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President Trump signs Executive Order on healthcare, calls it “a beginning”

(BUSINESS NEWS) The ink is drying on President Trump’s latest Executive Order, pushing agencies to adjust how existing healthcare laws are implemented.

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President Donald Trump signed an Executive Order Thursday, seeking to bring affordable health insurance to millions of Americans by promoting flexibility, choice, and competition.

The Order assigns the Labor Department to consider how to allow groups (small businesses, possibly individuals) to buy Association plans across state lines, consider expanding coverage through short-term low-cost plans, and to consider changes to employee reimbursement accounts.

House Minority leader, Nancy Pelosi said prior to the signing of the Order that “it is a sabotage of the Affordable Care Act, and quite frankly, a real disservice to the American people.”

Pelosi opined that President Trump “knows very little about healthcare legislation.”

Supporters have long pushed for health insurance to be competitive by opening the market across state lines and using the power of numbers to buy insurance like a trade Association.

Critics have long said an Order of this type will increase premiums as the risk pool adjusts up, filled mostly with people buying insurance that have pre-existing conditions. They also say that premiums may be lower under this Order, but benefits may be reduced.

Neither side has a universal solution all can agree upon, but this Order certainly marks the first steps in President Trump making good on his campaign promise to dismantle Obamacare.

The administration cites that it could take over six months to take effect. Congress has already given up on the notion of repeal/replace of Obamacare in 2017, and while President Trump can’t repeal the Act himself, today’s Order proves he is willing to push his administration to update guidance and expand how the law is implemented.

How the agencies will adjust to change the current regulations as ordered by the President will become clear over time, stay tuned.

National Association of Realtors President, William E Brown tells The Real Daily, “Today’s White House announcement is an important part of the work to expand health coverage opportunities. Association Health Plans have long offered promise for small business owners and self-employed individuals seeking affordable health coverage.”

Brown concludes that they are “reviewing the specifics of the proposal to determine the promise that it may offer self-employed individuals, like real estate professionals.”

The Real Daily is honest, up to the minute real estate industry news crafted for industry practitioners – we cut through the pay-to-play news fluff to bring you what’s happening behind closed doors, what’s meaningful to your practice, and what to expect in the future. Consider us your competitive advantage.

Politics

FHA Commissioner named, now all he needs is a yes from the Senate

(POLITICS) President Trump has confirmed his choice for the new commissioner of the FHA, all that is left is for Senate to approve.

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Confirmation, finally

Confirming rumors that began in May, President Trump this Wednesday announced his nomination of Brian Montgomery for Federal Housing Administration (FHA) commissioner.

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Montgomery will replace acting commissioner Edward Golding.

Commissioner round two

If the Senate approves his nomination, Montgomery will serve for the second time as FHA commissioner. He held the post for eight years under former president George W. Bush, and for about six months after Obama’s inauguration before resigning in July 2009.

Currently, Montgomery serves as Vice Chairman for an advisory firm he founded – The Collingwood Group, based in Washington D.C.

In his previous tenure as FHA commissioner, Montgomery created a bill, passed in July 2006, which significantly modernized the FHA, and also worked to assist black families trying to purchase a home for the first time. For his leadership in the cause of affordable housing, in 2008 he was awarded the Robert J. Corletta Award.

In a statement issued by the White House, Montgomery was praised for his leadership during his previous term as commissioner. The statement acknowledged Montgomery’s “efforts to preserve… affordable rental housing,” as well as his successes in “reducing rental assistance costs and the costs of FHA insurance claims,” and in financing the development of “more than 300,000 rental units.”

Work to do

If his nomination is confirmed, as FHA commissioner, Montgomery will need to address the suspension of the proposed mortgage insurance rate cut that Trump imposed shortly after taking office in January.

Last November, Montgomery told Politico that in order “To restore housing to its traditional role as an engine of economic growth and opportunity, the incoming Trump administration should pursue policies designed to make the path to homeownership possible again for fully-informed prospective buyers who have the ability to carry a mortgage.”

Pick up the pace

Business leaders and realtor are calling for the Senate to confirm the nomination as soon as possible. National Association of Realtors President William E. Brown wrote, “FHA’s mission is critical to the business of our members. Having strong leadership at the helm means fresh opportunities to improve the FHA programs that put homeownership in reach for millions of Americans every year. We congratulate Brian on the nomination and hope to see him swiftly confirmed.”

#ComishMontgomery

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Politics

Mnuchin might be capping your Mortgage Interest Deductions

(POLITICS) With so much effort being put forth to encourage homeownership, it seems ridiculous that the government is looking to cap mortgage policies designed as incentive for ownership.

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Favorite homebuyer tax cut could be in danger

Potential homebuyers, especially first time homebuyers are always looking for the maximum amount of discounts and price breaks to make their dream homes more affordable. One of the most popular ways to do this is by utilizing the government tax breaks for first time (and often repeat) homebuyers on their mortgage.

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The Mortgage Interest Deduction (MID) is one of the most effective ways to make homes that are marginally out of a buyer’s price range, a bit more affordable. MID allows homeowners to write off the interest they pay on their home loans when filing their income taxes. This is a lifesaver for most homeowners’ budgets. However, as the tax reform season kicks in, it looks as though the MID may be on the chopping block (or at least the shaving block).

MID may be trimmed/reformed

According to CNBC, one source, who wished to remain anonymous, stated, “saying they [tax reformers] aren’t going to get rid of it [the MID] isn’t saying they won’t touch it. There are clearly discussions going on around reducing the maximum of the mortgage interest deduction to the $600,000 range.” While this may not seem like much of a reduction at first glance, consider that the current maximum is $1,000,000 for married couples filing jointly and $500,000 for single homeowners. Also, as CNBC reports, the median home price point is approximately $200,000.

By lowering the MID to the $600,000 range, not all individuals are going to meet this cap, but they may well be discouraging some other individuals from purchasing a home.

In May, Treasury Secretary, Steven Mnuchin stated that President Trump’s tax-reform plan would not eliminate the MID, however, this is again not to say it’s safe from reform. The MID has been the subject of modification/reduction/reform talks before, but it seems as though it has become an even more pressing concern as of late.

Discouraging homeownership

The more worrying aspect of this is that the MID has long been considered “safe” or “untouchable” by tax reformists, until now. By reforming, and potentially lowering the cap to $600,000, this measure could be used as a bargaining chip to change more “safe” deductions. Many real estate industry SPECIALISTS, also worry that this measure will not only open the floodgates for additional reform, but also that it will be an unwanted stepping stone to discouraging more potential homebuyers from making the leap into homeownership.

According to Doug Yearly, CEO of Toll Brothers (via CNBC), “making changes to the MID would be very bad policy.” He goes on to state,” this country has prided itself on encouraging homeownership, and MID has been around for decades. It’s worked very well.”

Nay to mortgage deduction changes

The National Association of Realtors will lobby hard against these changes, but it is unclear at this time whether or not these measures will go through, or if they’ll be aborted during tax-reform discussions.

Either way, this is definitely something to keep a watchful on, as reduction or elimination could be detrimental.

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Politics

NAR pens assertive letter to HUD about regulatory burdens

(POLITICS) Recently, NAR wrote a letter to HUD on what they’d like to see them tackle, including but not limited to mortgage insurance premiums, condos, and PACE loans.

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NAR has had enough

The United States Department of Housing and Urban Development – HUD, to its friends – has officially begun the formal process of addressing housing regulations, publishing a request to comment pursuant to Executive Orders 13771 and 13777, both of which called on the agency to evaluate its policies with an eye to trimming burdensome regulations.

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Phew. Sexy lede, right?

NAR’s letter

That said, as is so tragically often the case, sexy isn’t the same as important. This is important. One of the strongest messages of President Trump’s campaign was a major reduction of regulatory oversight.

And nobody has more regulations or more oversight than housing.

Plus, short of being from space, Dr. Ben Carson, current director of HUD and former neurosurgeon and Trump presidential opponent, is from about as far outside the Beltway as it’s possible to be.

The next year or so may well be the best chance for major reform in housing regulation for a decade.

No surprise, then, that the National Association of Realtors, has jumped in with both feet.

NAR’s comment focused on 4 key areas, all vital for anyone with an interest in the housing industry:

Mortgage Insurance Premiums

One of the key burdens to homeownership is the necessity of mortgage insurance, the yearly payment required of buyers with less than 10% down.

NAR argues that mortgage insurance creates an undue burden on homeowners and a chilling effect on home buying.

Also, that its elimination would increase cash on hand for homeowners, increasing their ability to weather financial setbacks and volatile markets and thereby decreasing the likelihood of default and foreclosure.

FHA Approval in Condominiums

Again with the “not sexy, but important.” It’s no secret that homeownership has been declining badly over the last few decades. One of the few bright spots has been condos: they’ve been one of the few paths to ownership available to first-time buyers, older Americans and folks in general without immaculate credit and/or giant Scrooge McDuck bins of cash on hand to dive into.

NAR argues for two primary reforms to keep that goodness going.

First, they argue for changes to the FHA approval process, arguing that the current process is unnecessarily obstructive, and for loans to be made available on non-FHA approved spaces while the regulations are being reviewed.

Second, they pitch a new zoning model. At minimum, the NAR wants a reduction in the hard limit of condo-approved space being 50 percent residential to 35. At best, it wants the limit removed altogether in favor of determining what spaces are and aren’t appropriate for residential use on a case by case basis.

Clean Energy Loans

NAR states its opposition to a change in HUD regulations made in July of last year, in which default on PACE loans, made available for purchase of property that meets certain renewable energy and tech standards, would be given priority over default or foreclosure payments.

In short, when a loan goes south, NAR would like its money back before the government gets theirs. No surprise there.

Fair Housing

This is the biggest chunk of the letter, and no wonder, because it’s far and away the most substantial issue raised by NAR in its comment letter. While acknowledging the ongoing presence of race-based inequality and de facto segregation in housing, NAR calls on HUD to reduce rather than increase its involvement in the issue, shifting authority from the federal to the local level and significantly decreasing the strictness of its standards.

NAR argues for “home grown” solutions, with HUD as facilitator of a process chosen and put into effect by local interests rather than arbitrator of housing standards.

Years to come

All four issues will be vital to the development of housing over the next decades. The reform process has only begun, and its consequences promises real and exciting change for years to come.

#regulatoryburdens

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