Legislators understand the connection between the housing market and the economy. They have written legislation with the hope of undoing any injustices that were created by faulty practices of many lenders, to remove the huge uncertainties facing short sale buyers and sellers and to raise necessary funds.
But, sometimes the legislators need help in deciphering the complete ramifications of the bills.
Realtors have been working in conjunction with both state and federal law makers to verify that there is no damage to the housing market created by any proposed legislation. They have had success in stopping ones that create more problems for homeowners’ as well as those contemplating a purchase.
State House Bill 2563 would have created a new 5% Washington State Tax on Capital Gains and would have harmed real estate and compromised Washington’s economic recovery. The main objections included:
- The sale of a “second home would be subject to the tax
- It would consume $1.4 billion of seller equity in the first two years
- It would harm commercial real estate, and discourage investing in real estate
- Total capital gains tax would be increased 33% and would be in addition to REET taxes
- Only individuals would be subject to the tax, not corporations
- No tax forms would be sent to taxpayers indicating the capital gains tax was due and taxpayers would be subject to penalties and interest for non-payment or failure to file a return
Senate Bill 6557 would have diverted revenues for Infrastructure to the General Fund. Currently, only 6.1% percent of the Real Estate Excise Tax is dedicated to infrastructure – such as water and sewer systems. To eliminate this funding would compromise our economic recovery.
Senate Bill 6312 would have limited homeowners in King County to removal of 350 gallons of water per day from wells for new houses on septic systems in rural areas. This would have done great harm to rural property owners because none of this water could be used for animals (horses, goats, chickens sheep etc.) that are not household pets.
The Association of Realtors® has also had successes in helping short sale sellers. They were able to obtain three amendments to House Bill 2614:
- In the first communication with the Seller regarding a potential short sale, banks must declare if they are extinguishing the seller’s debt at closing or reserving the right to pursue a deficiency against the Seller.
- The period of time in which the banks must initiate legal proceedings to pursue a deficiency is lowered from 6 to 3 years.
- The bill adds a statement to the Law of Agency Pamphlet advising sellers that just because a bank releases collateral to make a short sale possible doesn’t mean the bank is automatically canceling all of the seller’s unpaid debt that is secured by the collateral.
The Prompt Notification of Short Sale Act, Senate Bill 2120, was supported by Realtors because it was designed to hasten the short sale process and prevent additional closures. It requires that banks respond to a short sale buyer within 75 days and specify acceptance, rejection, a counter offer, need for extension, and an estimation for when a decision will be reached. The servicer will be limited to one extension of no more than 21 days. The bill will also allow the buyer to be awarded $1000, plus "reasonable" attorney fees if the Act is violated.
"The current short sale process can be time consuming and inefficient, and many would-be buyers end up walking away from a sale that could have saved a homeowner from foreclosure," said Moe Veissi, president of the National Association of Realtors. "As the leading advocate for homeownership, realtors are supportive of any effort to improve the process for approving short sales."
Realtors® do much more than just sell houses. They are vigilant in their efforts to protect present and future buyers and sellers and to prevent any circumstances that may threaten the stability and improvement of the real estate market.
Joan Probala is the managing broker for Issaquah Windermere (Windermere Real Estate/East Inc.). She has 30 years of experience in real estate, construction and sales. She is president-elect (2012) of the Seattle King County Association of Realtors.