2019 August Recess Legislative Update

REALTORS® should directly engage with members of Congress who will be back in their districts in August during the congressional recess. Congress leaves town in August with three major issues affecting commercial and residential real estate transactions alike: flood insurance, GSE reform, and infrastructure.  

NAR prepared below a set of talking points, fill-in-the blank press releases, flood insurance state reports, and a social media post sample/template to help you in your meetings with members of Congress during the August recess.

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Executive Summary

Key Issues

  • National Flood Insurance Program Reauthorization
  • GSE Reform
  • Infrastructure and Transportation Modernization

National Flood Insurance Program Reauthorization

NAR’s Position: Congress must reauthorize the National Flood Insurance Program (NFIP) before September 30, 2019. NAR supports H.R. 3167, which extends the NFIP for 5 years and improves flood mapping, enhances mitigation investments, and removes federal barriers to private flood insurance.

Key Facts:

  • We are in the middle of hurricane season, which is not the time for more flood insurance uncertainty
  • Flood insurance is required for a mortgage in 22,000 communities nationwide
  • Each lapse costs 1,300 home sales per day
  • Each home sale means 2 jobs and $80,000 to the U.S. economy
  • Short-term extensions and lapses of NFIP introduce uncertainty into real estate transactions that typically last 30-45 days
  • The program has already been extended 12 times in two years, or once every two months
  • When flood insurance is not available at the closing table, consumers lose financing or pay fees to hold interest rates

Congress Should: Find a way forward on a long-term reauthorization measure before September 30 and consider H.R. 3167, the National Flood Insurance Program Reauthorization Act.

GSE Reform

NAR’s Position: Fannie Mae and Freddie Mac (the GSEs) are critical to financing home purchases.  They guarantee mortgage availability for responsible, creditworthy Americans no matter where they live or what their regions’ economic conditions are.  Since 2008, the GSEs have been operating under conservatorship as Congress considers structural reforms.

Key Facts:

  • Middle class Americans in both rural and urban communities benefit from the stability that GSEs provide to mortgage financing.  Without entities like the GSEs, consumer access to mortgages would be significantly limited.
  • Without the GSEs, mortgage rates would rise as much as 5% during a financial downturn, putting the American Dream out of reach for countless aspiring homebuyers.
  • And, perhaps most importantly, without the GSE’s government guarantee, the 30-year fixed rate mortgage would disappear.
    • Only Congress can update the GSEs’ charter to convert the system to a utility model, create a government guarantee, or alter its public mission

Congress Should:  Maintain a strong housing finance system that prioritizes access to financing for hundreds of millions of Americans to help fund their dreams as they debate the future of the GSEs.

Congress should consider NAR’s Vision for Housing Finance Reform, released earlier this year, which proposes a new, shareholder-owned utility model that highlights competition and remedies the failures of the pre-crisis system. Under NAR’s plan, Fannie Mae and Freddie Mac would continue to purchase, guarantee and securitize single-family and multifamily mortgage loans, providing stable and affordable financing to credit worthy borrowers.  The plan requires well-monitored participation by private investors, which protects taxpayers, consumers and the U.S. economy as a whole.

Infrastructure and Transportation Modernization

NAR’s Position: REALTORS® understand the infrastructure needs of our nation’s communities and the value to thriving communities.   Enhanced transportation and infrastructure systems are crucial for America’s housing market and overall economy. A robust, long-term federal infrastructure modernization program, combined with greater investment by state, local and private stakeholders, can create the partnership needed to ensure our infrastructure network is designed for the 21st century. However, without a serious commitment from federal lawmakers, we will not make the kind of progress demanded by the challenges we face.

Congress Should: Focus on two areas that can have an immediate impact to improve our nation’s infrastructure:

  • Restore and modernize federal infrastructure funding. NAR supports efforts to ensure sufficient revenue to maintain the solvency of the Federal Highway Trust Fund, including evaluating an increase in the federal gas tax, while fostering energy and transportation-related innovations in the private sector.
  • Streamline Permitting to increase efficiency and maximize infrastructure funds. NAR supports efforts to streamline permitting for infrastructure projects to decrease costs and bring infrastructure-related projects to the market more quickly. Transparency and accountability should be increased, while jurisdictional overlap and duplicative processes should be eliminated to provide better outcomes for communities and neighborhoods.

Download (PDF: 314KB)

Fill-in-the-Blank News Releases

The following “fill-in-the-blank” news releases are designed to help you gain publicity in your local news outlets following meetings with your Member of Congress during the August District Work period.

National Flood Insurance Program Reauthorization (DOC: 168KB)

GSE Reform (DOC: 168KB)

Infrastructure (DOC: 167KB)

Sample/Template Social Media Posts

In addition to the template press releases that have been created and provided to each local association’s Communications Director, NAR has outlined the following guidance for social media posts to follow/accompany your meetings with Members of Congress and their staff this August.

Social Media Posts: Samples/Templates (DOC: 16KB)

Flood Insurance Information Sheet by State

NAR’s Research Team prepared a set of flood insurance information sheets for all 50 states. The information highlights the importance of the National Flood Insurance Program to each state.

Tallking Points: National Flood Insurance Program Reauthorization

Issue Update

The National Flood Insurance Program (NFIP) provides necessary flood coverage for 5 million property owners nationwide but it is not designed for catastrophic loss years.  As a result, the NFIP has borrowed $36 billion since 2005 and premiums fall short of expected costs by $1.4 billion each year, according to the Congressional Budget Office.

The NFIP must be reauthorized to provide flood insurance.  September 30, 2019 marks the two-year anniversary since the last 5-year reauthorization expired.  So far, there have been 12 stopgap extensions and two brief lapses as Congress tries to find a consensus over reforms which balance long-term program viability with short-term insurance affordability.

What does this mean to REALTORS® and their Clients?

We are in the middle of hurricane season, which is not the time for more flood insurance uncertainty.

  • Flood insurance is required for a mortgage in 22,000 communities nationwide.
  • Flood insurance also offers hundreds of thousands of dollars of rebuilding assistance, compared with an SBA loan and FEMA aid that averages just $5,000 per household.
  • Short-term extensions and lapses of NFIP introduce uncertainty into real estate transactions that typically last 30-45 days.
  • In the last two years alone, NFIP has been extended 12 times, or once every two months.
  • When flood insurance is not available at the closing table, consumers lose financing or pay fees to hold interest rates.
  • Each day of a lapse costs 1,300 home sales according to NAR research.
  • Each home sale means two jobs and $80,000 to the U.S. economy.

Status in Congress

HOUSE OF REPRESENTATIVES: On June 12, by a unanimous vote of 59-0, the House Financial Services Committee approved H.R. 3167, the NFIP Reauthorization Act.  The bill extends the NFIP for 5 years and improves flood mapping, enhances mitigation investments and removes obstacles to private flood insurance reforms. The next step is for this bill to be considered by the full House of Representatives.

SENATE: Several bills have been introduced but no further action has been taken in the Senate.

NAR’s Ask

Congress must find a way forward on a long-term reauthorization measure before September 30. REALTORS® support the NFIP Reauthorization Act (H.R. 3167) and urge its consideration.

Opposing/Supporting Viewpoints  

House bill critics argue that the NFIP Reauthorization Act (H.R. 3167) costs too much.

Advocates note that U.S. taxpayers are already spending billions on disaster aid for home repairs. Instead, H.R. 3167 would buy out, elevate or relocate those homes saving $6 for each $1 invested.

House bill critics assert that there are not enough reforms in the NFIP Reauthorization Act.

Advocates counter that H.R. 3167 includes vital reforms to improve mapping, enhance mitigation investments and remove obstacles to private flood insurance.  This bill is the product of extensive bipartisan negotiations and strikes a delicate balance between NFIP sustainability and affordability.

House bill critics argue that H.R. 3167 does not address NFIP rate changes under Risk Rating 2.0.

Advocates note that FEMA will propose the new rates in April of 2020. Congress should extend NFIP now so they have more time to fully discuss and evaluate Rate 2.0 proposals.

House bill critics believe that private insurers will “cherry pick” the low risks from NFIP.

Advocates emphasize that there are no cherries in the NFIP; in fact, the private market is targeting the highest risk, subsidized properties that are net revenue losers for the program.

Download (PDF: 965KB)

Talking Points: GSE Reform

Issue Update

Fannie Mae and Freddie Mac (the GSEs) are critical to financing home purchases. The GSEs do not make home loans. Rather, they manage and insure the flow of money from investors in mortgages to lenders. In doing so, they guarantee mortgage availability for responsible, creditworthy Americans no matter where they live or what their region’s economic conditions are.

In 2008, the GSEs were placed in conservatorship, a form of federal control where their regulator, the Federal Housing Finance Agency (FHFA), has significant reform and oversight authority. The FHFA removed leadership, terminated several business lines, reformed how the GSEs work with their counterparties (e.g. the private mortgage insurers and servicers), and altered a number of other business practices. However, conservatorship is a temporary status and a number of important questions remain, including what the GSEs’ governance structure should be, whether there should be some form of government support, and what the public mission should be.

What does this mean to REALTORS® and their Clients?  

  • Middle class Americans in both rural and urban communities benefit from the stability that GSEs provide to mortgage financing.  Without entities like the GSEs, consumer access to mortgages would be significantly limited.
  • Without the GSEs, mortgage rates would rise as much as 5% during a financial downturn, putting the American Dream out of reach for countless aspiring homebuyers.
  • And, perhaps most importantly, without the GSEs’ government guarantee, the 30-year fixed-rate mortgage would disappear.  

Status in Congress

Congress has developed several proposals to reform the GSEs over the years but has not come to a consensus. However, all recent plans share some common elements, including private capital to take losses, taxpayer protections, oversight, a public mission that promotes a liquid, national market, and a government role in catastrophic situations. The President has requested a plan of action from the FHFA and HUD, which should come in late summer or early fall.

NAR’s Ask

As Congress debates the future of the GSEs, REALTORS® urge Congress to maintain a strong housing finance system that prioritizes access to financing for hundreds of millions of Americans to help fund their dreams.

REALTORS® urge Congress to consider NAR’s Vision for Housing Finance Reform, released earlier this year, which proposes a new, shareholder-owned utility model that highlights competition and remedies the failures of the pre-crisis system.

Under NAR’s plan, Fannie Mae and Freddie Mac would continue to purchase, guarantee and securitize single-family and multifamily mortgage loans, providing stable and affordable financing to credit worthy borrowers.  The plan requires well-monitored participation by private investors, which protects taxpayers, consumers and the U.S. economy as a whole.

Only Congress can update the GSEs’ charter to a utility, create a government guarantee, and provide clear support and guidance for the GSEs to support a public mission.

Download (PDF: 395KB)

Talking Points: Infrastructure

Issue Update

America’s infrastructure is a complex system that provides a crucial role in today’s lifestyle. It comes in many forms such as roads, bridges, railways, airports, power and telecommunications. Infrastructure helps move goods across the nation, advances our economy, improves our daily quality of life and serves as a connection between people and places.

A robust, long-term federal infrastructure modernization program, combined with greater investment by state, local and private stakeholders, can create the partnership necessary to ensure a 21st century infrastructure network. However, without a serious commitment from federal lawmakers, we will not make the kind of progress demanded by the challenges we face.
Unfortunately, that investment has steadily decreased, from a high of 4.2% of GDP in 2000 to a current rate of 1.5% of GDP in 2016. The investment deficit represents a challenge to property owners who rely on efficient transportation systems to get them to and from their jobs, affordable electricity to power their lives and clean and abundant water.

What does this mean to REALTORS® and their Clients?  

  • Enhanced transportation and infrastructure are crucial to achieve the American dream of homeownership
  • Investments in safe, convenient and efficient transportation infrastructure enhances the accessibility of communities.
  • Strong infrastructure helps support and retain property values, and improves the physical environment and well-being in our neighborhoods.
  • Improved mobility in communities allow citizens to have access to the newest and safest methods of transportation they need.

Status in Congress

Congress and the Administration are currently evaluating a range of options to address comprehensive infrastructure reform and modernization. While they are holding hearings and on-going high-level discussions, with the exception of reauthorizing the surface transportation act, there is no expectation that a legislative vehicle to fully modernize the nation’s infrastructure will emerge in 2019.   

NAR’s Ask   

REALTORS® understand the infrastructure needs of our nation’s communities and the value to thriving communities.  REALTORS® urge Congress to:

  • Restore and modernize federal infrastructure funding. NAR supports efforts to ensure sufficient revenue to maintain the solvency of the Federal Highway Trust Fund, including but not limited to, increased appropriations, evaluating an increase in the federal gas tax, as well as increasing ways to harness the creative energy of the private sector to improve infrastructure.
  • Streamline permitting to increase efficiency and maximize infrastructure funds. NAR supports legislative and administrative efforts to streamline permitting for infrastructure projects to decrease costs and bring infrastructure-related projects to market faster. Transparency and accountability should be increased and jurisdictional overlap and duplicative processes should be eliminated to provide better outcomes for communities and neighborhoods.

Download (PDF: 1.4MB)

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