Washington Report

Advocacy Updates from Washington D.C.

January 16, 2012

In This Issue

Clean Water Act

Supreme Court Hears Oral Arguments on Wetlands Case

Credit Policy

Government Mandates Housing Fee Increases to Help Pay-for Benefits Extensions

FHA Programs (Federal Housing Administration)

NAR Meets with HUD REO Staff

Realtor Insider DC News and Events

Federal Reserve Releases Housing White Paper

Clean Water Act

Supreme Court Hears Oral Arguments on Wetlands Case

The U.S. Supreme Court heard oral arguments in the Sackett v. U.S. EPA on January 9, 2012. The arguments presented by both lawyers elicited spirited discussion among the Justices. Experienced court watchers expect a decision in this case in late spring.

The Sacketts own a lot in Priest Lake, ID, where they started to build a home. The EPA determined that the site contained jurisdictional wetlands under the Clean Water Act (CWA), and that the Sacketts had failed to obtain a permit in violation of the law. EPA issued an Administrative Compliance Order (ACO) preventing further construction on the site, requiring the Sacketts to restore the wetlands and threatening the Sacketts with fines.

The Sacketts did not believe that the wetlands on their site were under the jurisdiction of the CWA. The Sacketts sued the EPA, but were dismissed in District Court, and also dismissed in the Ninth Circuit Court. The Ninth Circuit accepted the government’s argument that the Sacketts could have applied for a permit, and if denied, could have challenged EPA’s jurisdiction under the CWA and permit denial.

The Court will address two questions: (1) whether the Sacketts may seek pre-enforcement judicial review of the EPA order under the APA; and (2) if not, whether the inability to obtain pre-enforcement judicial review of the ACO violates their rights under the Due Process Clause.

NAR submitted an Amicus Brief for this case in support of the Sackett, in coalition with several other regulated associations.

The brief emphasized three basic points. First, jurisdiction under the CWA is a fundamental and controversial concept to the law, and that the agencies have used their administrative powers to adopt broader and broader definitions of “waters of the U.S.” even though the statute has remained unchanged.

Second, that assertion of jurisdiction under the CWA is final agency action under the APA and case law, because the decision marks the consummation of the agencies’ decision-making, and the decision has legal and practical consequences.

Third, the brief developed practical examples of the problems that arise in prohibiting judicial review of agencies asserting jurisdiction. The brief shows that the only way for a landowner to challenge the agencies’ overbroad assertions of jurisdiction is by running the gauntlet of the costly and time-consuming permitting process he believes does not apply to his property.

The case is important because current case law limits the circumstances under which a landowner or other entity can obtain judicial review of the assertion of CWA jurisdiction by the Army Corps of Engineers or the EPA . These assertions have been held to be unreviewable because the courts have concluded that they are not final agency action or that the CWA precludes review.

Russell Riggs, 202-383-1259
Austin Perez, 202-383-1046
Daniel Blair, 202-383-1089

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Credit Policy

Government Mandates Housing Fee Increases to Help Pay-for Benefits Extensions

At the conclusion of 2011, Congress passed and forwarded to the President for his signature the “Temporary Payroll Tax Cut Continuation Act of 2011”. The primary purpose of this legislation was to extend temporarily: (1) payroll tax relief, (2) unemployment compensation provisions, and (3) healthcare provisions. The estimated costs of the temporary extensions is $192.5 billion.

On Dec. 23, 2011, President Obama signed the legislation extending the payroll tax reduction and requiring the Federal Housing Finance Agency (FHFA) to raise guarantee fees (g-fees) for Fannie Mae and Freddie Mac loans in order to off-set $35.7 billion of the extensions' cost. FHFA, the conservator of Fannie Mae and Freddie Mac, is now directed to raise g-fees by at least 10 basis points. The new law also requires the Department of Housing and Urban Development (HUD) to establish and collect annual premiums, in addition to existing premiums, of 10 basis points of the unpaid principal balance on all FHA loans.

Despite NAR's strong opposition to the diversion of housing resources to pay for non-housing uses, the increase in g-fees is being used to pay for the extensions. HUD is required to phase in the increase over two years, as it determines appropriate, and will use the premium increase to shore up the FHA insurance fund. FHFA has directed Fannie Mae and Freddie Mac to increase their guarantee fees effective April 1, 2012. The increases will remain in effect through September 30, 2021. Lenders who choose to pass this increase on to borrowers will likely increase the rate offered to a borrower by at least .1% sometime before April 1, 2012. Several sources have placed the increase in cost at approximately $4000 - $5400 over 30 years on a $200,000 loan. On a monthly basis, the approximate increase will be $11-15.

Tony Hutchinson, 202-383-1120
Charles Dawson, 202-383-7522
Kenneth Trepeta, 202-383-1294

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FHA Programs (Federal Housing Administration)

NAR Meets with HUD REO Staff

This week the National Association of REALTORS® (NAR) met with senior staff for the US Department of Housing and Urban Development’s (HUD) Real Estate Owned (REO) Department. The issues discussed included the proposed Request for Information offered by the Federal Housing Finance Agency (FHFA), which includes FHA REO properties, and how NAR and the REO staff can work together going forward. NAR understands that any proposal announcement related to the RFI will be small in scale and will be offered as pilots. While NAR continues to have concerns about these pilots, staff at HUD are taking these concerns under consideration as decisions are made. NAR will continue to monitor and provide feedback on HUD’s REO disposition efforts and will maintain regular communication with HUD REO staff.

Charles Dawson, 202-383-7522
Jerome Nagy, 202-383-1233
William Gilmartin, 202-383-1109

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Realtor Insider DC News and Events

Federal Reserve Releases Housing White Paper

On January 4, 2012, The Federal Reserve released a white paper, entitled “The U.S. Housing Market: Current Conditions and Policy Considerations.” In the paper, the Fed said that continued weakness in the housing market poses barriers to a more vigorous economic recovery. The paper supports many principles established by NAR to help revitalize the housing industry and economy including, increasing lending to creditworthy home buyers, aggressively pursuing appropriate policies to keep borrowers in their homes, and providing greater incentives to pursue foreclosure alternatives like loan modifications, refinancing, short sales, or deeds-in-lieu of foreclosures. NAR believes these efforts will reduce the rising inventory of foreclosed homes and help stabilize and revitalize the housing industry. The Fed paper also addresses converting foreclosed properties into affordable rentals. In a statement released on January 5, NAR expressed concerns about proposed bulk sales of distressed properties and suggested that every effort should be made to increase liquidity for consumers and small investors since bulk sales will likely result in greater losses for taxpayers and have a more negative impact on housing values.

Charles Dawson, 202-383-7522
Kenneth Trepeta, 202-383-1294
Jerome Nagy, 202-383-1233

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