Small Business Health Plans: NAR will continue to pursue passage of small business health plan legislation. Small Business health plans would allow trade associations to offer their members access to uniform, nationwide group health insurance plans regardless of where the member resides. Realty sales operations and the independent contractors who make up the realty sales force are the quintessential small businesses. With over 28% of NAR members lacking health insurance, small business health plan legislation could give realty associations a means of providing much needed health insurance coverage to members.

Insurance Regulatory Reform: Federal legislation to replace the existing state-based insurance regulatory system with federal regulations will be introduced and debated. One anticipated bill would create a set of a uniform set of federal standards to be implemented by state insurance regulators. Long championed by Rep. Richard Baker (R-LA), this approach preempts existing state laws by providing incentives to states to adopt model laws developed by the National Association of Insurance Commissioners. Legislation to create an optional federal insurance charter will also be introduced. NAR's current policy opposes efforts to replace the current state-regulated insurance system with a federal regulator. A federal regulatory regime would eliminate the ability of states to set property casualty underwriting standards and insurance rates.

Reducing Regulatory Burdens Related to Telecom Policies: NAR will continue its ongoing efforts to reduce the regulatory burden of recently enacted rules that limit the ability of real estate professionals to easily communicate with customers. NAR will continue to oppose increases to fees to access the do not call registry, seek to reduce or minimize burdens imposed by CAN-SPAM (do not e-mail) and Junk Fax Protection Act regulations.

RESPA Reform: NAR advocates three basic elements for RESPA reform: 1) Revise the Good Faith Estimate (GFE) to ensure certainty and simplicity: HUD should provide for an early, firm and clear GFE, synchronized with the HUD-1, to provide certainty and simplicity for borrowers early in and throughout the process. 2) Encourage packaging without a Section 8 exemption: NAR specifically opposes a Section 8 exemption for so called "volume based" discounts. A Section 8 exemption for volume based discounts would allow the provider of services, rather than the consumer, to pocket the savings. 3) Increase enforcement and education: HUD should continue to step up RESPA enforcement efforts. NAR began an extensive RESPA education effort more than a year ago and we are expanding that effort. Other entities should be encouraged to do so as well and HUD should play a role.

Banks in Real Estate/Competition: The change of leadership in both the House and Senate will give NAR the opportunity to work with new Chairs of the Senate Banking Committee (Sen. Christopher Dodd, D-CT) and the House Financial Services Committee (Rep. Barney Frank, D-MA). Also, Rep Spencer Bachus (R-AL), a good friend of REALTORS^®, has been elected to replace the retired Rep. Mike Oxley (R-OH) as leader of the committee Republicans. The leadership changes in Congress will present NAR's first opportunity in six years to have a voice in the House Financial Services Committee, including fair and equal debate in the Community Choice in Real Estate Act, which permanently prohibits banks from engaging in real estate brokerage and management. At the start of the 110^th Congress NAR will again secure the reintroduction of the Community Choice in Real Estate Act with a majority of bipartisan co-sponsors and work to secure early passage in both chambers. In addition, NAR will defend its position regarding industry competitiveness and oppose any congressional or regulatory efforts to show the industry as anti-competitive.

GSE Reform and Conforming Loan Limits: NAR will continue working with Congress to ensure any regulatory reform of Government Sponsored Enterprises (GSEs) - Fannie Mae, Feddie Mac and the Federal Home Loan Banks - does not unduly inhibit their housing mission. In particular, NAR will advocate increased loan limits for high cost areas. In 2006, the House passed its GSE bill but the Senate's version, which was reported out of the Banking Committee, failed to reach the floor for consideration. Further, compromise GSE reform proposals developed during the lame duck 10^th Congress were not adopted but may be the basis for new reform legislation in the 110^th Congress. NAR will work to enact provisions from each bill that will best enable the GSEs to accomplish their housing mission.

Federal Anti-Predatory Lending Legislation: While there was no movement on any of the anti-predatory lending bills introduced in the 109^th Congress, some observers anticipate that the change in House Financial Services Committee leadership might bring some momentum to enacting national subprime lending standards. NAR's anti-predatory lending policy advocates that any enacted lending standards represent a balance for continued valid uses of subprime loans for borrowers with imperfect credit while avoiding predatory (abusive) lending practices. In 2005, NAR's Board of Directors adopted policy that encourages support for legislative and regulatory proposals that take a strong stand against predatory lending. One controversial provision we anticipate to be included in any federal subprime lending legislation will be preemption of state anti-predatory lending laws. NAR will continue to discourage inappropriate preemption of state laws.

FHA Reform: NAR will seek to secure enactment of FHA reform that was not achieved in the 109^th Congress. That legislation contained six reforms to the Federal Housing Administration (FHA) single-family mortgage insurance program: 1) Increasing the FHA loan limits nationwide and especially in high cost areas; 2) Eliminating the 3% downpayment requirement; 3) Extending the loan term to 40 years; 4) Allowing FHA to charge risk-based premiums to borrowers; 5) Eliminating the cap on reverse mortgages offered by FHA and 6) Streamlining the FHA condominium loan program. Similar legislation is expected to be introduced in the 110^th Congress, although limits on zero-downpayment and caps on risk-based pricing are expected to be included.

Affordable Housing Legislation: The new House Financial Services Committee leadership has indicated that affordable housing will be high on their agenda. NAR strongly supports federal programs to encourage the development of affordable housing. NAR will work to encourage the removal of policy and program disincentives that inhibit owner participation in the development and preservation of affordable housing - both rental and owner occupied.

Manufactured Housing: Manufactured housing (also called "systematically-built housing") is important as an affordable alternative to site-built housing. Legislation was debated in the 109^th Congress, but not passed. Reforms to the program include construction and safety standards as well as reform the FHA loan program requirements related to manufactured housing. NAR has formed and informal working group to review these issues and will be engaged in the legislative debate related to manufactured housing in the 110^th Congress.

Pay as You Go (PAYGO): In 2007, the Democrat-controlled Congress intends to reinstate the budgetary discipline of the so-called Pay as You Go or PAYGO rules. Under PAYGO, and tax cut must be offset by a commensurate tax increase. The impact of PAYGO will depend on the scope and magnitude of tax law changes. If incoming Ways and Means Chairman Charlie Rangel (D-NY) addresses broad issues such as Social Security reform, the alternative minimum tax, the pending estate tax repeal (including the problems of carryover basis) or the expiring Bush tax cuts, then the needs for revenue will be gigantic. In that context, real estate provisions could be vulnerable.

Mortgage Interest Deduction: Chairman Rangel was among the first members of Congress to denounce the recommendations of the 2005 report of the President's Tax Reform Advisory Panel. The lead item in his list of criticisms was the Panel's proposal to convert the MID from a deduction to a tax credit. In an aggressive revenue environment, proposals could emerge that would curtail the MID. Of particular concern would be the deduction for second homes.

Alternative Minimum Tax (AMT): The AMT was designed to assure that high income taxpayers paid a "fair share" of taxes. Design flaws, however, have caused the AMT to fall heavily on families with income in the range of $75,000 to $200,000. Chairman Rangel has stated that among his first priorities will be to repeal the AMT. This will be an exceptionally costly proposition (some estimate that it would be as much as $1 Trillion over 10 years), particularly in the emerging PAYGO environment.

Like-Kind Exchange: For the first time since 1991, Section 1031 may be the object of tax-writers' scrutiny. Among their concerns are Tenant in Common (TIC) transactions, added reporting requirements for taxpayers who engage in exchanges, controversial IRS regulations governing qualified exchanges is essential to the real estate investment community.

The Tax Gap: Incoming Senate Finance Committee Chairman Max Baucus (D-MT) has made the so called "tax gap" his highest priority. The tax gap is the difference between the amount of tax that the government believes should be collected and the amount that is actually reported. The first efforts to close the tax gap will be to impose additional reporting requirements related to the mortgage interest deduction (particularly items related to refinancings) and local property taxes. To date, none of the ideas in the mix would have an adverse impact on REALTORS^®

Federal Natural Disaster Insurance & Policy: The NAR Board of Directors has indicated that federal natural disaster insurance is a top priority for the association. Insurance companies are canceling, refusing to renew, and refusing to write new policies for homes in several areas of the country. Moreover, in a number of states where insurance companies offer natural disaster coverage (e.g., for wind, earthquakes, etc.), the premiums and/or deductibles are extremely high (e.g., 20% deductible for earthquake coverage). NAR will continue to work with Congress with the goal of enacting federal natural disaster legislation during the 110^th Congress (2007-2008). NAR policy, as amended by the Board of Directors in New Orleans states (in part); "The goal of any federal natural disaster program should be the promotion of available and affordable insurance for residential and commercial properties in disaster-prone areas." Past attempts by Congress to address this issue have been focused on (and driven by) insurance companies. NAR will take a lead advocacy role with Congress, appropriate federal agencies, and stakeholder groups to develop and have Congress enact a federal natural disaster policy that will protect property owners in disaster-prone areas.

Eminent Domain: The Committee has been monitoring trends in eminent domain law following the U.S. Supreme Court's decision in Kelo v. City of New London last year. NAR is monitoring a number of bills in the U.S. Congress and assisting state associations to address state eminent domain bills through the Land Use Intitative. State legislatures are expected to be active on the eminent domain issue in 2007. NAR continues to work with the REALTOR^® Association of New Mexico on eminent domain reform through the Customized Smart Growth Legislation Program. NAR will assist the Hawaii and Nevada associations to draft eminent domain bills for the 2007 state legislative session.

National Flood Insurance Program Reform/Flood Map Modernization: NAR will continue to work with the Federal Emergency Management Agency (FEMA) and Congress to ensure that flood maps are updated and that the National Flood Insurance Program (NFIP) is strengthened to meet future challenges. The NFIP is scheduled for reauthorization in 2008. Of particular concern are proposals that would eliminate subsidies for "pre-FIRM" second and vacation homes (i.e., homes built before flood insurance rate maps were developed). NAR continues to support funding for FEMA to modernize the flood insurance rate maps. NAR policy opposes removing subsidies on pre-FIRM homes, stating that "non-primary residences should be given the same consideration as primary residences."

Climate Change: Climate change will be the number one environmental issue for congressional environment committees during the 110^th congress. NAR will monitor developments (hearings, legislation, etc.) and ensure that the interests of REALTORS^® are represented and protected as Congress moves forward on the issue.

Natural Disaster Insurance and Policy: This multi-faceted issue crosses several specialties within the Public Policy Issues Group. Accordingly, the divergent interests of the Land Use, Conventional Financing, Business Issues and even possibly the Federal Taxation Committees will need to be harmonized.