Northwest Montana Realtor

H.R. 4173: Dodd-Frank Wall Street Reform and Consumer Protection Act

2010-08-04T12:01:00.000-06:00

H.R. 4173: Dodd-Frank Wall Street Reform and Consumer Protection Act

Since the beginning of the 111th Congress in early 2009, NAR has been working closely with the Members and staffs of the House Financial Services Committee and the Senate Banking Committee to ensure that Wall Street Reform legislation did not adversely affect Realtors. Below is a summary of the issues of particular interest to REALTORS®.

Provisions of Interest to REALTORS®

Download full PDF > (PDF: 214K)
Watch: Financial Services Reform: Will It Impact REALTORS®? >

CONSUMER FINANCIAL PROTECTION BUREAU (CFPB)

NAR secured an exemption for real estate professionals performing traditional real estate activities from the jurisdiction of the Consumer Financial Protection Bureau except to the extent they are governed by existing laws such as the Real Estate Settlement Procedures Act (RESPA) that will now come under the bureau’s purview.

MORTGAGES

Risk Retention – Qualified Mortgage Exemption

At NAR’s request, Congress included a qualified mortgage exemption from potentially costly--for both lenders and consumers--risk retention requirements.
Congress gave the regulator flexibility in determining what a qualified mortgage is, however the mortgage must meet the standards laid out in the predatory lending portion of the bill. These standards include underwriting based upon full documentation, ability to repay, and limitations on fees among other things.
NAR will work with the regulators to ensure that the regulatory framework maximizes access to affordable mortgages for consumers.

Qualified Mortgage Safe Harbor

A safe harbor from the “ability to repay” requirement was created, which limits the total points and fees collected by lenders and their affiliates to 3. This provision was included over NAR’s strenuous and repeated objection.
However, we believe there is some regulatory flexibility in this provision including flexibility for smaller loan amounts with “smaller” being left undefined.
NAR will work diligently to ensure this provision is interpreted in a manner consistent with the best interests of real estate professionals, their lender partners, and their clients and customers.

Seller Financing

NAR was successful in getting the legislation amended to allow an individual to conduct three seller financed transactions in a 12 month period without being subject to the complicated mortgage rules in the new Act. NAR has asked HUD to adopt a similar approach to exempt seller financing, up to three transactions in a 12 month period, from loan originator licensing requirements under the S.A.F.E. Act.

COMMERCIAL

Accounting Rules Study

The Act requires the Federal Reserve to study the combined effects of the risk retention requirements with recent new accounting rules put in place by the Financial Accounting Standards Board (FASB) that represent dramatic changes in securitization accounting (FAS 166 and 167).

Accredited Investor

The Act gives the SEC the authority to review the current standard and update it to reflect inflation and the characteristics of the modern economy. The bill excludes the investor’s primary residence from $1 million net worth standard. The SEC review may raise the threshold for defining a customer as an accredited investor, forcing companies that sell securities to them to register the products with the SEC.

Commercial End Users

The Act appears to allow commercial end users – including owners, operators and developers of commercial real estate – to continue to engage in swaps used to manage commercial risk without being subjected to central clearing. However, regulators would now be authorized to impose initial and variation margins on these un-cleared trades.

Modified Crapo Amendment

As for provisions governing securitization, the final language retained --with minor modifications-- an amendment by Senator Mike Crapo (R-ID), allowing “third party” (B-piece) investors to satisfy new risk retention requirements for commercial mortgage-backed securities (CMBS). This language also directs bank regulators to consider exemptions or different risk-retention requirements for CMBS.

Securitization

The Act requires banks that package loans into CMBS to keep 5% of the credit risk on their balance sheets. Directs regulators to exempt low-risk mortgages that meet certain minimum standards. (See “Risk Retention – Qualified Mortgage Exemption” above.)

Swaps

Financial firms, a class that likely includes mortgage real estate investment trusts (REITS), will be required to centrally clear their swap transactions and meet margin requirements.

APPRAISAL

Appraisers are to be compensated at a rate that is reasonable and customary for appraisal services in the market area of the property being appraised.
Home Valuation Code of Conduct (HVCC) sunsets when Consumer Financial Protection Bureau issues interim final regulations implementing the appraisal provisions of the Dodd-Frank Act.
A subprime mortgage requires a written appraisal of the property to be mortgaged.
           • The applicant is entitled to one free copy of the appraisal.
           • The applicant must be notified that the appraisal is prepared for the sole use of the
             creditor.
It is unlawful to coerce, extort, collude, instruct, induce, bribe, or intimidate an appraiser in an attempt to influence the independent judgment of the appraiser.
           • An appraiser may consider additional, appropriate property information including
            additional comparable sales to support an appraisal, provide further detail, or
           correct errors.
Appraisal Qualifications Board (AQB) Qualification Criteria for licensed and trainee appraisers becomes mandatory for the states (currently voluntary).
The Federal Housing Finance Agency (FHFA) and the new Consumer Financial Protection Bureau become members of ASC. The Office of Thrift Supervision is no longer a member of ASC because it is being merged into the Office of the Comptroller of the Currency.

1031 LIKE KIND EXCHANGE INTERMEDIARIES

NAR supported language requiring the SEC to conduct a study on how best to regulate 1031 Like Kind Exchange Intermediaries to end the fraudulent practices that have been taking place.

Flathead Basin as a closed Basin

2010-05-03T12:26:00.000-06:00

Last week at the Water Compact Commission meeting members of the Commission talked about the basin being over appropriated. What does that mean for land owners, cities, towns, private water districts and the County?

There are currently several closed basins in the State of Montana. But what does it really mean. if the basin is closed it means that there is no more water left for new consumption. Therefore you will have to buy someone's existing water right within the area in which you want to use the water. You will have to then get a change of use if you can find a water right that will work, or you will not be able to do what you want with your property.

My assessment is that it will slow growth and devastate Northwest Montana's economy.

What say you or do you want to have the Flathead Basin Closed? This will also enhance the position of the Tribe and their potential position for future water rights and their control over the water in the Flathead Basin!

Who Opposes CI-105 (prohibiting a realty transfer tax)?

2010-04-15T10:37:00.001-06:00

I've been asked many times who would oppose the initiative prohibiting State and Local Government from creating a realty transfer tax (sales tax on homes, business and real property)? Well the answer is the teachers union MEA-MFT. The following is a statement from president of MEA-MFT.

"Two weeks ago, our representative assembly directed MEA-MFT to oppose CI-105, a proposed ballot issue that would constitutionally prohibit a realty transfer tax - a tax that does not now exist.
Whereas there is no realty transfer tax in Montana, there could be, if and when.
And if there were, it could help our state's bottom line a lot.
A 1% realty transfer tax could raise as much as $28m annually! A 4% realty transfer tax could raise as much as $112m annually.
And CI-105 could arguably preclude local impact fees that local governments and public schools might need to ameliorate the costs of new subdivisions and student growth.

It is fundamentally wrong to embed in our constitution an absolute prohibition on creating a potential new revenue stream to fund quality public programs and services. Consider how this idea or any other absolute prohibition against any other tax works as the state contemplates a 4% cut in state personnel services or a freeze or reduction in state funding of k-12 and the university system.

CI-105 is at root an anti-government proposition.

For several weeks now, CI-105 proponents have been paying folks to gather signatures to qualify CI-105 for the November ballot. Regrettably, too many Montana citizens sign petitions without reading carefully or thinking through the short and long term ramifications.

I urge one and all not to sign and to spread the word to others."Eric Feaver, president MEA-MFT.

This statement has been sent to all the members of Montana Education Association-Montana Federation of Teachers as well as other labor unions that have ties to Eric Feaver.

The first issue that needs to be discussed is the premise that CI-105 "could arguably preclude local impact fees"...... This is completely wrong.
The initiative would not allow a tax on the transfer or exchange of real property, it has nothing to do with impact fees. Impact fees are for services and the cost of services provided to the property owner, such roads, water, sewer, fire etc.
These types of assumptions are just scare tactics used over the centuries to push people into voting a certain way.

Is CI-105 "at root in anti-government proposition"?

You have to decide that, i think that it is a ridiculous statement. Just because you are for limiting what government can tax is not a anti-government position.

The following is a list of the news media coverage that has recently appeared regarding CI-105

KXLH-Helena - http://www.kxlh.com/news/montana-group-aims-to-prevent-new-property-tax/. Click on the camera icon to the right of the headline to watch the video.

KBZK-Bozeman - http://www.kbzk.com/news/group-working-to-prevent-new-mt-property-tax/

Bozeman Daily Chronicle - http://bozemandailychronicle.com/news/article_c43bc2cc-4770-11df-b583-001cc4c03286.html

KPAX Missoula - http://www.kpax.com/news/anti-taxation-initiative-proposed-for-mt-ballot/

Just to make it clear the following is a list of Realty Transfer Tax Proposed in the Montana Legislature since 2001:

Overview of RETT Legislative Proposals Since 2001
(An LC designation denotes a bill request)

2009 Legislature
LC 1313: Implement realty transfer tax - Sen. John Esp (R)

2007 Legislature
HB 552: Real estate transfer tax - Rep. Ron Erickson (D)
1% on value over $500,000 to go to Housing trust fund
Tabled in House Taxation Committee

HB 799: Impose real property transfer tax - Rep. Ken Peterson (R)
1% on value over $500,000 to go to One-third to University system and remainder to K-12
Tabled in House Taxation Committee

SB464: Property tax relief - local option realty transfer tax - Sen. Dan Weinberg (D)
Authorizes local governments to adopt a 1% RETT; for properties valued under
$1 million, the local government must provide at least a 50% value exemption; for'
properties valued over $1 million, the local government must exempt $500,000
from taxation; local governments could set the $1 million threshold higher but not
lower 10% of revenues to reduce local property tax levies; bill did not require dedication
for remainder

LC 0656: Statewide realty transfer tax - Requester: Sen. Jim Elliott (D)

LC 1141: Constitutional limit on real estate transfer taxes - Requester: Sen. John
Esp (R)

2005 Legislature

S8510: Allow county property tax relief through local option realty transfer tax Sen.
John Esp (R)
1% on value over $300,000 with various exemptions, including family transfers;
could be adopted by citizen initiative or a majority vote of the county commission
Revenue must be used to offset property tax revenues for county purposes, but
not taxes for school or education purposes, that are funded by countywide
property tax levies.
Passed in Senate Taxation Committee; Died on Senate Floor

LC 2245: County property transfer tax - Requester: Rep. Gary Maclaren (R)

2003 Legislature

SB301: Real estate transfer tax - Sen. Ken Toole (0)
1% with no value exemption
20% to Montana agricultural heritage program; 60% to the affordable housing
revolving loan account; and 20% to the state general fund
Indefinitely postponed in Senate Taxation Committee

SB475: Realty transfer tax over $75K on residences and ag land - income tax credit
- Sen. John Esp (R)
1% on value over $75,000; allows an individual income tax and corporation
license tax credit on the first $425,000 of taxable value
State general fund
Passed in Senate Taxation Committee; Passed Senate Floor; Tabled in House
Taxation Committee

LC 1278: Real estate transaction tax - Requester: Rep. Tim Dowell (D)

2001 Legislature
HB205: Dollars for education - car rental, realty transfer, bed, and tobacco taxes Rep.
Chris Harris (0)
1% on noncommercial property that is not used as a primary residence
Dollars for education special revenue account in the state special revenue fund
Tabled in House Taxation Committee

SB224: Real estate transfer tax to fund local planning efforts - Sen. Ken Toole (0)
1% with $100,000 value exemption
one-third the local government in which the real property is located to be used for
planning activities; the remaining two-thirds: 1) one-half to the affordable housing
revolving loan account; and 2) one-half to the agricultural heritage program
Tabled in Senate Taxation

CI-105

2010-04-13T16:49:00.000-06:00

What are your thoughts on a Constitutional Initiative that would prohibit forever the ability of State and Local Government from implementing a "REAL ESTATE TRANSFER TAX" or RETT. Today April 13th started the official signature gathering period through out the state of Montana. It is time for Montanan's to step up to the plate and let our elected officials no that we don't want this type of tax on the "American Dream".

So far there have been 9 attempts over 10 years to implement this type of regressive repugnant tax in our state legislature. Now is the time to sign the petition and let the legislature know the answer is "NO".

I will be in Polson on April 24th gathering signatures at the Mission Valley Trades Fair and Business Expo come and see me.

Subdivision and Platting Act - What do you think?

2010-04-05T11:55:00.002-06:00

Another issue arises in Missoula over land use.

The question at hand is whether property that has more that one building needs to go through the Subdivision and Platting act. The issue is a disagreement between the City of Missoula and Missoula county and how each government body deals with the subdivision and platting act. Missoula county believes that land that has more that one building that is being leased or rented must go through the subdivision and platting act and the City of Missoula disagrees.

Therefore the Missoula County Attorney asked the Montana Attorney General to provide and opinion regarding this subject. In brief the AG has offered a draft opinion that would confirm Missoula County's interpretation of the subdivision and platting act, thus having a major impact on local government and land owners.

This opinion if it were go become an official stance would require all property with rented and leased buildings to go through the subdivision review process. For instance if you were to build a garage with a residential loft for the purposes of being rented out will have to go through the subdivision process.

Property rights protected in Missoula

2010-03-16T14:27:00.001-06:00

Its been ruled that the City of Missoula was guilty of property rights taking during the approval process of Clark Fork Terrace II subdivision in Missoula.

"The Missoula City Council trampled on private property rights when it required the Clark Fork Terrace developer to grant a trail and public access easements, a judge ruled in an opinion filed Monday."

Judge McLean (former candidate for Supreme Court Justice in 2004 lost to Brian Morris former solicitor general) ruled that the city of Missoula arbitrarily took land from the subdivision (20 feet of river front property) for the use by trails enthusiasts. For the full article click on the following link:

"Missoula City Council Violated developer's property rights"

What questions should come out of this case.

What can the local governments ask for when approving a subdivision?
What constitutes a public good without paying just compensation?
Will this ruling be over turned by the Montana Supreme Court if it is appealed?
Will this encourage other developers to sue over these similar types of takings?

Water and Subdivisions

2010-03-03T11:00:00.001-07:00

The question of the day:

Should the State of Montana require meters on all exempt wells?

Water Compact Commission Questions 2-24-2010

2010-03-02T07:28:00.003-07:00

The following Questions were asked of the Water Compact Commission on February 25th. We are still waiting for a response from each side that is represented at the negotiation table.
__________________________________________________________________________________

3-1-110 Appeal of Decision of the Board

Question: Does the non Tribal member have the right to go thru the State of Montana court system, and likewise shouldn’t the Tribal member have the right to go thru Tribal court?

2. 1-1-110 Effect of Federal Laws and Trusteeship.

If the proposed management ordinance is not allowed to “diminish the effect of federal law or Treaty, nor to vary or diminish the powers and responsibilities of the federal government in its role as trustee of Indian natural resources”

Question: Then should the proposed management ordinance not diminishing the power of the state when it comes to the States natural resources.

Article IX (Montana Constitution)

Section 3

(3) All surface, underground, flood, and atmospheric waters within the boundaries of the state are the property of the state for the use of its people and are subject to appropriation for beneficial uses as provided by law.

(4) The legislature shall provide for the administration, control, and regulation of water rights and shall establish a system of centralized records, in addition to the present system of local records.

3. 3. 1-2-103 Qualifications of Board Members.

(2) “Reservation Resident” means, for the purposes of encumbering a position on the Water Management Board, a person who

(a) does business within Flathead Indian Reservation boundaries,

and who uses water in the ordinary course of such business,

(b) is domiciled within Flathead Indian Reservation boundaries, or

Reservation boundaries.

Question: Does a Board Member have to meet all the criteria set out in sub items A,B and C?

4. 4. 1-2-105 Appointment of Water Management Board Members:

The Governor and the Tribal Council will each appoint two (2) voting members to the Water Management Board and the Secretary will appoint the ex officio member to the Water Management Board within sixty (60) days of the effective date of this Ordinance. The four voting members of the Board will nominate a fifth voting member for confirmation by the Governor and the Tribal Council. If the fifth voting member is not confirmed within thirty (30) days of nomination, the four appointed voting members will nominate another individual for confirmation by the Governor and the Tribal Council. Both the Governor and the Tribal Council shall provide reasons for refusing to confirm the nominee in writing to the other confirming party. Until the fifth voting member of the Water Management Board is confirmed, the Board shall conduct business with the four appointed Board members.

Question: Should two members of the Water Management Board be required to be members of the Confederated Salish and Kootenai Tribes and likewise should two members

be required to be non Tribal?

5. 5. 1-1-102 Findings and Policy:

(1) The waters of the Flathead Reservation are a hydrological unitary resource in that

(a) all Reservation waters drain into the Flathead River, a part of the

Columbia River system, or into Flathead Lake, a naturally occurring

lake which is fed by the Flathead River north of the Reservation and

which empties into the Flathead River within the Reservation, and

(b) most of the water appropriated and utilized by the people of the

Reservation is taken from streams arising on lands owned by the Tribes and tributary to the Lake or the River; the balance of the surface water consumed on the Reservation was appropriated and diverted from off-Reservation sources by the United States, and

surface and ground water of the Reservation, and

(d) every use of Reservation waters affects and impacts water use by all

Reservation residents;

Question: Do these statements make the claim that all waters that drain into the Flathead river and then into the Flathead Lake belong to the Confederated Salish and Kootenai Tribe? If so then does the Confederated Salish and Kootenai Tribe have the ability to limit the use of water outside the boundaries of the Tribal Reservation as described in the Hell Gate Treaty of 1855?

6. 6. 1-1-104 Definitions:

(20) “Instream Flow Requirement” means 1) that quantity of water flowing through

a surface water body, including ground water recharge, that is needed to

sustain, rehabilitate, or restore the ecological functions of a stream in terms of

hydrology, geomorphology, biology, water quality, and connectivity at a

particular level; or 2) that quantity of water flowing through a stream course needed to sustain instream values at an acceptable level based on appropriate study. Instream values and uses include protection of fish and wildlife habitat, migration and propagation; cultural and religious practices; outdoor recreation activities; navigation;

Question: With regards to instream flows and along with State –vs- Stasso (in which Tribal members rights to hunt and fish on open and unclaimed land be upheld), will the Water Management Board have the ability to control the use of water outside the Reservation boundaries as established in the Hell Gate Treaty of 1855 so as to maintain instream flows to protect their fishing rights? If so, then will the Water Management Board be required or allowed to approval all off Reservation water rights, including adjudication of first in time first in right knowing that the Confederated Salish and Kootenai Tribe will have had their water rights established in 1855?

Marijuana Dispensaries in Kalispell

2010-02-23T14:13:00.000-07:00

Bull Trout and YOU

2010-02-16T10:26:00.003-07:00

Whats on Your Mind

2010-02-10T15:04:00.001-07:00

I want to hear from you about issues you would like to see discussed and researched. Let me know how I can help.

Reappraisal in the State of Montana

2010-02-09T10:42:00.015-07:00

Water Banking in Montana

2010-02-03T20:30:00.003-07:00