January 11, 2019
NAR Helps Secure FEMA Reversal
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 a controversial ruling the agency released earlier this week.
“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.”
On December 21 Congress 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 policymakers to reevaluate the decision. Congress expressed concern as well.
“We thank the Administration and Congress for stepping up so quickly to ensure the smooth continuation of flood insurance at a time when market disruption would be extremely hard-felt,” says Shannon McGahn, NAR senior vice president of government affairs.
NAR Testifies on Housing Finance Reform
On December 21 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 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, Mr. Malta outlined NAR’s views of Committee Chairman Jeb Hensnarling’s bill, the Bipartisan Financing Reform Act of 2018. Specifically, Mr. 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 (CSP) 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.
While these components are a good foundation for a future housing finance market, Mr. Malta provided suggestions to the Committee that would improve the proposal. Among other things, NAR suggested to include language that would require Ginnie Mae to have a dual mandate to safeguard the secondary mortgage market, but also to ensure for a deep, liquid, affordable, and national mortgage market. Finally, NAR committed to continue to work with Congress and the Administration to create a mortgage market that provides access to affordable mortgage credit for all creditworthy Americans, while ensuring taxpayers are properly protected.
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