NAR: Banking Reform May Boost Real Estate

March 13, 2018

The National Association of REALTORS® has expressed support for the Economic Growth, Regulatory Relief and Consumer Protection Act, S. 2155, a banking reform bill the Senate plans to take up this week. The bill could open up more lending to households aspiring to become homeowners, NAR says.  

The bill balances consumer protections with changes that could make home lending more readily available to people who need it, including renters struggling to acquire a mortgage because they haven’t yet amassed a conventional credit history. The bill includes a requirement that Fannie Mae and Freddie Mac, the country’s largest source of home mortgage funds, accept rent and utility payment history as part of loan applicants’ credit scores.  

The bill also reduces some regulatory burdens on credit unions and smaller community banks, which are often the main source of home mortgage financing in rural areas. 

“We believe this bill balances financial regulation with consumer protections,” NAR President Elizabeth Mendenhall said in a statement Tuesday. “It contains some favorable provisions for the housing industry, including expanding Fannie Mae and Freddie Mac’s use of alternative credit scoring models and easing credit through reduced regulatory burdens on smaller community banks and credit unions.” 

The bill would also hold Property Assessed Clean Energy—or PACE—loans more accountable and improve access to manufactured housing. Homeowners use PACE loans to make their property energy-efficient, including by installing a solar panel system. But the loans are considered problematic because they typically are put in a first-lien position, which can make them incompatible with mortgage loans. 

The House has already passed its version of banking reform, known as The Financial Choice Act. Should the Senate pass its version, the bills will have to be reconciled. 

“REALTORS® believe that balanced financial regulation and appropriate consumer protection will result in a more vibrant housing market and overall economy,” Mendenhall said. “NAR urges Congress and the [Trump] administration to enact S. 2155 into law.”

—Robert Freedman, REALTOR® Magazine