Monthly Archives: June 2011

Joyce’s Voice…..Realtors® Advocate Higher Loan Limits and Low Down Payment for FHA

The Federal Housing Administration plays a critical role in the nation’s housing financing system, providing safe, affordable mortgage financing to consumers in all markets during all economic conditions, the National Association of Realtors® said in testimony today.

NAR President Ron Phipps spoke before the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity regarding a discussion draft of legislation to reform FHA.

“As the leading advocate for homeownership, NAR strongly supports FHA’s single- and multifamily mortgage insurance programs. Since 1934 millions of qualified home buyers have relied on FHA-insured loans to purchase a home, and particularly in recent years when private financing dried up,” said Phipps, broker-president of Phipps Realty in Warwick, R.I. “NAR supports efforts to strengthen FHA and reduce its current market share; however, changes should not be made at consumers’ expense by drastically impacting the availability and cost of mortgage capital for millions of Americans, especially while the housing market recovery remains fragile.”

NAR supports sections of the discussion draft that would help FHA remain fiscally strong and better monitor risk, increase enforcement tools and protect taxpayers but opposes any increases to the down payment requirements.

Phipps testified that FHA remains a leader in insuring safe, low-down payment mortgages to responsible, qualified borrowers, with as little as a 3.5 percent down for borrowers with good credit.

“Proposals to further increase FHA down payment requirements are unwarranted,” Phipps said. “The current 3.5 percent down payment and closing costs represent a significant financial commitment. Requiring a larger down payment does little to reduce risk of default compared to strong underwriting requirements, and only puts home ownership out of reach for many families who have the income necessary to carry the cost of the home purchase,” Phipps said.

NAR has long maintained that the principal barrier to home ownership is accumulating the money needed for down payment and closing costs, and estimates that it would take the average American family, living frugally and saving at the current national rate, nearly seven years to save for a 5 percent down payment on a $200,000 home and more than 10 years to save for 10 percent down.

Phipps also testified about the importance of making permanent the FHA mortgage loan limits currently in effect. He stated that decreasing the current loan limits would reduce the availability of mortgage loans across the country, not just in higher cost areas, and increase the cost of capital to consumers. NAR estimates that reverting to the lower statutory limits on October 1 will impact 612 counties in 40 states and the District of Columbia, with an average loan limit reduction of more than $50,000. Further reductions to the loan limits could have an even greater dramatic impact on liquidity and halt the housing market recovery.

“Allowing the current loan limits to decrease will have an immediate negative impact on mortgage availability. FHA has played a critical role in holding down mortgage rates. Without FHA, the higher mortgage rates paid by consumers would flow into noncompetitive banks that are too big to fail,” Phipps said.

Phipps praised FHA for continuing to serve the needs of millions of hardworking American families and for the steps the agency has taken to ensure its long-term financial soundness. “FHA is the only government agency that operates entirely from self-generated income, costing taxpayers nothing. In fact, FHA programs have helped bring net revenue to the U.S. Treasury, helping reduce the budget deficit,” he said.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.


Joyce’s Voice…National Association of Realtor’s President Responds to TODAY Show

May 31, 2011 TODAY Show Producers Sent via e-mail Realtors® are working hard in today’s market to help people sell their homes to buyers who want to realize their dreams of owning a home. Not only did today’s segment, “House Hunting? Don’t Fall for These Tricks” unfairly disparage these hard-working professionals, it also misled viewers rather than giving them helpful, accurate information about buying and selling a home. In all honesty, the entire segment seemed sensationalist and slanted – rather than give buyers truly helpful tips and advice, you preferred to plant suspicions and spread misinformation.

Several recent studies show that a majority of Americans – both homeowners and renters – believe in and aspire to homeownership, and Realtors® are working to bring sellers and buyers together in that context. The segment suggested that listing agents intentionally mislead buyers, when in fact many of the tactics you describe simply help position homes in a competitive market. As a condition of membership, Realtors® must subscribe to NAR’s strict Code of Ethics, which includes being honest with all parties in the transaction.

In addition, the term “Realtor®” is not a generic term for real estate professional. By referring to “Realtors®” throughout the segment, Matt and Barbara were specifically, although we hope not intentionally, describing members of the National Association of Realtors®. In the future, please refrain from using this term as catch-all for “real estate agent.”

Instead of relying on in-studio discussions about the real estate market, why don’t you go out into the field and cover Realtors® as they help actual buyers and sellers in today’s environment – whether they’re helping homeowners make a life transition, helping sellers avoid foreclosure through a short sale, or working with first-time buyers who aspire to own a home of their own? We would be happy to help you with resources and logistics.

As a working Realtor® and president of the National Association of Realtors®, I offer to come on the TODAY Show to share insights into what’s really happening in today’s real estate market and provide information your viewers can truly use when buying or selling a home. No “tricks,” just the facts. I look forward to hearing from you.


Ron Phipps, ABR, CRS, GRI, GREEN, e-PRO

2011 PresidentNational Association of REALTORS®