A Message from the President: Making Good Laws

 Mike Theo  |    May 07, 2015

It’s often said that if you like sausage and laws, you shouldn’t see how either is made. It’s an apt comparison when you consider producing a good product in either case requires a deep commitment of time, effort and knowledge on the part of the participants. But when done right, the final outcome is always worth the effort.

Making good laws involves spending time with lawmakers explaining the impact of proposed legislation on property owners and our industry, which is exactly what occurred in Washington, D.C., recently when a group of WRA leaders braced a late-season Wisconsin/Chicago snowstorm to make a wintery trek to meet with our congressional delegation and their staff to discuss several key pending issues. The trip was a regional effort by REALTOR¬ģ leaders from the Great Lakes states of Wisconsin, Illinois, Indiana, Michigan, Minnesota and Ohio, who all took to Capitol Hill to discuss real estate-related issues before Congress this session. A much larger contingent of REALTORS¬ģ from across Wisconsin and across the nation will gather in D.C. in mid-May to continue the dialogue.

I often use these pages to talk about the importance of member engagement and how individual REALTORS¬ģ can work together to make a real difference in the lives of homeowners and property owners across Wisconsin and across America. That‚Äôs exactly what these industry leaders did. We traveled from office to office across the Capitol grounds and through the labyrinth of underground tunnels, from the House of Representatives‚Äô offices on the south side of Capitol Hill to the Senate offices on the north side, passing thousands of school kids, tourists, congressional staffers, lobbyists, members of the media and members of Congress along the way. And for two days, we discussed the potential impact ‚ÄĒ both good and bad ‚ÄĒ of many pending issues awaiting congressional action.¬†

It‚Äôs uncertain at this time which of our key issues will actually be addressed during this session of Congress. However, it appears unlikely that mega-issues like tax reform ‚ÄĒ which includes issues such as limitations on the mortgage interest deduction or elimination of the property tax deduction in exchange for lower tax rates ‚ÄĒ and the possible privatization of the mortgage financing giants Fannie Mae and Freddie Mac, will be taken up anytime soon. With a Congress now controlled by Republicans and a White House and administration controlled by Democrats, disagreement and inaction on many major issues seems the more likely outcome.

However, several other important bills could find bipartisan agreement between the legislative and executive branches this session, and it‚Äôs on those issues that we focused. Two such issues involve mortgage lending rules that were intended to address the ‚Äúeasy money‚ÄĚ policies that contributed to the Great Recession and housing market meltdown. These rules, however, have become too restrictive and now create unnecessary barriers to homeownership.

The first bill, the bipartisan Mortgage Choice Act (HR 685), would change the definition of a ‚Äúqualified mortgage‚ÄĚ to allow consumers more choices, and potentially lower costs, in choosing mortgage and settlement services. By changing the definition of what constitutes a safe, ‚Äúqualified mortgage,‚ÄĚ Wisconsin consumers, for example, will not be penalized for escrowing funds to pay for our high property taxes like they are under the current rules. Moreover, potential homeowners will gain the ability to shop various sources for title and homeowners insurance, and thus more qualified homeowners will receive more mortgage loans. Wisconsin congressmen Jim Sensenbrenner, Sean Duffy and Reid Ribble have already co-sponsored this important legislation, with Rep. Duffy voting for the bill in committee a few days after our D.C. meetings. Unfortunately, Rep. Gwen Moore, representing Wisconsin‚Äôs 4th district, voted against the bill in that same committee.

Another bipartisan bill with hope of passage this session is the Mortgage Forgiveness Tax Relief Act of 2015 (HR 1002). This legislation would extend for two more years a tax relief provision that saves distressed families from having to pay taxes on money they have already lost (‚Äúphantom income‚ÄĚ) through a foreclosure, a short sale, or a restructuring of a current mortgage. This bill won‚Äôt restore a homeowner‚Äôs loss or repair their credit, but it would prevent a fundamental unfairness in the lives of those homeowners facing truly unfortunate circumstances. Congress has passed and extended this law in the past, but it is due to sunset at the end of 2016.

We also discussed business issues such as legislation to prevent the threat of frivolous lawsuits from patent attorneys, or ‚Äúpatent trolls,‚ÄĚ who make a living sending vague and deceptive letters to brokers alleging technology patent infringements and demanding unjustified financial payments. Brokers across the country are being forced to spend thousands of dollars defending against such frivolous claims, or worse, paying thousands of dollars to the patent trolls to make them go away.

As a busy REALTOR¬ģ, it‚Äôs often easy to assume association leaders and/or staff are on top of these issues and that you need not get directly or personally involved. That‚Äôs not true. Making good laws requires a commitment of time, effort and knowledge, not by a few but by many.

Every REALTOR¬ģ benefits from passing good laws and defeating bad ones, so every REALTOR¬ģ should help elect candidates who support our issues, and every REALTOR¬ģ should respond to Calls to Action and communicate with members of Congress or state legislators on key issues at key points in the lawmaking process. Watch for these opportunities over the next several months and take action. Making good laws requires it.

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