LEGISLATIVE AFFAIRS: NAR Helps Secure FEMA Reversal On New Flood Policies During the Shutdown

Philip Weiden | January 2019

WASHINGTON—In a critical win for home sales while the partial shutdown of the federal government is ongoing, the Federal Emergency Management Agency will issue and renew flood insurance policies, reversing an unexpected and controversial ruling the agency released late last month.

“FEMA and the administration deserve credit for hearing our concerns and acting swiftly to address them,” says NAR President John Smaby. “This new decision means thousands of home sale transactions in communities across the country can go forward without interruption, as Congress intended when it renewed the flood insurance program earlier this week. Our research has shown that 40,000 home sales are lost every month that flood insurance is not available.”

Congress on Dec. 21 passed legislation that extends the National Flood Insurance Program until May 31, 2019. In an unexpected policy decision, though, FEMA on Dec. 26 said it couldn’t allow insurers to issue and renew federal policies while the partial government shutdown was ongoing. That ruling was unexpected because in past government shutdowns, FEMA continued to operate the program as authorized. NAR, along with other organizations, including the Property Casualty Insurers Association of America and the Independent Insurance Agents & Brokers of America, urged policy makers to reevaluate the decision. Congress expressed concern as well.

NAR Testifies on Housing Finance Reform

On Dec. 21, 2018, NAR President-Elect Vince Malta testified before the House Financial Services Committee during its hearing, “A Legislative Proposal to Provide for a Sustainable Housing Finance System: The Bipartisan Financing Reform Act of 2018.” Malta, a third-generation Realtor and the CEO and broker of Malta & Co., Inc. in San Francisco, CA, commended the committee for its work toward comprehensive reform of the nation’s housing finance system while outlining NAR’s priorities for a legislative restructuring of Freddie Mac and Fannie Mae.

In his testimony, Malta outlined NAR’s views of Committee Chairman Jeb Hensnarling’s bill, the Bipartisan Financing Reform Act of 2018. Specifically, Malta stated NAR’s support for many components within the legislation such as an explicit government guarantee, flexibility given to regulators to set standards in the new mortgage finance system, and the use of a Common Securitization Platform as the issuance platform for mortgage-backed securities. These provisions will help build a new housing finance system structure that will be more transparent, while providing a countercyclical mechanism to help ensure mortgage credit is available during periods of economic distress.

Updates on the VA Loan Program

On Dec.17, 2018, the Department of Veteran’s Affairs released an interim final rule addressing changes to VA guaranteed or insured cash-out home refinance loans as understood to be required by the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act. These changes will address when VA will permit cash-out refinance loans, including the testing parameters to determine if the veteran will gain a net tangible benefit from the refinance, as well as recoupment and seasoning requirements. VA will address changes required by the act for interest rate reduction refinancing loans (IRRRLs) in a separate rule-making. The rule will be effective on Feb. 15, 2019 and any comments must be received on or before that date.

On Dec. 11, 2018, the Department of Veteran’s Affairs announced that it will no longer require appraisers to include Fannie Mae Form 1004MC in all VA appraisal reports, however same information that was contained in the form must continue to be included in the appraisal report. This announcement follow’s Fannie Mae’s decision to allow appraisers to input the information contained in Form 1004MC into the appraisal report in other ways.

Philip Weiden
Legislative Affairs columnist Philip Weiden is the Government Affairs Director for the Hudson Gateway Association of Realtors.