Government Affairs Director
TIGAR Pushes Key PACE Law, Tax Issues in Washington DC
In mid May, TIGAR leaders joined thousands of colleagues from across the country in Washington DC for Midyear Meetings. The annual event includes meetings with most members of the U.S. Congress and Senate to press issues critical to homeownership and organized real estate.
HR 1958, S 858: Protecting Americans from Credit Entanglements Act of 2017
This year, the REALTOR® message included seeking support for HR 1958 and S 838, both titled the “Protecting Americans from Credit Entanglements Act of 2017. The companion bills are designed to provide protections for consumers utilizing financing through Property Assessed Clean Energy (PACE).
PACE, better known through brand names such as HERO, YGRENE and CaliforniaFIRST, was designed to allow property owners to borrow funds for energy and water-efficient home renovations and repay those funds through tax assessments. The fact that the loans are created as new property taxes give them priority over mortgages, which triggered problems with federal lending institutions wary of piling new risk onto a mortgage system the needed a bailout less than a decade ago.
Beyond the complex institutional issues, PACE companies have come under steady criticism for evading disclosure, regulation and consumer protection requirements that apply to more traditional forms of financing. Homeowners, some of which have joined a series of recently initiated class action lawsuits, have presented many cases in which they were misled about the nature of PACE loans by salespeople and contractors.
TIGAR was among the first organizations in the nation to recognize that lack of consumer protection laws and regulation were chief problems opening the door to deceptive practices by individuals pitching PACE loans.
HR 1958 fills in a significant gap in the issue. The bill would, among other things, require PACE to meet Truth in Lending requirements and fall under the oversight of the same regulators who keep tabs on virtually all other forms of consumer financing.
TIGAR urged local members of Congress, including Rep. Ken Calvert and Rep. Mark Takano, to support the bipartisan bill as it winds its way through the legislative process.
HR 916: Risk Management and Homeownerhip Stability Act
REALTORS® also discussed a bill designed to ban future attempts to create new, disguised taxes through federally backed mortgages. HR 916 was created to specifically ban the use of “guarantee fees” as a revenue source for unrelated government spending.
Guarantee fees, or “g-fees”, were implemented to bolster reserves for programs that support most conventional home loans in the nation following the financial crisis. As mortgage giants Fannie Mae and Freddie Mac returned to fiscal health, Congress has entertained proposals to use g-fees to pay for other priorities, including transportation.
This amounts to interest rate surcharges on homeowners. REALTORS® have helped to defeat these proposals so far. If approved, HR 916 would ban the practice going forward.
Tax Reform and the Mortgage Interest Deduction
Recent tax reform proposals have included provisions that would largely render the mortgage interest deduction largely unusable for middle-class homeowners. While the MID would technically remain in place, other provisions would mean that it would have very little benefit except for those who can afford to pay among the highest housing costs in the country.
This is due to a plan that would significantly increase the standard deduction for all taxpayers. While taxes wouldn’t necessarily rise for many of these homeowners – at least those in low tax states (more on that soon) – it would mean that there would be no tax advantages between being a homeowner or a renter in most cases.
In California, the tax reform package would mean significant tax increases. C.A.R. estimates that the average California homeowner would pay more than $2,500 in additional taxes. This is due largely to a provision that would eliminate the ability to write off your state and local taxes, including property taxes. In a high tax state like California, this has a substantial impact on your bottom line tax bill.
REALTORS® urged lawmakers to seek tax reform that does not undercut the financial incentives of homeownership or lead to thousands in new taxes.
Support our Mission, Support the REALTOR Party
The most important thing each member can do to support our government affairs work is to stay informed and help spread the word on important issues to your colleagues, clients, friends and neighbors. Nothing is more important than your time, including the time you devote to making your voice heard at the ballot box each election day.
However, our work is also backed by the generous support of members who understand the importance of our advocacy mission.
In 2017, we hope that all TIGAR members will consider making a voluntary contribution of $49 or more with their membership renewal to support the REALTOR® Party and our efforts to protect and promote the American Dream of Homeownership.
You can make a contribution as you renew your membership – or anytime by going to www.car.org/governmentaffairs/raf.
Questions? Comments? You can reach Paul Herrera, Government Affairs Director, at firstname.lastname@example.org or on his cell phone at 951-500-1222.