. NAR agrees they are flawed and some retooling is necessary, but they are vital to the industry. Properly constructed and administered, the GSEs are profitable and stable. It was the consensus of the Tennessee legislative delegation that there must be change. However, Sen. Corker noted that while everyone agrees there is need for change, he has not seen any suggestions as to how.

Jim Cooper the representative for Tennessee’s fifth congressional district summed it up best saying that “To revive the housing market, we need to keep down-payments as low as possible, the mortgage deduction strong, and flood insurance available. Home ownership is essential to the American dream.”

For the first time in years, the Realtors left the Hill enthusiastic about the results, yet with some head-scratching as they had their concerns validated, their issues supported and with consensus from both Republican senators, the seven Republican representatives and the two Democratic representatives.

In discussions with Realtors from other parts of the country, it seemed that the same rang true with their representatives. So, is spite of what might be written or said, there are at least four issues on which Congress can agree. Maybe this thing will work out after all.

Richard Courtney is a Realtor with Pilkerton Realtors and a past president of GNAR. He is the co-author of “Come Together: the Business Wisdom of the Beatles.”

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