Voice for Real Estate 44: Criminal Records, Reverse Mortgages

Voice for Real Estate 44: Criminal Records, Reverse Mortgages

Apr 18, 2016
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Almost a third of Americans have a criminal record. In many cases, the reason for the record is a minor infraction that occurred decades ago. Minorities are disproportionately represented among those with a record. To help providers develop housing policies that address criminal histories without having a disparate impact on minorities, HUD has issued guidelines. These guidelines are a top story in The Voice for Real Estate for the week of April 18.

Also covered: NAR's effort to improve the availability of rural home loans and unique issues when real estate professionals are selling a house with a reverse mortgage.

Featured Segments:

  • Criminal Records and the Fair Housing Act - 0:24
  • Improving Rural Home Loans - 2:18
  • Selling House with Reverse Mortgage - 3:52 

Get more on all the topics covered in this video:

Voice for Real Estate 44: Transcript

Criminal Records, Reverse Mortgagese

Stephen Gasque Voice Over: 

Understand the nuances of selling a house with a reverse mortgage
Do you have a policy on people with a criminal record?
And NAR seeks to make rural loans more competitive
These stories and more on The Voice for Real Estate
Hi, I’m Stephen Gasque of the National Association of Realtors.
It will come as a surprise to many that, in the United States, one-third of the population—100 million people—has a criminal record and that some 650,000 people are released from prison each year. For many of these people, the infraction was relatively minor—possession of a small amount of marijuana, for example—or it happened decades ago.
This is important to you as a real estate professional because the U.S. Department of Housing and Urban Development has just released guidance on how the handling of this population could lead to scrutiny under federal Fair Housing laws.
Of course, people with a criminal record are not a protected class under the Fair Housing Act, but minorities are, and minorities are disproportionately represented in the share of Americans who have a criminal record. For that reason, a policy that imposes a blanket rejection of persons seeking to rent or buy housing because of their criminal record could be found to have a disparate impact on minorities, and that could be a violation of Fair Housing laws. NAR Associate Counsel Lesley Walker has more.
NAR is sharing federal resources—including a chart of dos and don’ts—that can help you analyze your housing policy to make sure it protects your business interests without also creating a disparate impact on minorities. For example, it may be appropriate to exclude people who were convicted of the illegal manufacture or distribution of a controlled substance, but if the exclusion extends to people who were convicted of mere possession, the policy may be deemed to have a disparate impact.
Close to 90 percent of all home loans today are backed by the federal government, either through Fannie Mae, Freddie Mac, FHA, the U.S. Department of Veterans Affairs, or the Rural Housing Service. But in only one of these programs—the Rural Housing Service—does each and every loan have to get approved upfront by the federal government.
As you can imagine, that slows down the process and puts buyers who are seeking these loans at a competitive disadvantage with other buyers. That’s why NAR has
been working hard to get Congress to pass legislation that would allow lenders to make these loans the same way they’re made in all other programs: without upfront review.
Already the House has passed the bill, and NAR is now working the Senate hard—most recently at a Senate hearing on rural development. NAR’s Megan Booth has more.
NAR is also asking Congress to increase the number of loans that can get rural mortgage assistance, because the government is on track to run out of authority by this summer.
Did you know one million people have taken out a reverse mortgage since the federal government started insuring them through FHA in 1988? That means the chances of you selling a home with one of these mortgages—which homeowners 62 years or older can take out to access the equity in their home—is pretty good.
What you need to know, though, is selling a home with a reverse mortgage is not a straightforward matter. FHA imposes rules on the pay-off of these mortgages that aren’t applied to other types of mortgages. There are issues of timing and sales price.
To help you learn about these issues, Realtor Magazine is hosting a live webcast later this week with the National Reverse Mortgage Lenders Association. The live webcast gives you an opportunity to email questions to the experts during the program. NAR’s Jon Boughtin has more.
Foreign buyers of U.S. real estate are expected to pump an additional $20 to $30 billion into the economy this year thanks to tax law changes Congress made at the end of last year, including eased restrictions on foreign investors in U.S. commercial property REITs. But the law also increased the amount of taxes that buyers must withhold if they buy U.S. property—including residential property—that has a foreign owner. That withholding is 15 percent of the seller’s gain in the sale of the property, up from 10 percent. But the law includes several nuances that determine whether the 15 percent or the 10 percent withholding applies. Linda Monaco, legal education attorney at The Fund, a support organization for real estate attorneys, talks about these nuances in a webinar NAR hosted last week
You can learn all about the tax law changes that affect foreign buyers and sellers of real estate in that webinar, which is posted on Realtor.org.
And that’s our show for the week of April 18. You can get more on everything we talked about today at The Voice for Real Estate page on Realtor.org. Thank you for joining us and be sure to join us again as we bring you the latest news on The Voice for Real Estate.
The Voice for Real Estate is NAR's video news series. Every month, host Stephen Gasque shines a spotlight on a range of topics, including legislative, regulatory, and legal updates, as well as recent research findings.
Each week, NAR Leadership and industry experts share tips and updates on the real estate industry during this unprecedented time.
Window to the Law is a monthly video series focusing on a legal topic of interest. Not just for legal professionals, Window to the Law covers topics applicable to legal compliance for real estate professionals, brokerages, and REALTOR® associations.
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