The start of the New Year means new laws go into effect, many of which impact buyers, sellers, homeowners, and investors in real estate.
This year, several new laws and regulations will make it easier for certain homebuyers to obtain financing, investors to obtain the insurance they need, and property owners to take advantage of income tax breaks.
Among the changes likely to have the biggest impact in our region is the increase in how much homebuyers can borrow using loans backed by the Federal Housing Administration, Freddie Mac and Fannie Mae.
Nationally, the ceiling rose from $484,350 to $510,400.
For high-cost areas, such as the Bay Area, the limit has gone up more than $40,000 – from $726,525 to $765,600.
Given that the median cost of a home in Alameda County last year was $740,000, this is a welcome change.
Limits are based on the Federal Housing Finance Agency’s Housing Price Index, which increased 5.38% in the past year.
As part of the Blue Water Navy Vietnam Veterans Act, signed into law last June, the cap on home loans for veterans issued by the Veterans Administration has been entirely eliminated.
The Department of Housing and Urban Development released new FHA policies for loans on condominiums, changes that the National Association of Realtors had been advocating for. The new rules extend FHA certifications from two years to three, and allow more condos to qualify for FHA financing, which should make it easier for first-time homebuyers and moderate-income buyers to share in the dream of homeownership.
The spending package to fund the federal government for 2020 provides temporary extensions of three important federal tax provisions. These provisions allow:
• Deductions for the cost of premiums for mortgage
• Exclusion of mortgage debt that is written off in a
• Deductions for the cost of improvements that make
buildings more energy efficient.
Congress reauthorized the National Flood Insurance Program. The NFIP’s statutory authority to operate must be renewed on a regular basis. The president signed the legislation in December and the authorization will be good through Sept. 30. Legislation to reform the program and extend it for another five years is currently awaiting action in both chambers of Congress.
Congress also reauthorized the Terrorism Risk Insurance Program for seven years. This program makes it easier to obtain financing on commercial property.
The National Association of Realtors, which lobbies on behalf of real estate consumers and the industry, has played a role on many of these issues.
Many other measures are awaiting further action, including:
The Secure and Fair Enforcement Banking (SAFE) Act would pave the way for financial institutions to service state-legal marijuana businesses without fear of federal reprisal. The House approved the bill in September. But when it went to the Senate, Sen. Michael Crapo, R-Idaho, chairman of the Banking, Housing and Urban Affairs Committee, offered his own version of cannabis banking reform, including a cap on THC potency.
The FHA Additional Credit Pilot Program Reauthorization Act, H.R. 123, would allow HUD to create a pilot program offering automatic alternative credit for those who don’t currently qualify for home loans. The House Financial Services Committee approved the bill in September and sent it to the full House.
The Equality Act would protect LGBTQ people from discrimination in housing and other settings. It passed the House by a vote of 236-173 has been sent to the Senate.
The National Association of Realtors is also working closely with HUD to develop policies protecting those who rely on the assistance of companion animals, while preventing individuals from exploiting the system.
H.R. 5377, the Restoring Tax Fairness for States and Localities Act, passed the House at the end of December and is awaiting action in the Senate. This bill, which is strongly supported by N.A.R., would provide a two-year repeal of the $10,000 cap imposed on state and local tax deductions, a cap that has had the biggest impact on high-cost states such as California.
Perhaps most importantly, the N.A.R. is working with policymakers to reform government-sponsored enterprises, including Fannie Mae and Freddie Mac, which help credit-worthy Americans secure mortgages.
If you have questions or concerns about any real estate matters, or if you plan to buy or sell property in 2020, contact your local Realtor today.
Cher Wollard is a Realtor with Berkshire Hathaway HomeServices Drysdale Properties in Livermore.