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General News
Municipal primary election is on Tuesday, May 21

Bucks County
Haycock opposes state code-enforcement proposal

Chester County
Route 352 and King Road meeting set for June 5

Delaware County
Middletown to have open space referendum

Montgomery County
Pottstown school board considers music cuts to balance budget

Philadelphia County
City officials announce down payment assistance program for first-time home buyers
 

 

Blog

Friday, January 10, 2014

‘This Doesn’t Make Sense’ Campaign Leads to Increased Awareness of Municipal Inspection Issues

point of sale
Posted by: Jamie Ridge on Friday, January 10, 2014 at 12:00:00 am Comments (0)

By Jamie Ridge, president/ceo, Suburban REALTORS Alliance
Here at the Suburban REALTORS Alliance (SRA) we’ve noticed a significant increase in REALTOR-awareness regarding municipal “point-of-sale” inspection requirements since the Marchlaunch of our “This Doesn’t Make Sense” campaign and website.  This increased awareness has led to some very questionable municipal point-of-sale practices being brought to light by our members, and successfully challenged by the SRA.

In Chester County we learned that two boroughs – Phoenixville and Downingtown – were refusing to issue temporary use and occupancy certificates for required repairs that a buyer had agreed to complete after a sale. In both instances, the boroughs were in violation of the Pennsylvania Municipal Code and Ordinance Compliance Act (MCOCA), which states that: “a municipality shall not refuse to issue a use and occupancy certificate … on the basis of a substantial violation or require the correction of a substantial violation as a condition to issuing a use and occupancy certificate … unless the substantial violation renders the property unfit for habitation.”

After SRA staff reached out to each borough, they began issuing temporary certificates that allow real estate transactions to move forward.

In Delaware County, where the vast majority of municipalities have some form of point-of-sale inspection requirement, increased member input has allowed us to address Ridley Township’s refusal to issue temporary use and occupancy certificates for sidewalk repairs. Once again, township staff seemed unaware of the state law that requires the issuance of temporary certificates unless a property is being condemned.

Perhaps our favorite “success” story this year involves Suburban West member Nick Vandekar, who is also a member of the SRA’s board of directors. Nick was in the process of closing a deal in East Norriton Township in Montgomery County when their codes department mentioned a required sewer lateral repair and a hefty escrow requirement to allow a temporary U & O certificate.

Being quick on his feet, Nick was able to encourage a conversation between East Norriton staff and SRA staff.  After being provided with an explanation of the enforcement tools that the Code and Ordinance Compliance Act provides to townships when home owners don’t comply with the terms of a temporary U & O permit, the township dropped their escrow requirement for Nick’s transaction, and future transactions. We think that is teamwork at its best!

The ultimate goal of the ‘This Doesn’t Make Sense’ campaign is to not only raise our members’ awareness of these issues, but also public awareness.  By sharing the campaign website with your neighbors and clients, you can help us accomplish this goal. Once on the website – www.thisdoesntmakesense.org – guests can find information about the point-of-sale requirements in their municipality, and even send a pre-written message to their elected official about why these local real estate regulations do more harm than good.

When more of our local elected officials begin receiving these messages from residents of their townships and boroughs, perhaps they’ll think twice about introducing any further point-of-sale requirements. Even better, maybe they will strongly consider repealing inspection ordinances that are already in place.

After all, at a time when the economy is still recovering and home sales are just beginning to perk up, the last thing we need is more barriers to real estate transactions.

Friday, August 16, 2013

Secondary market reform is critical, and the details matter

Fannie Mae; Freddie Mac; Secondary Mortgage Market
Posted by: Jamie Ridge on Friday, August 16, 2013 at 12:00:00 am Comments (0)

Based on a recent statement by President Obama and activity in Congress, it appears that Washington may finally be inching toward reforming secondary mortgage giants Fannie Mae and Freddie Mac. While very few elected officials and market experts dispute the need for reform, opinions of how it should be accomplished vary greatly.  For future home owners and the REALTORS® who will serve their home buying and selling needs, the details of the final reform plan will matter a great deal.

To date, lawmakers in Washington appear to be aligning themselves with two different reform camps. The first, led by the president and a bipartisan group of moderate legislators, favors reforms that would significantly restructure the secondary mortgage market, while maintaining a critical role for the federal government. The second, led by conservatives in the House and Senate, would end the government’s long-time role as a guarantor in the secondary market altogether, leaving serious doubt that market liquidity would be maintained by private market entities during tough economic times.

The National Association of REALTORS® (NAR) has stated its opposition to the latter reform plan in terms that are loud and clear. According to 2013 NAR President Gary Thomas, “NAR supports a comprehensive approach to restructuring the secondary mortgage market, including winding down Fannie Mae and Freddie Mac, but believes any new secondary market entity replacing the enterprises must have an explicit government guarantee.”

Without that guarantee, Thomas correctly argues, the nation’s $10 trillion mortgage market could lose a functioning secondary market, leading to its ultimate collapse. The impact of that collapse would result in a dramatic destruction of wealth for middle class Americans that would see the value of their homes fall significantly. The lack of a functioning secondary market would also lead to mortgage rates that are unnecessarily high and unaffordable for many Americans.

While NAR does argue that a federal guarantee is a necessary ingredient of any successful reform effort, it also warns against a restoration of the old, broken system. That system, unfortunately, resulted in the creation of two entities – Fannie Mae and Freddie Mac – whose shareholders pushed private profits without demonstrating any concern for taxpayer losses.
Rather than an attempt to “fix” Fannie and Freddie, NAR is recommending that the president and Congress work toward the creation of new entities that are government-chartered, non-shareholder owned, and subject to strong oversight that “ensures they can accomplish their mission and protect the taxpayer.”

Along with the top priorities of protecting taxpayers and ensuring mortgage liquidity at all times, NAR is advocating for the following:

  • The new entities should guarantee or insure a wide range of safe, reliable mortgage products, to include 15 and 30-year fixed rate loans, traditional ARMs, and other products for which homeowners have “demonstrated a strong ability to repay.”
  • The establishment of “sound and sensible” underwriting standards for loans purchased and securitized in mortgage-backed securities (MBS), loans purchased for portfolio, and MBS purchases.
  • The entities should remain politically independent, and should not be allowed to lobby Congress or the administration. Their CEO’s should have fixed terms, so they cannot be fired without cause.
  • The entities should be self-funded instead of receiving ongoing government appropriations.

The American economy and individual home owners have benefitted greatly over the past 70 years from the stable source of mortgage funding provided through the government sponsored enterprises, Fannie Mae and Freddie Mac. Let’s hope that their shocking failures, ultimately brought on by a harsh recession and too much focus on shareholder profit over taxpayer protection, has created enough urgency in Washington to introduce meaningful reforms that will help us avoid another such calamity.

The result of such a reform effort, if it can be accomplished by a Congress and president that haven’t proven their ability to accomplish much lately, would be a new and improved secondary mortgage market that could help sustain home ownership and the national economy into the distant future.

Jamie Ridge is president/CEO of the Suburban REALTORS Alliance

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