LEGISLATIVE AFFAIRS: Federal Legislative Update
Philip Weiden | September 2018
As expected, last week, 12 attorney generals filed suit against the Department of Labor challenging the Association Health Plan rule issued in June. The state AGs include: New York, Massachusetts, California, Delaware, Kentucky, Maryland, New Jersey, Oregon, Pennsylvania, Virginia and Washington, plus Washington, D.C.
The lawsuit challenges DOL’s redefinition of “employer” under the Employee Retirement Income Security Act, which the AGs argue is unprecedented and in violation of the Administrative Procedures Act. The lawsuit also challenges the rule’s conflict with the statutory intent of the Affordable Care Act to provide fundamental protections to the individual and small group insurance markets because the AHPs would be subject to different large group market rules.
Of importance to NAR members, the lawsuit argues against AHP eligibility for “working owners” (self-employed individuals), claiming that the re-characterization of working owners to be eligible to join an AHP was intended to skirt the ACA’s individual market protections, placing these consumers and others’ health and financial security at risk.
Single-family pilot rental program—On Aug. 21, 2018, the Federal Housing Finance Agency announced that Fannie Mae and Freddie Mac are ending their single-family rental pilot programs, stating that that the larger single-family rental investor market continues to perform successfully without the liquidity provided by the enterprises. Moreover, the enterprises will limit their participation in the single-family rental market to their prior investments over the past two years.
NAR has long opposed the enterprises providing financial guarantees to large Wall Street investors, who can use their financial advantage and outbid homebuyers, which reduces the supply of affordable homes for Americans. The enterprises’ single-family rental deals with Wall Street giants have clearly not advanced affordable homeownership.
Alternative credit scoring—Treasury recommends that the Federal Trade Commission maintain its rulemaking and enforcement authority for non-bank financial companies under the Gramm-Leach-Bliley Act and better coordinate with other federal regulators, such as the Bureau of Consumer Financial Protection, on oversight over the credit bureaus with the intent of improving consumer protections. Treasury also recommends that regulators increase flexibility within their regulatory frameworks to accommodate and support the testing of new credit models and alternative credit data. NAR specifically advocated for such flexibility and non-traditional considerations for credit scoring to facilitate more borrowers into the market.
Appraisals—Treasury recommends that Congress review Title IX of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 for possible appraisal updates including sanctioning the use of automated or hybrid appraisals for certain transactions.
Treasury also recommends that the government loan programs, such as those provided by the Federal Housing Administration, develop technology and procedures to allow for automated valuation methods, including appraisal waivers similar to those provided by Fannie Mae and Freddie Mac, for certain properties. Treasury views automation of some appraisal capabilities as a way to improve efficiencies in the federal loan programs, while reducing cost to consumers. NAR agreed with Treasury that technological advancement could be beneficial to reducing appraisal times and costs for certain transactions, but urged caution in advancing too quickly with these methods given potential risk to homeowners and the secondary markets.