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GA Blog: National issues

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3.20.19 National News: Federal Reserve Signals It Won't Raise Interest Rates At All This Year

At the conclusion of its March meeting, the Federal Reserve announced it is not raising the federal funds rate. In fact, the Fed is signaling it is done with the idea of rate hikes for the rest of 2019.

The Federal Open Market Committee’s statement indicated that the Fed is taking a cautious tone with the rates as it monitors the rate of inflation and other global economic conditions and developments.

“In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes,” The FOMC statement said.

The committee said it will maintain its target range for the federal funds rate at 2.25-2.5%. 

Read more about interest rates at HousingWire.

Federal Reserve

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3.18.19 National News: NAR Cheers Bill to Extend Fair Housing Protections to the LGBTQ Community

LGBTQ

From NAR's REALTOR® Magazine

The National Association of REALTORS® supports legislation introduced in both chambers of Congress Wednesday to extend protections under the Fair Housing Act to the LGBT community. “REALTORS® have worked for [nearly] a decade to ensure the American dream of homeownership is not unfairly denied to those in the LGBT community,” NAR President John Smaby said in a statement.

NAR amended its Code of Ethics to prohibit discrimination based on sexual orientation in 2011 and gender identity in 2013. Last year, the association supported the Fair and Equal Housing Act, which would make those protections part of the Fair Housing Act. However, Congress adjourned before the bill could come up for a vote.

The legislation introduced Wednesday, called the Equality Act, includes the NAR-supported housing protections of the Fair and Equal Housing Act and also extends LGBT protections in the areas of employment, public accommodations, credit markets, and voting. Shannon McGahn, NAR senior vice president for government affairs, will appear at a policy summit hosted by the National Association of Gay and Lesbian Real Estate Professionals next month in Washington, D.C., to talk about next steps for the legislation.

Read more about "What Everyone Should Know About Equal Opportunity Housing"

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1.23.19 National News: Treasury, IRS Give Big Win to Real Estate Professionals in Qualified Business Income Rule

Late last week, the Treasury Department and the Internal Revenue Service issued final regulations regarding the new 20 percent deduction on qualified business income. As Americans begin preparations for the 2018 tax filing season, real estate professionals have been uncertain about the true impact of the 2017 Tax Cuts and Jobs Act on their respective businesses. Friday’s ruling from Treasury and the IRS, however, signaled a significant victory for the real estate industry and for many of the National Association of Realtors®’ 1.3 million members.

A central component of the new tax law is a reduction of the corporate tax rate – from 35 to 21 percent. However, since nine out of ten American businesses are structured as pass-through entities rather than corporations, the Section 199A provision provides critical tax deductions for small businesses and self-employed independent contractors, which is how many real estate professionals are classified.

Within the 247-page rule issued last Friday, three major provisions for real estate professionals stood out as critical victories for members of the National Association of Realtors®.

Most importantly, the regulation clarifies that all real estate agents and brokers who are not employees but operate as sole proprietors or owners of partnerships, S corporations or limited liability companies are eligible for the new deduction, which can be as high as 20 percent. This includes those whose income exceeds the threshold of $157,500 for single filers and $315,000 for those filing a joint return.

Second, the rule simplifies the process that owners of rental real estate property must follow to claim the new deduction. As written in the Tax Cuts and Jobs Act, only income that is from a “trade or business” qualifies for the 20 percent write-off. However, because this distinction was not clearly defined by Congress when crafting the law, various court rulings and prior IRS guidance have caused confusion among tax professionals in determining which rental properties were merely investments and which could accurately be considered a business enterprise.

NAR strongly urged Treasury and the IRS to simplify the rules in order to give millions of rental real estate owners certainty surrounding their ability to qualify for this new deduction. Friday’s final regulations included a bright-line safe harbor test requiring at least 250 hours per year spent on maintaining and repairing property, collecting rent, paying expenses and conducting other typical landlord activities.

Finally, within the proposed regulation released last August, those who had exchanged one parcel of real estate under Section 1031 for another parcel were unfairly denied deduction eligibility. However, NAR and multiple additional trade groups concerned with commercial real estate were vocal in highlighting this shortcoming. In a positive resolution to the situation, Treasury and the IRS recognized the initial ruling was misguided and corrected the policy in Friday’s final guidance.

More information on the final regulations for the 20 percent deduction is available here.

IRS

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1.21.19 National News: Annual BU Survey of Mayors Nationwide Finds Affordable Housing is Top Issue

As home values and rents continue climbing nationwide, affordable housing is the number-one concern for big city mayors — whether Republican or Democratic — and the cost of housing is the sole issue that many mayors from both parties consider a significant barrier to social mobility, according to a new study from the Boston University Initiative on Cities.

Almost two-thirds of mayors consider affordable housing an integral part of city infrastructure, though only 56 percent favor relaxing zoning rules to encourage greater density in established, popular neighborhoods, according to BU’s 2018 Menino Survey of Mayors.

“By and large, I think mayors are acknowledging the challenges in reshaping their cities’ housing,” said Katherine Levine Einstein, a BU assistant professor of political science and co-author of the study, which is named for former longtime Boston mayor Thomas M. Menino.

Einstein added, though, that the mayors’ reluctance to increase density doesn’t seem to “match what they’ve said about how big a priority this is for them.”

More on the survey results from The Boston Globe.

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1.14.19 National News: Shutdown Update on Federal Homeownership Programs

Below is a summary of the impact of the Federal Government Shutdown on Federal Homeownership Programs as of this week: 

IRS Begins Processing Tax Return Transcripts Again to Allow for Loan Processing

Due to the government shutdown, the IRS had closed down and suspended the processing of all forms, including requests for tax return transcripts (Form 4506T) as of December 22, 2018. While the FHA and VA do not require these transcripts, they are required by many lenders for many kinds of loans, including FHA and VA, which had delayed many loans from being processed. Here is what IRS announced:

"While the IRS remains closed during the partial government shutdown, on January 7, 2019, it will begin processing requests for transcript information made through Income Verification Express Service (IVES) program. Because it will take time to ramp this service up to normal operating status, it may initially take a few days to process these requests, as employees are brought back to work and begin to process requests backlogged since the funding lapse began on December 22, 2018. " 

HUD Press Release - Impact of Shutdown on FHA Borrowers

HUD issued a press release last week reminding servicers to offer special forbearance options to borrowers affected by the shutdown along with a letter encouraging lenders "to waive late fees for affected borrowers and to suspend credit reporting on borrowers nationwide who have been affected by the shutdown." 

Link to FHA Letter to Moretgagees & Lenders Re: Shutdown:  https://www.hud.gov/sites/dfiles/Main/documents/FHA_Letter_to_Mortgagees_Lenders.pdf

Veterans Administration (VA) Circulars on the Shutdown

VA has issued two new circulars concerning the shutdown: 

Circular 26-19-1 - Servicing

VA encourages servicers "to extend forbearance to borrowers in distress as a result of Federal Government shutdown".  

Link: https://www.benefits.va.gov/homeloans/documents/circulars/26_19_1.pdf

Circular 26-19-2 - Origination

VA describes measures regarding loan origination as a result of the shutdown.  As long as the loan is current and you have been able to obtain all required documentation (pay-stubs, W-2s, VOEs, etc.) prior to guaranty, the loan remains eligible for guaranty.

Link: https://www.benefits.va.gov/homeloans/documents/circulars/26_19_2.pdf

Click here for more information on how the Federal Shutdown continues to impact REALTORS®. 

Shutdown

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1.11.19 National News: Federal Government Shutdown Making Some Buyers Nervous

For three weeks, a partial government shutdown has left thousands of federal workers without a paycheck. This week, President Donald Trump was quoted as saying in a meeting with top Democrats that the shutdown could stretch on for “months or even years” as he and Congress continue to stall on a spending bill and funding over a border wall.

And as each day the partial shutdown goes on, you could find it costing you more and more in sales. Roughly one-tenth of more than 2,000 respondents to a National Association of REALTORS® survey conducted Monday reported an impact on potential clients. Another one-tenth reported an impact on current clients. Among REALTORS® who reported a business impact since the shutdown began three weeks ago, 25 percent said that they had a buyer who decided to hold off on purchasing a home even though they were not government employees.

More on the government shutdown is available here including a video from NAR Economist NAR Chief Economist Lawrence Yun on how the partial shutdown of the federal government is hurting real estate markets.

Shutdown

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