In a classic federal government agency overreach, the twice-determined-as-unconstitutional CFPB has ignored history and the 10^th Amendment in order to weigh-in on an area of housing contracts reserved for the states and private contracts.

Contracts-for-deed, or land installment contracts, are common in many parts of the U.S., especially among the unbanked.  They are very common among the urban core and very rural residents.  In the early 20^th century this was the primary venue for many minorities, especially in the black community, to purchase a house as the federal government opposed minority housing financing – until the Supreme Court, which the CFPB ignores, put a stop to it repeatedly.

U.S. citizens would be far better served by a CFPB that performed actual reports and recommendations based upon state law to state-based consumer protection bureaus and legislatures rather than trying to subvert the 10^th amendment and take over private contracts for real estate in every state with one regulation – remember the recent Chevron Deference case?

As to the recommendation that the Truth in Lending Act (TILA) applies, it is interesting to note that CFPB relies on Dodd-Frank and the specifically the ‘systemic risk’ factor as a justification for application of TILA – especially when CFPB has already stated that individual buyers selling their OWN property do not constitute a systemic risk!

Finaly, the use of the term “balloon payment” loan as justification for and denigration of contract-for-deeds is highly misleading.  In fact, almost every commercial loan is a “balloon loan” in that the amortization is longer than the payment window.  For example, a property purchased with a 25-year amortization and a 5-year note – requires the creditor (bank) and debtor (purchaser) to revisit the loan in 5 years for a refinance or even a movement of the loan.  This is how Canada handles residential housing loans.  The denigration of this form of widely used loan speaks to the deceptive practice and effect of the CFPB on this effort.  Shameful.

Charles Tassell, COO, National REIA

Click here to read “CFPB Goes After Contract for Deed Agreements.”

The National Real Estate Investors Association (National REIA) is a 501(c)6 non-profit association that has been representing the real estate investing industry for 35 years.  With over 40,000 members and 120 local Chapters and affiliates, we are housing providers that help to rebuild communities, one house at a time.  We thank our industry partner Home Depot for their support.  To learn more visit www.nationalreia.org

We have been encouraging our members to reach out to their Congressmen to ask for their support on this important piece of legislation.  As partner in the SFC, National REIA looks forward to continuing our work with them in helping to move this bipartisan bill forward in both the House and the Senate.

The following is an update from the Seller Finance Coalition (SFC) by Jeff Watson.

I want to share with you an update from the Seller Finance Coalition regarding the progress made last year relative to H.R. 3464, the Affordable Homeownership Access Act. Over the past year, our team has sought to advance H.R. 3464 by:

• Organizing & managing two Congressional fly-ins for Seller Finance Coalition leadership, resulting in meetings with 45 Congressional offices.
• Holding virtual meetings with over 15 Congressional offices to socialize the bill.
• Working with Rep. Andy Barr (R-KY) to re-introduce H.R. 3464 in the 118th Congress.
• Securing new co-sponsors for H.R. 3464, including, but not limited to, the following Members:
  •         Rep. Brendan Boyle (D-PA)
  •         Rep. Bill Posey (R-FL)
  •         Rep. Byron Donalds (R-FL)
  •         Rep. Pete Sessions (R-TX)
  •         Rep. Erin Houchin (R-IN)
• Engaging with Sen. JD Vance (R-OH) and Sen. Katie Britt (R-AL) on the introduction of a Senate companion to H.R. 3464.

2024 Legislative Priorities 

        To build on the momentum we developed last year, our team will prioritize the advancement of the following key workflows:

• Work with Sen. JD Vance (R-OH) to introduce a Senate companion to H.R. 3464 in the 118th Congress.

Sen. Vance’s team has indicated that they would like the support of at least one additional Senate Banking Committee member.

Our team plans to reach out to each Member of the committee to determine who may be willing to join Sen. Vance in this effort.

• Continue to pressure Rep. Andy Barr (R-KY) to hold a swift markup of H.R. 3464 in the House Financial Services Committee.

Based on our latest discussions with Rep. Barr, he is aiming to hold the markup by the end of the first quarter of 2024.

• Organize an SFC Coalition-wide fly-in in the first quarter of 2024 to engage with House Financial Services Committee & Senate Banking Committee Members to support H.R. 3464.

Here’s how you can help SFC in our efforts on behalf of real estate investors across the country:

CLICK HERE to learn more.

 

The recent White House announcement regarding renters and housing providers is the largest overreach in recent history. It is an agenda driven effort meant to organize, unionize and politicize one-third of American residents.  The effort is really addressing symptoms caused by federal policy and ignores centuries of state oversight of basic housing provider and renter laws, not to mention the 10^th Amendment to the U.S. Constitution.

National REIA supports safe, quality and affordable housing and represents thousands of Americans investing in their communities providing housing options for their neighbors: the majority of rental housing in the U.S.  The “inside the beltway” and “country club” approach to housing and a chronic federal hypocrisy on the issue is exactly why there is an ongoing supply problem, for example:

Anti-trust Rental Rate Setting:

The U.S. Department of Housing and Urban Development (HUD) REQUIRES local housing providers to develop their prices by developing a local price report of rents.  In fact, HUD provides a Fair Market Rental Rate and has done so for years.  The Feds set the rate for a majority of the rents in every neighborhood across the country!

Source of Income:

The White House acknowledges there is NO federal mandate or allowance, and yet intends to force a ban on the consideration of Source of Income – the real problem: housing providers do not want to participate in the 3,000 plus federal housing programs across the country because they are so poorly managed.  Additionally, they each have their own set of rules and enforcement procedures – literally the first complaint about “patchwork” regulations the White House is stating is a problem!

Disability issues:

Rather than follow the Justice Department’s rules on disability, HUD has created an issue of every pet becoming an emotional support animal and undercutting the validity of the truly disabled and their needs.  HUD’s confusion in this area has increased difficulties across the country, generating false verification websites for Emotional Support Animals and placing them on the level of Trained and Certified Service Animals.

Housing Affordability:

Regulations drive cost.  The federal government has done more to increase the cost of housing, from recent interest rates hikes to new bans and requirements on everything from the quickly withdrawn gas stoves proposal, to types of furnaces, air conditioning systems, insulation, insurance, etc.  Each new regulation increases the cost of housing and diminishes the likelihood of more investment in housing.  Rehabbing of housing has become so expensive and time consuming, especially in some states, that housing is not re-capitalized and is ultimately lost, with new replacements becoming even more expensive.  A reduction in housing development costs and associated regulations, and interest rates, not just for the millionaires who can qualify for ESG discounts but for neighborhood level developers and rehabbers would address the basic facet of supply shortage: straight from Economics 101.

Background Checks and Evictions are inexorably connected.  Housing providers who cannot easily reach a solution with a problem renter will increase their barriers to entry with higher security deposits and more in-depth background checks in order to protect their asset.  Understanding this tension is critical to addressing either side of the equation.  This federal statement ignores the tension entirely, and the federal complicity by CFPB and HUD in complicating the issues.

In Summation:

While the White House stopped short of calling for National Rent Control and taking the first steps to nationalize housing, considering the backdrop of West Virginia vs. EPA in 2022, it seems the Federal government should focus on addressing its own problems before addressing state and local issues with more federal symptomatic failures.  Housing has long term structural concerns that need serious dialogue and commitment to address, not utilizing questionable statistics to force an agenda; i.e. housing providers use the same rule of thumb as bankers regarding mortgages – no more than 30% of income can be allotted to housing cost.  Stating otherwise conflates the issue with HUD funded programs that provide full housing support for the lowest income individuals, which are extrapolated and cited as a general housing burden.  Individual business owners don’t make those type of decisions, only the government does that.  It’s time for meaningful dialogue.  We look forward to continuing to work with our 40,000+ members across the country to provide real solutions.

Click here for more information about the National Real Estate Investors Association.

Click here to read the full Biden Administration release at WhiteHouse.gov.

The National Real Estate Investors Association (National REIA) is a 501(c)6 non-profit association that has been representing the real estate investing industry for 35 years.  With over 40,000 members and 120 local Chapters and affiliates, we are housing providers that help to rebuild communities, one house at a time.  We thank our industry partner Home Depot for their support.  To learn more visit www.nationalreia.org

Irrespective of previous income, if a resident lost their job due to Covid-19 and remained unemployed for 90 days or more, they can seek these funds for up to 12 months of arrearage and potentially, an additional 3 months, if needed.  Grantees are encouraged to focus significant funds on those resident at less than 50% of the Average Median Income (AMI) for the region.

Please review the Excel spreadsheet linked below, as your state, county or city may have received funds.

Click here to download the full list of Emergency Rental Assistance Program Grantees (12-20 Stimulus).

Click here to read the FAQ about the Emergency Rental Assistance Program.

One organization that has shown impressive results is Family Promise.  In over 20 states already, their relationship-based methodology systematically improves a resident’s chances of overall success, even helping them define new goals of success.  While some National REIA affiliated groups are already working with Family Promise, we wanted to further this information about the benefits of partnering with Family Promise.  Please take a moment to review the material below and reach out to your local branch to explore the opportunities!

Keys to Good Tenancy Best Practices

Family Promise Information Sheet

Click here to learn more at FamilyPromise.org.

Highlights from the Stimulus Bill of 12/20

Senator Portman (R-OH) worked hard to get a deal done on additional COVID-19 relief, and was a key negotiator on housing related issues, especially the Emergency Rental Assistance, detailed below.  The bill passed with only a handful of Senators and several Congressmen opposing it.  The bipartisan package authorizes a second round of PPP loans for the hardest hit small businesses, additional unemployment benefits, support for health care providers, additional funding for vaccine development and distribution, funding for testing and tracing, and funding for a litany of smaller programs.

The $25 Billion will be parceled out in a block grant to states on per person share with funds likely arriving by February.  Additionally, cities and counties with populations over 200,000 will receive a direct allocation of the Emergency Rental Assistance funds.

This new set of funds will have the following guidelines, mainly due to leadership by Senator Portman, providing for a block grant that is pretty hands off and gives states lots of flexibility. But there are a few key guardrails:

• $25 billion for emergency rental assistance and utility payments will be funded through the Coronavirus Relief Fund and administered by the U.S. Department of the Treasury;
• Assistance can cover up to 12 months of back and forward rent, with an additional three months in certain cases;
• The CDC’s eviction moratorium will be extended one month to Jan. 31.
• Households below 80 percent area median income (AMI) are eligible for rental assistance funds if they qualified for unemployment insurance or experienced reduced household income or financial hardship due to the pandemic; and are at risk of homelessness or housing instability;
• States and localities must prioritize households below 50 percent of AMI and/or those who have been unemployed for 90 days;
• Property Owner/Managers can apply for assistance on the resident’s behalf but tenant must cosign the application. Payments must be used to pay the resident’s rental obligations;
• Cities and states can make payments directly to Property Owner/Managers or utility companies on behalf of renters. If a Property Owner/Manager refuses to accept rental assistance, it goes directly to resident to pay to Property Owner/Managers or utility provider;
• Up to 10 percent of funds can be used to provide case management and other services intended to help keep households stably housed;
• Extends the deadline for spending previously allocated Coronavirus Relief Funds to Dec. 31, 2021

Congress also passed fiscal year 2021 appropriations (for the fiscal year that started October 2020) with increases for many of the regular housing and homelessness programs administered by HUD and the USDA. The spending bill likely provides enough funding to renew existing contracts for the Housing Choice Voucher program and Project-Based Rental Assistance. Congress also increased many other HUD programs for 2021.

Click here to read the Emergency Rental Assist section of 12-20 Stimulus bill.

Editor’s note:  this legislation was signed into law on 12/27/20.

Additionally, for the federal government to weigh-in with such a heavy hand on state level issues, and is essentially interfere with contract agreements between individuals is seemingly unconstitutional on its face. Please let your Federal House and Senate Representatives, the President, Vice President and the Secretary of Health and Human Services know that this action will have devastatingly far reaching financial impacts on this country, and that there are better alternatives.

Make your voice heard by clicking on the graphic below!

by Charles Tassell, COO, National REIA

All of us at National REIA hope you and your families are well. The COVID-19 outbreak is an enormous challenge to our communities and our nation. While Congress enacted far-reaching measures in response to the crisis, more needs to be done. Congress needs to pass additional relief measures for the rental housing industry and address a number of concerns in the recently passed CARES Act!

Take action by contacting your Member of Congress and demand they protect the rental community!

Specifically, Congress needs to: 

• Create an emergency rental assistance program for those who are impacted by the COVID-19 crisis and struggling to cover housing expenses.
• Better tailor the CARES Act eviction moratorium provision and safeguard owners’ ability to effectively manage their property.
• Allow more housing providers access to mortgage forbearance and ensure fairness and flexibility in those terms.
• Provide financial assistance for property-level financial obligations such as property taxes or insurance payments and extend credit to residential/commercial mortgage servicers.
• Expand the Small Business Administration’s Paycheck Protection Program to include all rental businesses.
  

Send your message to Congress today.  There are tens of thousands of rental housing owners, operators and property management businesses in America today.  National REIA is participating in this effort as part of a broad coalition of rental housing providers representing the entire industry. If all of us make our voices heard, we can secure the relief that is desperately needed.  Please send your message now!

Click on the box below to contact your Member of Congress!

Click here to visit National REIA’s Legislative Action Center.

by Charles Tassell, COO, National REIA

The Coronavirus (Covid-19) is dominating the headlines, news, and in many cases the fears and concerns of many!  Congress has passed two bills addressing various aspects of the impact of Covid-19.  The first was an $8 billion plan to reinforce Health Care organizations and ensure funds were available for necessary logistics.  The second passed just days ago, referred to as Phase II, implemented new tax credit programs for family and medical leave for small businesses, among other things.  Phase III is under way and the long-term strength of our nation’s economy hangs in the balance as lawmakers decide how best to provide relief from coronavirus-related hardships. Thus far, Congress and the Administration have offered up several solutions to support economic prosperity and as they decide how best to proceed, it’s our duty to make the real estate investor’s case.

With issues ranging from local municipalities banning evictions to HUD placing a moratorium on single family foreclosures and evictions at properties with FHA loans or Section 8 funding, the financial impact for a property owner can range from dramatic to overwhelming.

The housing coalition, of which National REIA is a member, is encouraging their collective membership to reach out to Congress about four different, but related issues.  In order to provide the most effective relief to our residents and the industry, we are suggesting a two-pronged approach: Congress should provide direct assistance to renters as well as support for impacted property owners and operators.

First, renters displaced by Covid-19 directly or indirectly, will need direct, sustained assistance.  Congress should provide short-term financial assistance for renters, expand unemployment income for individuals who lose their job because of COVID-19 and exclude unemployment income from taxes for 2020.

Second, most rental properties are owned by individuals and small businesses that must pay mortgages, utilities, payroll, insurance and taxes. If residents cannot pay their rent because of COVID-19, then owners are at risk of not meeting their obligations.  Owners need mortgage forbearance and flexibility.  The impact of significant defaults among single and multifamily housing could serve as a catalyst for a repeat of 2008.

Third, there needs to be specific guardrails for eviction moratoria.  Knee-jerk reactions to blame property owners for requiring rent ignores the basic facts of housing cost.  We caution policymakers against blanket eviction moratoriums. However, if imposed, any federal or state moratoria on evictions should be targeted to COVID-19-related circumstances and include the following guardrails:  A maximum 45-day time frame with possible extensions; preservation of the right of housing operators to evict for other lease violations such as property damage, criminal activity or endangering other community residents; and no moratorium on previously filed proceedings unrelated to Covid-19.

Finally, there needs to be targeted tax relief for individuals and affected industries, such as: Payroll Tax Cuts, Unemployment Compensation & Net Operating Loss Carryback: allow net operating losses generated in 2020 to be carried back for three years.

With mortgage markets at risk, now is the time for Congress to act decisively and support both sides of the rental housing market: 44 million families reside there and it is the largest sector of small business in the country – it needs to be stable!

Click on the box below to take action TODAY!

Click here to visit National REIA’s Legislative Action Center.

The Corporate Tax Cut Is Paying for Itself
Faster-than-expected growth has produced a revenue windfall.

Kevin Hassett, chairman of President Trump’s Council of Economic Advisers, caused a brouhaha by claiming last week that the corporate tax cut enacted last year has “about paid for itself.” I told Bloomberg it is a little premature to say that, and critics have asserted that even a Trump economic adviser disagrees with Mr. Hassett. But I’ve looked more closely at the numbers, and it turns out he is almost entirely right.

Compare the August 2018 economic forecast from the Congressional Budget Office with the one from June 2017, before the tax cuts passed, and we discover some very good news. The much higher than expected economic growth in the wake of the Trump tax cut means that U.S. gross domestic product will be higher than expected every year over the next decade.

Even if we assume a reversion to the pre-Trump 1.9% growth path, the ratchet up in GDP this year translates into $179 billion in unexpected output this year, $465 billion next year, $654 billion in 2020, and so on. This magic of compounding yields more than $6 trillion additional GDP over the decade thanks to the faster growth already achieved.

The federal government is expected to capture a bit more than 18% of that extra output in tax revenue—about $1.1 trillion over the 10-year window. That’s well above the $400 billion to $500 billion expected revenue loss from the corporate tax-rate cut.

Corporate tax revenues are down this year, but receipts from nearly every other tax source are rising at the federal and state levels. The higher growth this year alone will give states and cities almost $20 billion in windfall revenue. No surprise then that many states are reporting “unexpected” gains in tax collections this year and will have budget surpluses.

Perversely, because the economy is bigger now than expected, the CBO has revised upward its estimated “cost” of the tax cut. Because of lower tax rates, the government will get a smaller share of the larger-than-projected economy—even though the tax cut encouraged the faster growth.

One can argue about how much of the boom is a result of the corporate tax cut. My view is that the small-business tax cuts also have helped, as have deregulation and pro-energy-production policies.

The results we are seeing are perfectly consistent with the original game plan. We always believed that creating jobs and elevating growth from 2% to 3% or 4% should be the major focus of the economic revitalization strategy. Faster growth would make every other national problem—poverty, stagnant wages, funding Social Security, even drug abuse—easier to solve. Certainly the national debt is less frightening with $6 trillion more GDP.

This is the growth dividend we all hoped for when designing the tax cut. Although it is still early in the game, so far things are going even better than we expected.

Copyright © *2018* *Committee To Unleash Prosperity*, All rights reserved.

Click here to read it in the Wall Street Journal.