H.R. 3700/S. 3083 Passes Congress, on to The President

By
Education & Training with Adhi Schools, LLC

Legislation with a significant impact on the function of Department of Housing and Urban Development (HUD) rental assistance and public housing programs, Federal Housing Administration (FHA) requirements for condominium mortgage insurance, and Department of Agriculture (USDA) single family housing guaranteed loan programs passed the Senate on Friday. H.R. 3700 passed through the House of Representatives on February 2nd, so the legislation will be moving to the President’s desk for approval or veto. It passed both houses with broad bipartisan support—it received zero “No” votes. The legislation has been supported by the National Association of REALTORS® (NAR), the California Association of Mortgage Professionals (CAMP), and other professional organizations involved with the real estate industry.

Below we have highlighted the key impacts this legislation will have if the president signs it into law (the full text and summary of the impacts of the bill can be found here).

 

What Could Change with HUD

As may be expected, HUD’s Section 8 housing voucher program (and any other family rental assistance programs) is subject to change. Public housing agencies (PHAs) that administer the program would have new expectations to develop systems to review the incomes of families receiving assistance. This includes annual review or any time income and deductions are expected to increase by 10%. Tenancy must be terminated or the greater of “fair market rent or the amount of the government subsidy for the unit” in the event a tenant’s income is “greater than 120% of the area median income for two consecutive years”.

PHAs are also prohibited from renting a dwelling to or assisting a family with “net family assets exceeding $100,000 (adjusted for inflation) or an ownership interest in property that is suitable for occupancy”. The exception is “victims of domestic violence, individuals using housing assistance for homeownership opportunities, or family that is offering a property for sale”.

PHAs are also prevented from using more than 20% of their authorized units for project-based vouchers (PBVs; meaning assistance tied to the housing unit not the tenant, like a Section 8 voucher). The exception is an additional 10% for PBVs targeting the homeless, veterans, the elderly, disabled, or for “units in areas where vouchers are difficult to use due to market conditions”.

There are many more changes to the technical functioning of these programs that affect the business of some real estate professionals, but for the sake of brevity we will not summarize the rest of these potential modification here.

 

What Could Change with FHA

H.R. 3700 would require the FHA to “make recertification substantially less burdensome than original certifications” for condominium mortgage insurance.

The FHA would also have to issue guidance “regarding the percentage of units the must be occupied by the owners…in order for a condominium to be eligible for FHA mortgage insurance”. If the FHA does not issue this guidance within 90 days of the bill being signed into law, the default eligibility requirements would be 35% or more of all family units occupied by the owners or sold to owners who intend to see the occupancy requirements, down from 50%. The FHA would be allowed to adjust afterwards to consider “factors relating to the economy” of the area.

 

What Could Change with USDA

The Housing Act of 1949 would be amended to permit the USDA to grant preferred lenders its “loan approval authority for the Rural Housing Service’s single family housing guaranteed loan program”. The USDA will be allowed to charge lenders a fee of up to $50 per loan to use the USA’s automated underwriting systems for the program.

 

Industry Opinions

The legislation was supported by the National Association of REALTORS®, California Association of REALTORS®, California Association of Mortgage Professionals (CAMP), and more. In an email sent on July14th, CAMP states that the legislation “provides significant benefits to taxpayers, homebuyers and the real estate market” through removing a “burdensome and expensive FHA Condo approval process” and reducing “FHA restrictions on the number of condos available to homebuyers.” They also describe the impact on the Rural Housing Loan Service processing as “permanently streamlining”. Tom Salomone, president of NAR, states that “This legislation will put homeownership in reach for more families” and NAR asserts that condominiums “are among the most affordable homeownership potions for first-time homebuyers, as well as lower income borrowers”. This condominium affordability is important, especially when juxtaposed with the assertion of the California Association of REALTORS® that only “10 percent of condominiums nationwide have made it through the burdensome, time-consuming, and expensive FHA-approval process”.

 

Adhi Schools, LLC Stance

We are dedicated to education and policies that lead to a healthy real estate industry and the general well-being of those seeking housing. This bipartisan bill is a rare chance to make the industry more efficient and open up more housing opportunities to more people. The impacts on the FHA condominium approval process are particularly promising. Broader access to these units incentivizes new housing developments that are necessary to combat the increasingly high cost of housing throughout California and the United States.

Posted by

Cody Carmen

Comments (13)

Peter Mohylsky. Broker Associate
Miramar Beach - Santa Rosa Beach, FL
THE BEACH IS OPEN AND WAITING FOR YOU

A lengthy read but well worth the effort.  This is an example of why we need to stay focused on our business and the local business conditions.  

Jul 20, 2016 03:54 AM
Cody Carmen

Thank you Peter Mohylsky. I tried to keep it as brief as possible, but obviously a rather large bill to analyze. 


I agree with your sentiment. The more knowledge about local conditions, the better one is able to apply national policy and change to their business. I hope people that live in areas with a lot of condos keep an eye on this one as it heads to POTUS.  

Jul 20, 2016 03:57 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Lots of information here, Cody, but very helpful. Glad to see it's moving on to the next step! Thanks for keeping us all posted!

Jeff

Jul 20, 2016 03:58 AM
Cody Carmen

Thanks Jeff, I agree that it's a good thing to see it move forward. If it is signed into law I'll have to do an update post.

Jul 21, 2016 02:37 AM
Debbie Laity
Cedaredge Land Company - Cedaredge, CO
Your Real Estate Resource for Delta County, CO

WOW, Cody...thanks for keeping us all in the loop. You are really on top of the real estate industry. 

Jul 20, 2016 02:22 PM
Cody Carmen

Thank you! I enjoy covering new policies and laws, the process is always interesting.

Jul 21, 2016 02:38 AM
Jerry Newman
Brown Realty, 210-789-4216,www.JeremiahNewman.com - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Cody, Looks like our real estate industry in moving in a good direction with all these latest changes in the works. Thanks for Sharing!

Jul 21, 2016 06:25 AM
CA COASTAL ESTATES Lauren Selinsky Perez CRS
California Coastal Estates - Aliso Viejo, CA
"Your Real Estate Broker" #oclauren

Hopefully, re-certification will be less burdensome.

Such a nightmare sometimes! Great update.

Lauren Selinsky

Jul 21, 2016 09:44 AM
Cody Carmen

Thanks Lauren Selinsky CRS ePro. I try to avoid getting my hopes up too much, but it is great seeing a problem being approached with a solution.   

Jul 21, 2016 09:46 AM
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Cody

Thanks for sharing the information on HR 3700R - -3083.

Good luck and success.

Lou Ludwig

Jul 21, 2016 11:14 AM
Debbie Reynolds, C21 Platinum Properties
Platinum Properties- (931)771-9070 - Clarksville, TN
The Dedicated Clarksville TN Realtor-(931)320-6730

This is a good bill and the only thing is that Congress took way too long in getting this through.

Jul 21, 2016 01:34 PM
Cody Carmen

I agree Debbie, there is no good reason that a bill that passed through the House so easily should sit in the Senate for five months without a vote. 

Jul 22, 2016 01:33 AM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good evening Cody Carmen ,

Thanks for sharing this information! It is a good bill.so sorry it took so long to pass. I just subscribed to your blog!

Jul 25, 2016 11:26 AM
Cody Carmen

Thank you for reading! I think the bill can do a lot of good too. I returned the favor, looking forward to reading your posts Dorie Dillard 

Jul 26, 2016 01:41 AM
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

This is very good information to share.

Have a most productive summer.

Jul 25, 2016 11:22 PM
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Cody

I stopped to bookmark your post.

Good luck and success.

Lou Ludwig

Jul 27, 2016 11:45 AM
Cody Carmen

Thank you very much Lou Ludwig. It's definitely a topic I will be returning too frequently. Rumor has it POTUS will be signing it soon, in which case I will have to post an update.   

Jul 27, 2016 02:45 PM
Larry Johnston
Broker, Friends & Neighbors Real Estate and Elkhart County Subdivisions, LLC - Elkhart, IN
Broker,Friends & Neighbors Real Estate, Elkhart,IN

Good evening Cody Carmen ,  It seems that some bills seem to take forever to get through.  This was one of them.

Jul 27, 2016 01:01 PM
Cody Carmen

Larry Johnston always odd when it is a bipartisan bill that takes this long. You would think politicians would be falling over themselves trying to sign this to brag to their constituents about their bipartisanship. 

Jul 27, 2016 02:46 PM
Evelyn Johnston
Friends & Neighbors Real Estate - Elkhart, IN
The People You Know, Like and Trust!

Great review on a huge bill that favors home ownership. Thanks Cody!

Jul 28, 2016 05:04 AM
Winston Heverly
Winston Realty, Inc. - Atlantis, FL
GRI, ABR, SFR, CDPE, CIAS, PA

A super post, I'm glad I picked something up from your tips. Thanks for sharing.

Aug 19, 2016 01:58 PM