Nation

TERRORISM INSURANCE, MORTGAGE RULES ON NAR AGENDA

NAR legislative priorities are expected to get a boost when Congress returns from its summer recess next week. The House is scheduled to take up legislation that NAR says will help ensure the continued flow of commercial real estate deals by providing a federal terrorism insurance backstop. NAR-backed H.R. 2761 would help keep private insurers in the market by extending federal insurance involvement another 15 years.

To address subprime mortgage woes, House Financial Services Committee Chairman Barney Frank (D-Mass.) is expected to put the finishing touches on legislation upping underwriting standards for all mortgages, prime and subprime. In a main focus, the bill would subject mortgage originators (lenders and brokers) to rules similar to those that apply to depository institutions. The new rules would subject originators to a licensing requirement and prohibit loans to consumers who have no reasonable ability to repay. NAR has been working with Rep. Frank's staff to incorporate its Responsible Lending Principles into the bill, among them a prohibition on prepayment penalties, which critics say can trap borrowers in loans they can't afford.

Separately, NAR will continue to tout FHA reform as a much-needed antidote to the abusive subprime loans that have rocked mortgage markets. The reforms have bipartisan support in the House and the Senate but progress is slowed as lawmakers look at whether a national housing trust fund should be passed as part of the bill. Along with FHA reform, NAR is calling for the federal government to let secondary mortgage market giants Fannie Mae and Freddie Mac temporarily hold more loans in their portfolios than they can currently. Such a move would help calm markets by signaling the companies' commitment to ensuring continued liquidity for lenders' mortgage businesses.

MORTGAGE INTEREST TAX DEDUCTION UNDER FIRE
Rep. John Dingell (D-Mich.) recently confirmed his plans to roll out legislation in

September to wipe out an existing tax break for owners of large houses. Under the measure, owners of residences measuring 3,000 square feet or bigger as many as 8.6 million residential properties nationwide, according to 2003 federal government data no longer would be able to claim a tax deduction on mortgage interest. Dingell's aim is to discourage wasteful energy use and help curtail pollution tied to climate change. But housing industry officials warn that the current slump in the sector makes now a particularly challenging time to tinker with the deduction. Doing so "would have repercussions for the housing market as a whole," according to Mary Trupo, NAR spokeswoman.

HOME SIZE ISSUE NOT LIMITED TO BOULDER COUNTY
Cities across the country are passing laws that limit teardowns of older, smaller homes for replacement by giant new ones known not so affectionately by residents as McMansions and Edifice Rexes. Here are some of the most recent laws popping up that are limiting so-called McMansions:

The Atlanta City Council has passed an ordinance that links the size of a home to the size of the lot. The law requires big homes to go on big lots and small homes to go on small lots. Edina, a suburb of Minneapolis, requires larger setbacks on narrow lots to limit the size of new homes. Austin, Texas, has approved an ordinance that limits the size and height of replacements for teardowns. The National Trust for Historic Preservation, which has identified 300 communities nationwide where teardowns are an issue, has developed a resource guide to help local governments craft appropriate legislation. Source: USA Today, Haya El Nasser (08/27/07)