Capitol Hill abuzz with home buying-related legislation

WASHINGTON – Housing issues typically generate a lot of interest and get a lot of attention on Capitol Hill, and this congressional session is no different, especially at a time when housing is a high priority for the economy. There is no shortage of mortgage reform legislation circulating around the halls of Congress and the Senate. The following is a summary of some of the activity keeping members of Congress busy: * The Housing Affordability for America Act (H.R. 3995) that features Housing Subcommittee Chairman Marge Roukema’s (R-N.J.) American Dream Downpayment Fund moved one step closer to becoming reality July 10 when the House Financial Services Committee approved a bill to increase the availability of affordable housing and expand homeownership opportunities in the U.S. The Housing Affordability for America Act (H.R. 3995) introduced by Roukema and Subcommittee Vice Chairman Mark Green (R-Wis.) was approved by voice vote. The American Dream Downpayment Fund provision of the bill would help first-time low-income homebuyers meet initial home buying costs. Among other provisions of H.R. 3995, it: a) provides the Federal Housing Administration with additional resources and tools to encourage homeownership opportunities and to increase the supply of affordable rental housing; b) establishes a downpayment assistance program to help teachers, firefighters, police officers, and other public safety officials to purchase homes in the communities where they work; c) authorizes the HUD Secretary to develop a three-year pilot program to assist law enforcement officials, including correctional officers, to purchase homes in designated “high crime” areas without a downpayment; d) provides ways to rehabilitate and preserve existing elderly housing and to convert existing elderly public housing to assisted living; e) requires certain government agencies to disclose when proposing new regulations any impact the new rules would have on housing affordability; f) makes permanent a simplified and cost-saving technique for calculating home mortgage downpayments. * HUD sent a draft of its Real Estate Settlement and Procedures Act (RESPA) proposed rule to Congress on July 5. Congress has 15 days from the date of submission to review the draft proposal before HUD can publish it in the Federal Register for public comment. The draft proposed rule would simplify mortgage paperwork for borrowers and make it more difficult for lenders to increase fees and interest rates after a consumer applies for a mortgage, when it’s harder for the borrower to walk away from the loan. It has three major parts. The first part clarifies disclosure rules applicable to transactions involving mortgage brokers. Yield-spread premiums would have to be reported on the good faith estimate and HUD-1/HUD-1A documents. HUD is proposing that these payments be reported as payments from the lender to the borrower. In addition, brokers would be unable to increase their stated total maximum compensation without the borrower’s knowledge. Second, the proposed rule amends the good faith estimate disclosure to make it more easily understandable by borrowers Last, the draft proposal creates a system of guaranteed cost disclosures and facilitates the “packaging” of settlement costs. Under the draft rule, “packagers” could offer a lump-sum price for settlement costs along with an interest rate guarantee at no cost to the borrower in exchange for an exemption from Section 8 of RESPA. HUD is proposing that the interest rate guarantee be subject to change based on “some observable or verifiable index or other appropriate data or means.” * Members of Congress and the Senate respectively introduced H.R. 3424 and S-1839 that prohibit financial holding companies and national banks from getting involved in real estate brokerage or management. H.R. 3424 has 244 co-sponsors, and S-1839 has 14 co-sponsors. The bills were introduced after the House Appropriations Committee July 9 approved an amendment to a Treasury Department spending bill that would block Treasury from finalizing until next September a rule that would let banks get into the real estate brokerage business. The amendment was introduced by Rep. Ann Northup (R-Ky.). [email protected]