President Barack Obama nominated Charlotte Congressman Mel Watt to be the director of the Federal Housing Finance Agency (FHFA), which oversees both Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs) that purchase and securitize mortgages from banks and other lenders. If confirmed, Watt would replace Acting Director Ed DeMarco, and take on the difficult and controversial subject of how to restructure the two GSEs.

In a statement released shortly after President Obama announced Watt’s nomination, The National Association of Realtors® (NAR) commended the White House on the selection, saying, “The extended conservatorship of government-sponsored enterprises Fannie Mae and Freddie Mac is one of the most pressing issues facing the housing sector. NAR appreciates the Administration’s recognition that a permanent director is required for the regulatory organization overseeing the operations of these two important entities. We look forward to continuing our work with FHFA and Representative Watt upon his confirmation.”

Other costs with the loans could also rise as Congress looks at further reforms to FHA (see main story).

As of April 1, annual mortgage insurance premiums on FHA loans of $625,500 or less, and have loan-to-value ratios greater than 95 percent, are 1.35 percent. This is an 8 percent increase over the old rate of 1.25.

On FHA loans larger than $625,500 with LTVs greater than 95 percent, annual premiums rose 3 percent, from 1.50 to 1.55.

Furthermore, on June 3, most FHA borrowers will no longer be able to stop paying mortgage insurance premiums once they have 22 percent equity in their home, says Megan Booth, senior policy representative on federal housing with the National Association of Realtors® (NAR). Borrowers will have to the pay the annual premium for the life of the loan.

“In the past, we would have opposed these increased premiums,” Booth says, “but we did not do that on these because the (FHA loan) fund is in trouble. It is $13.4 billion in the hole right now. We really can’t argue with this. Without additional revenue, the FHA would have to turn to the taxpayers.”

NAR did oppose another recent FHA change — raising the down payment requirement on loans greater than $625,500. The down payment went from 3.5 percent to 5 percent on Feb. 6.

NAR is concerned that the change could limit loan options for buyers not being served by the private market in high-cost areas of the country. Plus, FHA’s own actuarial review for fiscal year 2012 noted “larger loans incur claims at a lower rate, and in those cases where a claim occurs, loss severity tends to be lower.” Given these facts, NAR believes the change does little to improve the health of the FHA loan fund while potentially disenfranchising quality borrowers.

STATE, FEDERAL LEGISLATION ON FRONT BURNER

By Susan Shackelford

From whether mortgage interest will continue to be tax deductible to changing requirements on Federal Housing Administration loans, legislation affecting homeownership is in full swing in Raleigh and Washington.

With both the N.C. General Assembly and U.S. Congress in session, the North Carolina Association of Realtors® (NCAR) and the National Association of Realtors® (NAR) track housing legislation and actively lobby to keep homeownership as affordable as possible.

On April 24, Realtors® from around the state gathered in the state capital to lobby legislators. May 13-18, Realtors® from around the country will be in D.C. for their midyear meetings, which include a lobbying trip to Capitol Hill.

State: Tax reform is key focus

In North Carolina, the biggest issue so far is tax reform — what shape it will take and how it could impact mortgage and property-tax deductions currently allowed on state income taxes. Whether to keep these deductions is being weighed at the national level as well.

“The biggest (homeownership) components of the tax code are inclusion of the Mortgage Interest Deduction (MID) and property tax deduction, both of which conform to the federal code,” says Cady Thomas, NCAR’s government affairs director. “We believe both of these are key for housing affordability, particularly for many people in the first five years of the mortgage.”

As of early May, a number of tax reform bills have been introduced in the General Assembly, and at least one proposal removes both of these tax deductions, Thomas says. Introduced by State Senator Dan Clodfelter (D-Charlotte), S 394 proposes to replace most state tax deductions, including the MID, with a reduced personal income rate and an annual tax credit for all homeowners. NCAR is reviewing this and other legislation to determine its impact on Realtors® and the housing market.

“We are also continuing to have conversations with legislators,” Thomas says. “We want to make sure we are communicating our concerns.” Senate Bill 394 must come out of both the Senate Finance and the Senate Appropriations committees before the full Senate votes on it.

Senate Bill 394 also includes a “personal tax credit,” which NCAR is reviewing to see if it impacts homeownership. “We are also continuing to have conversations with legislators,” Thomas says. “We want to make sure we are communicating our concerns.” Senate Bill 394 must come out of both the Senate Finance and the Senate Appropriations committees before the full Senate votes on it.

Two other tax issues are also been discussed on the state level. One is raising the deed stamp tax, typically paid by the seller at closing, from the current 2/10 of a percent to one percent. “We have not seen it in legislation yet,” Thomas says, “but it was in Senator (Bob) Rucho’s talking points as he traveled around the state.”

The other issue is a possible tax on professional services. With real estate transactions, this could mean taxes on work performed by title insurers, attorneys, mortgage brokers, appraisers, home inspectors and the (real estate) broker. “This would add to the bottom line of what people would have to pay to buy a house; the taxes can’t be added to the mortgage,” Thomas says. “It would be a direct, out-of-pocket expense and could keep people from purchasing a home.”

Thomas notes that Senate Bill 394 proposes a sales tax on pest control, power washing and several other services but doesn’t include services traditionally involved in a home closing.

Federal: Three big issues

Meanwhile, on the national level, there are three major issues — tax reform, reform of Federal Housing Administration loans, and restructuring or replacement of Fannie Mae and Freddie Mac, which guarantee home loans when lenders sell them to investors. “These are three issues of equal profile,” says Jamie Gregory, NAR’s deputy chief lobbyist.

Whether tax reform is designed to raise revenue or be revenue-neutral, Gregory says, a homeowner’s ability to deduct mortgage interest and property taxes on federal income taxes is on the table.

“They may not eliminate it (the mortgage deduction), but they may lower the (loan) cap on taking the interest,” Gregory says. For example, “right now, you can deduct interest on up to $1 million worth of loans on two properties. That was put in place in 1997. They may reduce that loan cap.”

House Ways and Means Committee Chair Dave Camp has set up a bipartisan work group to examine real estate provisions in the tax code, Gregory says, and the work group is expected to report out May 7.

With reform of FHA loans, the focus is on whether, and how, to tweak the loans to make them a smaller part of the marketplace.

Committee hearings have been underway, and no FHA-related legislation had been introduced as of early April. “At the bottom of the market (downturn), FHA was up to 32 or 33 percent of the share of loans,” Gregory says. “Historically, it’s 12 or 13 percent. At the top of the boom it was 2 or 3 percent. We are arguing that FHA is counter-cyclical, that when the market goes down, FHA, Freddie and Fannie play larger roles,” but when the market gets stronger, they player smaller roles.

“Still, there is a lot of talk about how to dial back the level of government-backed loans and a possible triggering mechanism” to that effect, Gregory says.

Another FHA issue is whether down payments on FHA loans at $625,500 or less should increase from the current 3.5 percent to 5 percent or be scaled in some way to the size of the loan. On Feb. 6, down payments on loans over $625,500 went up by this amount.

Also, Congress is discussing whether the FHA should insure loans at 100 percent, as it does now, or insure them at a lower level. Some changes have already been made to FHA loans to boost the solvency of the loan program (see sidebar).

With Fannie Mae and Freddie Mac, talk revolves around whether to reform and restructure the programs, which needed government bailouts during the downturn, or to begin a process to shut down the programs. U.S. Rep. Jeb Hensarling from Dallas has introduced a bill to end the government conservatorship of Fannie and Freddie in three years and shut them down in five, Gregory says.

“The question is whether consumers would be able to have 20- or 30-year fixed-rate mortgages without a government guarantee,” Gregory says. “We believe there is this need for a guarantee of some sort. Home-buying consumers want these long-term, fixed-rate mortgages, and investors have told us that there is not going to be that product without a guarantee.”

By Kim Walker
Media Relations and Public Relations Specialist

The association’s future leaders have been busy; their first two sessions in March and April are already behind them! The Class of 2013 kicked off its first session on a cold, spring morning back in March with teambuilding at the U.S. National Whitewater Center. Under tall majestic pines on a hill overlooking awesome man-made rapids, the group got to know each other and bonded through several challenges and activities meant to test their wits and inspire them to accomplish the goal. With cold hands, warm hearts and lots of laughter, they worked together, and by lunch, new friendships were developing. The afternoon workout on the rapids further sealed the deal. No longer strangers, at the close of the day they were eagerly looking forward to their next meeting in April. And no one fell out of the raft!

Meet the Class of 2013

Learning from lawmakers

April’s Legislative Day had the class up early. They boarded a bus to Raleigh to meet with hundreds of other Realtors® from across the state.  Organized by the North Carolina Association of Realtors® (NCAR), the association’s rising stars linked up with association leadership and for the annual opportunity to present legislative representatives from the region with issues important to the industry and homeownership.

The morning began with a rally and opening remarks by NCAR CEO Andrea Bushnell and N.C. House Speaker Thom Tillis. Next, Real Estate and Building Industry Coalition (REBIC) Executive Director Joe Padilla and Association/CarolinaMLS CEO Anne Marie Howard led Realtor® groups through the legislative halls to meet with Rep. Bill Brawley, Assistant Director of Policy Andy Munn, N.C. Senator Dan Clodfelter and N.C. Senator Bob Rucho. At issue are several critical pieces of legislation that could affect the way Realtors® do business and whether homeownership remains affordable to North Carolinians. (Read more about these proposed bills in the Reflections cover story.)

It was organized chaos as the group listened and questioned their representatives on everything from tax reform and the Mortgage Interest Deduction (MID) to the development of the Charlotte Douglas Airport Authority. Leadership continued their discussions over lunch at the N.C. Museum of Science with senior political consultants Brad Crone and Alastair Macaulay, who discussed much of the recent history between North Carolina’s republicans and democrats and the current issues across the state. After a lively Q&A, the association’s future leaders hopped back aboard the bus. The participants were abuzz discussing what they had learned. Now that they’re fired up, the group will be prepped for their next session in May: Government 101.

Billy Shugart, My Townhome

“Service to others is the rent you pay for your room here on earth.”

— Mohammed Ali

Debbie Buck, HM Properties

“Shoot for the moon. Even if you miss, you’ll land among the stars.”

—   Brian Littrell

Sonya Leonard, Keller Williams-Mooresville

“Success is about doing the right things. Not trying to do everything.”

—   Gary Keller

Joe Gonzales, Coldwell Banker United

“Happy, Happy, Happy.”

—   Phil Robertson, Duck Dynasty

Lisa Wohlford, Dickens-Mitchener & Associates

“Just keep moving forward…”

Jason Gentry, RE/MAX Executive

“Treat people (clients) the way you would want to be treated.”

Danny Williamson, Keller Willlams-Ballantyne

“If you do what you’ve always done, you’ll get what you’ve always gotten.”

— Tony Robbins

Sarah Szczodrowski, Dickens-Mitchener & Associates

“Be true to your work, your word, and your friend.”

— Henry David Thoreau

Jeff Monfils, L&E Properties

“Make an impact, not an impression.”

Bryan Perkins, CarolinaMLS

“If you are offered something and you want it, do not say no to be polite. They may not ask again.”

—   Grandpa Richard Perkins Sr.

LaVerne Williams, CarolinaMLS

“Love life. Engage in it. Give it all you’ve got. Love it with a passion, because life truly does give back, many times over, what you put into it.”

— Maya Angelou

Eric Taylor with Lake Norman Realty, Inc. has earned the Certified Luxury Home Marketing Specialist designation. In addition, the firm welcomed three new associates to its Mooresville office: Eric McCauley, Susan Robitzer and Shawn Wilson. The firm’s Angela Wooten was promoted to transaction coordinator.

Leading RE presented the Allen Tate Company with the Award of Excellence for Outgoing Referral Production, Top 5 Performance Award for Outgoing Closings (ranked #3), and Institute Outstanding Participation Award. At the conference, the firm’s Mark Bardo, Phyllis Brookshire, Diane Honeycutt, Susan Larkin, Pat Riley, Katrina Richards and DJ Stephan were presenters or panelists. The company also named Lynda Stiles vice president of senior services. In addition, according to the REAL Trends 500 report, the company was the top real estate firm based in the Carolinas and ranked #8 among the country’s largest independently owned, non-franchised brokers, and #14 among all brokers, based on closed transactions sides for 2012. The firm’s Ballantyne office added Lisa Crawford, Erin Gannett and Lenge Pena.

Keller Williams Realty – SouthPark has added Kristen Bernard, Katy Guerena, Richard Sparrow and Mary Beth Thomas.

Helen Adam Realty’s Curt Seifart, is working with Self Help, Crossroads Inc., JCB Urban, and the residents and community board of Grier Heights to make a difference in that neighborhood and help them start over with efficient homes that are cost effective to manage and buy. Curt and Helen Adams are helping with this project at cost.

By Susan Shackleford

Jill Gibson picked up her phone one day in late February and heard some unexpected good news. Realtors® Care Day (RCD) had selected Barium Springs, the nonprofit for which Gibson works, as a special project to
honor the fifth anniversary of the volunteer event.

“Can I celebrate?” Gibson asked Brenda Armstrong, RCD’s homeowner relations chair.

“Of course,” Armstrong replied.

“I put the phone down and said, ‘YAY!’” Gibson recalled.

The celebration was worthy of the moment. The children’s welfare agency based in Iredell County greatly needed help with three of its residences for troubled and abused kids.

Dim interior lighting, worn industrial-style carpet and walls in need of fresh paint were such high priorities that Gibson appealed to RCD; even though she knew the agency didn’t meet the program’s established criteria. “My facilities director encouraged me to apply and I thought, ‘What is the worst thing — they’ll just say no,’” says Gibson, regional development manager for the agency.

Gibson called Terri Marshall, executive director of the Housing Opportunity Foundation and the staff leader for RCD. Along with RCD Core Committee member Daniel

Cottingham, Marshall visited Barium Springs and saw the need. She came back and prepared a pitch to the RCD Core Committee, foundation committee and Association Board of Directors to ask for an exception to the usual policy of assisting single-family homeowners with exterior repairs.

‘A great response’

“It was a unique request,” Marshall says. “It received a great response. The Realtors® are committed to housing on all levels and wanted to make a fifth-anniversary gift to the community.”

So now, thanks to RCD on Friday, April 19, decades-old lighting in three residential homes at Barium Springs will be replaced with 19 new fixtures. Carpeting, painting and other projects will also be done at the three homes, which house young people ages 8 to 18. For more details on the project, click here.

The work at Barium Springs is in addition to more than 20 single-family homes that RCD will repair on April 19. The association is now soliciting Realtor® volunteers for the projects.

Since RCD began in 2009, more than 500 Realtors® have fanned out each year across Mecklenburg and Iredell counties to perform exterior fix-up work for deserving homeowners. The one-day blitz makes a significant financial impact on the community. Cash and in-kind contributions together each year average about $200,000, and RCD will hit the $1 million mark this year.

But the impact that matters the most is on the lives of the homeowners, many of whom are disabled, elderly or simply so economically challenged that maintaining their home is beyond their reach. Anyone can submit a homeowner application to be considered for the program, and the RCD Core Committee works closely with housing, government and nonprofit partners to identify candidates.

Code enforcement house

A memorable project in 2012 came to the committee’s attention from the City of Charlotte’s Neighborhood & Business Services Department, one of RCD’s partners.

City housing code enforcement officials nominated a homeowner they’d cited for violations a year earlier. “If the problems had continued, the city would have stepped in, hired a contractor to fix the issues and put a

lien on the property,” says Sherry Rathod, a neighborhood development specialist.

Past President Laurie Knudsen and association staff member Bryan Leitch could hardly believe the property when they scouted it as Site and Volunteer Captains prior to RCD last year. “My first thought was, ‘Oh, my heavens,’” says Knudsen. “I didn’t know how we were going to get all that done in one day.”

The RCD crew needed to eliminate a rotten backyard shed, which was about 12-by-12 feet in size and brimming with items to be trashed. They also needed to remove a defunct above-ground swimming pool that had nearly a dozen, 25-foot-high trees growing through it and rotten decking around it.

Sharing Knudsen’s concern about the size of the tasks, Leitch reached out a week in advance to the 24 Realtors® scheduled for the site. He explained the situation and asked them to commit to getting the project completed in one day. No one turned him down.

“We were a team even before we started,” says Leitch, an executive assistant at the association. “We had an amazing crew and project manager (contractor John Saffo of Jescon, LLC). We started at 7:30 a.m. and by 12:30 had 90 percent done. When the code enforcement folks came by, they were in utter shock. Their jaws were on the ground.”

The volunteers filled three construction dumpsters and even planted bushes and repaired and painted shudders.

‘She was blown away’

The next day, Leitch returned to the site to make sure the dumpsters had been picked up and talked again with the homeowner. “She was blown away,” he recalls. “She was also very humble and so apologetic that she’d let the situation get so bad. She said, ‘Please know I am so very grateful.’”

This homeowner is one of 110 the association has helped since RCD began in 2009. This year, more than 20 homeowners and Barium Springs will join the list.

Sandy Larsh, a past president and RCD volunteer, chaired the Housing Opportunity Foundation when the event was created in 2008. The concept was an immediate choice to replace the Home Giveaway, which helped only one family per year. “He (Association member Joe Rempson) mentioned the idea, and it was like yes — there was no question,” Larsh says.

The staying power and growth of the effort have been notable. Both Larsh and Tony Smith, also a RCD volunteer and former association president, cite the leadership and hard work of the association staff as well as the hundreds of volunteers who have given their time.

He explains the sustained Realtor® support this way. “We can all make a donation, pay money to great causes, and they do great work,” he says. “But you are not going to feel the same way as when you’ve gone and done something for someone, and they look in your eyes and tell you, ‘Thank you,’ and are genuinely grateful.”

Job well-done, Realtors®, and happy fifth anniversary!

Thanks to the 2013 Realtors® Care Day Core Committee!

2013 Chair
Todd Long

Elected Officials
Nobie Thrasher

Food
Donna Anderson (Mecklenburg County)
Sonya Leonard (Iredell County)

Homeowner Relations
Brenda Armstrong

Materials / Logistics / Clean-Up
Mike Hege
Lee Ann Brown

Project Manager and Prep-Work Chair
Scot Draper

Site Captains Chair
Garrett Werkman

Site Locations Team
Daniel Cottingham
Brenda Hayden
Boston Reid
Joe Rempson

Volunteer Recruitment
Joan Goode
Dave Edwards

Housing Opportunity Foundation staff
Terri Marshall, executive director
Laurene Franco, program coordinator

Sales Executive
Melissa Uhink

The program costs anywhere from $160,000 to $200,000 per year to meet the needs of the chosen homeowners. In-kind contributions cover the majority of the expenses, but cash makes up the rest. Foundation staff raises the necessary funding, which this year will likely be more than $45,000. This year, a fifth anniversary raffle will also assist in defraying project costs.

What is the financial impact of RCD?

Estimated at approximately $200,000 per year, it will hit $1 million in 2013.

How are homeowners selected?

Anyone can submit a homeowner application for consideration. RCD has a rigorous procedure to make sure a property meets the established criteria for the program. On average, the foundation receives 65-70 applications per year and thoroughly reviews each before making the final determinations.

Why is RCD in April?

It’s National Fair Housing Month. The Housing Opportunity Foundation and the association purposely schedule RCD at this time to draw attention to housing in the community and consider this project as a way to offer a solution to housing sustainability.

Through the first four years, how many homeowners have been helped?

110.

Does RCD have a presence beyond the Charlotte region?

Yes.The National Association of Realtors® (NAR) asked the foundation to make RCD presentations at NAR conventions in 2009, 2010 and 2011. The NAR Ambassadors for Cities Program recognized RCD with an award in 2011, and the New Jersey state Realtor® association licensed the RCD program in 2012.

Variety of factors must be in play; what are we missing?

By Kim Walker
Media Relations and Public Relations Specialist

Recently I was asked when we would officially declare a seller’s market. The entire CarolinaMLS area reached equilibrium at six months’ supply back in November 2012. January 2013 statistics showed inventory down 29.4 percent compared to inventory a year ago, which leaves the region with a 5 months’ supply. So we’re moving in the right direction.

Based on articles from the National Association of Realtors® (NAR) and other industry insiders such as Realty Times, there are a combination of factors that support an actual seller’s market, including high demand, lowered inventory, shorter list time, multiple offers and homes selling above list price.

The CarolinaMLS region is recovering. Trends show demand is high with pending contracts in January up 62.3 percent over last year.  But keep in mind that CarolinaMLS did not include “showable” under contract listings in the “Pending Sales” stats prior to July 2012, and now, listing agents report listings as “Under Contract-Show” earlier in the transaction. As a result, the new Pending Sales stats trend higher. Conversely, months’ supply of inventory has trended lower since last July.

The region has shorter list to close (LTC) figures. In January 2013, that figure was down to 155 days, which is nearly two weeks less on-market time than January 2012 and a full month less than January 2010.  Harry Munson, a Realtor® with Helen Adams Realty, says, “I’m seeing quicker sales — with many homes that my buyers are interested in —sold before they can make an offer.”

Still, are we meeting all the criteria involved in seller’s markets of the past?

Kerry Stecher, vice president of sales and broker-in-charge (BIC) at Coldwell Banker United, says, “We are in the middle of an interesting transition. It’s not quite a seller’s or buyer’s market. Though we are seeing many multiple-offer situations and offers over asking price, there have been issues with appraisals being less than the contract price.”

In many heavily sought-after areas throughout the region, statistics support the seller’s market phenomenon. Stecher notes these scenarios are more common now in the South Charlotte, Ballantyne and South Park areas.

But typically, the seller’s market is seen as a market where buyers have no negotiating power.

As a region, are we there yet? Probably not. And there are a number of other characteristics that are often in play during a seller’s market:

• A booming local economy and businesses hiring at a brisk pace.
• Low existing-housing inventory.  The CarolinaMLS region had only 12,862 homes for sale in January compared to 18,212 in January 2012.
• Builders that are not producing enough homes to fill the job base.
• Escalating home prices. Over the last several years, the national increase has been in the five- to seven-percent range.
• Non-contingent buyer contracts. Buyers want to purchase a house, period. They no longer offer under list price, ask to sell their house before settlement, or try to buy without financing already approved.
• Seller subsidies disappear. While buyers used to ask for some sort of assistance — lower price, points paid, closing costs — buyers must come to the table without any help from the seller.
• High down payments are the norm (think 25-plus percent).
• Appraisals are no longer needed to qualify for the purchase price. With down payments of $100,000-plus, there’s plenty of equity coming to the table to ease the risk factor for most lenders. Therefore, the appraised value is not as important as the actual purchasing price. If the appraisal comes in $20,000 less than asking price, that’s okay. The buyer has enough cash to compensate for the lower value.

While some good things are happening locally, the economy is still fragile; job creation and consumer confidence across the region remain slow. Stay tuned, though. As we move into the selling season, the market continues to change daily. Realtors®: We’d love to hear your thoughts, stories and frustrations about the current market. Let us know if you think we are there.

The Barium Springs location in Iredell County is the headquarters for the agency, which delivers services in 41 North Carolina counties, mostly in the western part of the state. The organization serves about 600 children and families a day, says Regional Development Manager Jill Gibson, with about 50 percent of those being served out of the headquarters location.

Todd Long, 2013 chair of RCD, notes the important role RCD is playing at Barium Springs. “They get a good bit of support from the community, but it goes directly to serving children and their families,” he says. “They don’t use funding to work on structures. We can do something to make the living environment there more appealing.”

Sonya Leonard, a member of the 2013 RCD Core Committee, also supports the project. “I think it’s is a perfect way to celebrate the fifth anniversary and to do something for the community as a whole. That’s what Realtors® Care Day is all about.”

The Barium Springs project will focus on interior and exterior improvements to three residential buildings. New lighting was the agency’s top need. “It’s dim and not a happy-pleasant feeling in those buildings,” Gibson says. “It’s just that our homes are old and haven’t been updated.”

Past president Tony Smith acquired new light fixtures for the buildings as a donation from Hubbell Lighting. The 19 new lights will replace ones original to the structures, which were built in the 1960s. Electricians will donate their services to install the lights, and Realtor® volunteers will handle other projects, including exterior repairs, carpeting and painting.