As a follow up to my post of July 5th, I wanted to talk about on of the big topics and National REIA’s Mid Year Conferencence and that was the legislative piece.
Here in the Kansas City market, we don’t get too worked up about things being legislated for the real estate investor because our states seem to be follow states. The big new things get started in other states, get reviewed, changed, and reworked until they at least function before we see them here in KS and MO. But we need to stop being complacent.
These regulations that are detrimental to the real estate investor are getting passed very quickly in other states and are now hitting the national level - that means national laws that will affect you in your real estate investing are being discussed. One in particular is HR1728 and if you are any real estate investing online networking boards, you have probably seen everyone going nuts about how we need to stop this bill.
So what is this bill and what is going on. First Google “HR 1728” to get the exact page on the government web site. At that site you can read the bill all the way through, see who the sponsors of the bill were, and how it passed in the US House of Representatives on May 7th with out really anyone in the Real Estate Investor Community knowing what was going on. Spend some time on those google links to find out what is really going on.
At the heart of the matter is lending reform and while lending reform is not a bad idea, the language in the bill would basically restrict us as the investors from offering homes in a seller financing sitation. If you sell houses with any kind of owner financing, you would be greatly restricted in what you can do. This will affect every real estate investor and slow down the sales of homes. I know in our office, we often turn to owner fiancing for us to buy and often time to sell, more than one or two times a year. And the law will limit us to once every 3 years, at least as it is currently written.
Right now this bill has been sent to committee to be discussed before it will be voted on, if it gets voted on in the Senante and we as investors can do quite a bit. The lobbiest from national REIA and National REIA have recommended a grass roots effort from all the member REIAs like MAREI and their members.
So what can you do:
- Make a phone call to the Senators in your state that you voted for and let them know why this is a bad bill and why they need to do their part to make sure it does not pass, or even get to out of committee.
- Write real paper letters and use real use stamps to flood their offices.
- Send emails to them as well.
- And lastly, we need to enlist the help of the lobby from the National Association of Realtors, they will be a powerfull ally if we can get them on our side. So if you are a realtor and active in your local realtor board, let the local board know what is going on with HR 1728 . (click here for testamony from NAR on the subject)
So you might be like I was, great – I am all for contacting my senators, but who are there, how do I get in touch with them and what do I say.
So who are your senators and how can you get in touch with them:
Go to: http://www.senate.gov/general/contact_information/senators_cfm.cfm
Pick your state and they will list your Senators, their contact information, and their web sites. I would suggest visting their web sites and if they are internet people you might be able to connect with them on facebook, myspace, twitter, and more. Then as you post your thoughts on your pages online about HR 1728, they get your post in addition to your letters, calls, and emails.
Ok, what to say. You can’t really rant and rave, you want to sound professional and state your points clearly. An example might be:
Dear
I am writing to voice my concern on HR 1728 and to bring to your attention, why you need to have concerns with the bill as well.
I am a (insert your real estate profession here) in the state of _________.
Language of concern:
Section 101, 3, (E) does not include, with respect to a residential mortgage loan, a person, estate or trust that provides mortgage financing for the sale of 1 property in any 36 month period, provided that such loan:
(i) Is fully amortizing
(ii) Is with respect to a sale for which the seller determines in good faith and documents that the buyer has a reasonable ability to repay
(iii) Has a fixed rate or an adjustable rate that is adjustable after 5 or more years, subject to reasonable annual and life-time limitations on interest rate increases, and meets any other criteria the Federal banking agencies may subscribe
While there are many good benefits for the public included in this legislation there are dangerous pitfalls as relates to the consumers this bill is intended to protect. We are seeking assistance in de-coupling the individual taxpayer from this legislation that is intended for oversight of institutions.
1. On its face this legislation appears to bring into merge individual taxpayers who accept installment payments for their equity along with banking institutions, mortgage brokers and originators who sell money for a business.
2. When a seller offers to sell their own property to another and accept payment for equity, there is no loan but rather terms of a sale.
3. Banks lend money that the borrower can then spend as they see fit.
4. In the current market, if there was no seller financing, there might be no financing at all in many communities.
5. Millions Of soon to be retirees who have worked a lifetime and prepared for retirement by purchasing a few rental properties that can be sold with installment payments providing supplementary income will be negatively impacted by this legislation (being limited to only 1 transaction every 36 months.
6. Individuals and families who are going through foreclosure may only find the ability to buy a future home for their family by finding a seller amenable to accepting an installment sale
7. A homeowner who may have sold their previous home with seller terms has now lost their job and is about to fall behind on payments, however they have a little vacation cabin which in order to sell quickly has to be sold on terms to provide enough income to keep them current on their present homestead would run afoul of this legislation as written.
8. While this legislation regulates large organizations with teams of legal people (consider the contract language that is being used in the resale of foreclosed homes being sold by banks) it puts the individual taxpayer at a horrible disadvantage on either the selling side as well as the buying side thereby making homes less accessible by many people.
9. Lastly, many people in the US live in manufactured housing for which there are basically no loan products available once the manufactured home reaches a certain age, though there is still remaining useful life. How will these properties be bought or sold if not with a seller accepting installment payments?
Thank you for you consideration of this serious issue. Please feel free to contact me with any questions. If you would like to set up a meeting with local real estate professionals from _________________, please let me know and I can facilitate that for you.
Kim Tucker
816-523-4400
——————
You may want to tweek it a little so your senator does not get 3000 letters and emails that are identical. If you can’t facilitate a meeting of investors with the senator in your local area, partner with your local real estate investor group to do so, maybe even the local Realtor Board office.
And remember, the 100 or so local Real Estate Investment Groups, banded together through National REIA can form one professional voice to help change the face of Real Estate and the US economy for the better. So please do your part, find send your letters, emails, post cards, facebook posts, and twitters. Then JOIN your local REIA group and get involved. If you don’t know of a group in your area, contact me at MAREInet.com for the Kansas City market or go through www.NationalREIA.com
Filed under: Kansas City Missouri
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