LOBBY DAY 2014 Talking Points

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1 LOBBY DAY 2014 Talking Points This packet outlines the main issues and Talking Points we would like you to cover in your meetings with your state legislators. There is a summary of each bill along with specific information and background on the reasons why NYSAR supports or opposes a particular bill or proposal. All REALTORS should speak about these key issues in each of their meetings in addition to any local matters you want to raise with your legislators. NYSAR Supports: Quick Legislative Reference Guide 1. Broker Rebates A.7979-B(Lavine)/S.5693-B(Zeldin) Pg. 3 Status: Assembly Codes/Senate Judiciary 2. Ensuring Availability of FHA Loans in New York State A.9539(Morelle)/S.7224(Farley) Pg. 5 Status: Assembly Banks/Senate Cal. # Automatic Fire Sprinkler System Information A.7916-A(Morelle)/S.4610-A(Young) Pg. 7 Status: Assembly Rules/Senate Cal. No Transparency and Disclosure in Co-operative Housing A.2556(Lavine)/A.4388(Perry) Pg. 9 Status: Assembly Housing Committee 5. Scaffold Law Reform A.3104(Morelle)/S.111(Gallivan) Pg. 11 Status: Assembly Judiciary/Senate Judiciary NYSAR Opposes: 1. Mortgage Recording Tax (MRT) and Real Estate Transfer Tax Implementation and Extenders Pg. 13 1

2 a. S.5718-A(Young)/A.9167(Nojay) NEW Livingston County Additional MRT Status: Senate Investigations & Government Operations/Assembly Ways & Means b. S.5687(Gallivan)/A.9168(Nojay) NEW Livingston County Transfer Tax Status: Senate Investigations & Government Operations/Assembly Ways & Means c. S.7165(Rules)/A.9838-A(Finch) NEW Cayuga County Additional MRT Status: Senate Investigations & Government Operations d. S.5487-A(O Mara) Chemung County MRT Extender Status: Senate Investigations & Government Operations e. S.6457(Gallivan)/ A.8729(DiPietro) Wyoming County MRT Extender Status: Senate Cal. No. 681/Assembly Ways & Means f. S.6498(Tkaczyk)/A.8750(Lopez, P.) Greene County MRT Extender Status: Senate Cal. No. 682/Assembly Ways & Means g. S.6587(Little)/A.8759(Stec) Warren County MRT Extender Status: Senate Cal. No. 684/Assembly Ways & Means h. S.6549(Seward)/A.8959(Butler) Herkimer County MRT Extender Status: Senate Cal. No. 683/Assembly Ways & Means i. S.6840(O Mara)/A.9142(Palmesano) Yates County MRT Extender Status: Senate Cal. No. 686/Assembly Ways & Means j. S.6945(O Mara)/A.9302(Palmesano) Stueben County MRT Extender Status: Senate Cal. No. 688/Assembly Ways & Means 2

3 NYSAR SUPPORTS ENACTMENT OF THE FOLLOWING: Broker Rebates & Incentives A.7979-B(Lavine)/ S.5693-B(Zeldin) Status: Assembly Codes/Senate Judiciary Overview: NYSAR supports legislation clarifying and codifying the ability of brokers to offer buyers and sellers, landlords and tenants, rebates and other monetary incentives for using their real estate broker services. The legislation amends 442 of the Real Property Law titled Splitting Commissions, to explicitly state that nothing shall prohibit a broker from offering any part of a fee, commission, or other compensation received by the broker to the seller, buyer, landlord or tenant as an incentive for using the services of that broker. Per the NYS Department of State and the NYS Attorney General, broker rebates/incentives are permissible in New York. This legislation simply clarifies the existing statutory language. Why NYSAR Supports: Per numerous decisions/opinions by the New York State Department of State and the New York State Attorney General, broker rebates to buyers/sellers and landlords/tenants are permissible. These agencies have recommended codifying these decisions to eliminate any uncertainty in the real estate community regarding the offering of rebates and other incentives to clients. This legislation aims to clarify any ambiguity in the marketplace regarding the permissibility of the use of rebates in real estate transactions. What to ask from the MEMBER of ASSEMBLY at your meeting: Please ask lawmakers to support A.7979-B(Lavine) and vote YES in support of this bill. What to ask from the SENATOR at your meeting: Please ask lawmakers to support S.5693-B(Zeldin) and vote YES in support of this bill. 3

4 Specific Talking Points on Broker Rebates Already Permissible The NYS Department of State and the NYS Attorney General have both issued decisions/opinions stating that broker rebates to buyers/sellers and landlords/tenants are legal in New York State. Eliminate Uncertainty This legislation will codify the opinions of the Department of State and Attorney General and eliminate any uncertainty about the legality of rebates. Pro-Consumer Codifying the ability of brokers to offer rebates and other incentives will benefit consumers and create healthy competition in the real estate market. 4

5 NYSAR SUPPORTS ENACTMENT OF THE FOLLOWING: Ensuring Availability of FHA Loans in NY A.9539(Morelle)/S.7224(Farley) Status: Assembly Banks/Senate Cal. No. 911 Overview: NYSAR supports legislation that provides for technical amendments to New York State banking laws adjusting the subprime threshold for loans insured by the Federal Housing Authority (FHA). The legislation codifies previously adopted emergency rules by the New York State Department of Financial Services that addressed the unforeseen consequence of the imposition of the FHA mandated Mortgage Interest Premium (MIP) as it relates to a home loan s annual percentage rate (APR). Why NYSAR Supports: This legislation adjusts the subprime threshold by 75 basis points for FHA-insured loans. It is expected that this will allow for the availability of FHA mortgage financing at the same levels that existed prior to the imposition of the MIP rule change. Ensuring liquidity in the mortgage finance marketplace is of critical importance to the real estate market and overall New York State economy. This legislation simply addresses an unforeseen consequence of the imposition of FHA mortgage interest premiums as it relates to state banking law. What to ask from the MEMBER of ASSEMBLY at your meeting: Please ask lawmakers to support A.9539(Morelle) and vote YES in support of this bill. What to ask from the SENATOR at your meeting: Please ask lawmakers to support S.7224(Farley) and vote YES in support of this bill. Specific Talking Points Codifies previously adopted emergency rules This legislation amends the Banking Law to codify multiple temporary emergency rules promulgated by the New York State Department of Financial Services adjusting the 5

6 subprime threshold in Section 6-m of the Banking Law. Section 6-m provides for the regulation of subprime loans in New York State and defines a subprime loan as a loan with an initial interest rate or the fully indexed rate, whichever is higher, that exceeds a certain threshold. The subprime threshold is set at (1) the average commitment rate for loans with a comparable duration as set forth in Freddie Mac s Weekly Primary Mortgage Survey, plus (2) 1.75 percentage points for a first-lien loan or 3.75 percentage points for a subordinate-lien loan. If the rate exceeds that rate, it is considered a subprime loan under NYS Banking Law. Why it is needed: In 2013 the FHA revised the period for the imposition of an annual Mortgage Interest Premium (MIP) for FHA insured loans effective June 3, Because the MIP is a component of APR calculations, the rule change caused the APR on many loans to increase beyond New York s subprime threshold. The secondary mortgage market is reluctant to purchase subprime loans and as a result lenders in New York are less apt to originate such loans, severely curbing the availability of affordable mortgage financing. This legislation adjusts the subprime threshold by 75 basis points for affected FHA-insured loans. In some real estate markets FHA backed loans represents up to 30% of all residential mortgages. o Please share with your legislators what you are seeing in your local markets. If applicable, let them know how many FHA loans you encounter in your communities. Ensures availability of FHA Loans in NY: Federal Housing Authority (FHA) loans provide a safe, affordable financing option when the private market cannot or will not participate. Ensuring liquidity in the mortgage finance marketplace is of critical importance to the real estate market and overall New York State economy 6

7 NYSAR SUPPORTS ENACTMENT OF THE FOLLOWING: Automatic Fire Sprinkler System Information A.7916-A(Morelle)/S.4610-A(Young) Status: Assembly Rules/Senate Cal. No. 945 Overview: NYSAR supports legislation which adds a new article to the general business law requiring any builder who is contracting to construct a one or two family residence, under three stories in height, to provide the buyer with information prepared by the Office of Fire Prevention and Control regarding the installation of fire sprinklers prior to entering into a contract for construction of such dwelling. Why NYSAR Supports: Requiring builders to provide potential buyers with accurate information on the costs and benefits of installing fire sprinklers is an appropriate and responsible way to ensure consumers are fully aware and informed about their building decisions. What to ask from the MEMBER of ASSEMBLY at your meeting: Please ask lawmakers to support A.7916-A(Morelle) and vote YES in support of this bill. What to ask from the SENATOR at your meeting: Please ask lawmakers to support S.4610-A(Young) and vote YES in support of this bill. Specific Talking Points Installation of Fire Sprinklers Should be a Consumer Choice - The decision to install fire sprinklers should be a consumer choice. The purchase or construction of a home for many is one of the largest financial commitments they will ever make and all available information and resources should be provided to assist in making financially prudent design decisions. 7

8 REALTORS Support Disclosure - New York s REALTORS have long supported disclosure and transparency in the real estate transaction, as evidenced by the enactment of the Property Condition Disclosure Statement required under the Real Property Law, and NYSAR supports the disclosure to consumers required by A.7916-A(Morelle)/ S.4610-A(Young) regarding disclosure of automatic fire sprinkler systems. 8

9 NYSAR SUPPORTS ENACTMENT OF THE FOLLOWING: Transparency and Disclosure in Co-operative Housing A.2556(Lavine); A.4388(Perry) Status: Assembly Housing Committee Overview: NYSAR supports legislation that would bring greater transparency to the process of buying and selling cooperative apartments by setting up a mandatory timeline for the acceptance and/or rejection of a purchase application. Why NYSAR Supports: A.2556 and A.4388 will significantly improve the transparency of the cooperative purchase by adding uniformity and predictability to the application process. Additionally these bills provide consumers with up front information on the cooperatives purchase application requirements and inform them of their rights under fair housing and anti-discrimination laws. What to ask from the MEMBER of ASSEMBLY at your meeting: Please ask lawmakers to support this legislation and move the bills out of committee. These bills are important to buyers and sellers of cooperative housing throughout the state. What to ask from the SENATOR at your meeting: Although these bills do not have a Senate sponsor, please discuss the issues and describe the need for this legislation. NYSAR is actively seeking a Senate sponsor for this legislation. Specific Talking Points What these bills do Establish a clear timeline for the receipt, acknowledgement, amendment, completion and acceptance and/or rejection of a purchase application. Additionally, A.4388 would require a cooperative board to give a reason why an application/applicant is rejected. 9

10 Difference with Cooperative Purchase - In the sale of fee-simple residential housing a buyer negotiates with the seller for the transfer of real property between the two parties. But in the process to purchase a cooperative apartment the purchaser does not deal directly with the seller as the final arbiter to the transaction but rather must apply to a coop board or committee for ultimate approval. The problem - The secretive nature of cooperative boards application and review processes have an injurious effect on our clients, while also giving the co-op boards the ability unfairly deny housing opportunities to persons deemed undesirable. The result, potential buyers will meet all reasonable financial criteria for ownership, but they are illegally denied or rejected from purchasing shares in the cooperative. Potential for Illegal Discrimination - It is the experience and the reports of real estate professionals throughout New York that the secretive and vague nature of the application and review process by coop boards allows for potential illegal discrimination. Currently Boards are not required to respond Please explain that currently boards are not required to respond in any timely manner. Boards can simply delay responding to an application for long periods of time. During that time the applicant may incur additional legal expenses, bank fees, and the potential loss of their financing agreement. This bill will remedy this problem by setting up a definitive timeline for a response. That way, if denied, the applicant can move on with their housing search. Why this bill is needed- This will significantly improve the transparency of the cooperative purchase process to the benefit of all parties. Furthermore, this uniform process will save consumers time, money, and ensure a more orderly procedure for both the co-op boards and applicants. Does not interfere with Board s decision making process Importantly, this legislation in no way interferes with a Board s business judgment, or the ability to accept/deny an applicant, nor diminish its fiduciary responsibilities to its shareholders. Rather it simply requires the Board to provide a written response to all applicants. 10

11 NYSAR SUPPORTS ENACTMENT OF THE FOLLOWING: Scaffold Law Reform A.3104(Morelle)/S.111(Gallivan) Status: Assembly Judiciary/Senate Judiciary Overview: NYSAR supports legislation that would establish a comparative negligence standard for claims under Labor Law 240 and 241. New York s antiquated Scaffold law imposes an absolute liability standard on employers and property owners in negligence claims and continues to drive up costs on construction, insurance, farming and small business. This bill takes a limited approach at addressing the absolute liability standard in current law while not taking away any rights of an injured worker to sue. Why NYSAR Supports: The Scaffold Law is an antiquated statute that increases general liability insurance premiums on construction projects in New York State. This deters investment and economic development and ultimately costs New York State residents additional money due to the higher premiums and coverage incurred by contractors. This is universal to all constructions projects including residential and commercial. What to ask from the MEMBER of ASSEMBLY at your meeting: Please ask lawmakers to support A.3104(Morelle) and vote YES in support of this bill.. What to ask from the SENATOR at your meeting: Please ask lawmakers to support S.111(Gallivan) and vote YES in support of this bill. Specific Talking Points Scaffold Law Increases Liability Insurance Costs by 300 1,200 Percent According the New York State Conference of Mayors and Municipal Officials (NYCOM) due to increased litigation for actions arising under the Scaffold Law, general liability insurance premiums are 300% to 1200% 11

12 higher in New York than any other state in the country. These costs are ultimately passed on to both residential and commercial purchasers. This bill is reasonable Amends the Civil Practice Law and Rules to establish a more equitable comparative negligence standard to personal injury, property damage or wrongful death actions arising under the Scaffold Law when the employee has committed a criminal act, used drugs or alcohol, failed to use safety devices, or failed to comply with employer instructions. This bill does not limit or eliminate the ability of an injured worker to sue. All New York taxpayers directly impacted by Scaffold Law Because of the increased costs associated with litigation and insurance coverage due to the Scaffold Law, construction projects in New York simply cost more. This includes all publically funded construction projects like roads, bridges, schools, buildings and other infrastructure. This means that every taxpayer in the state is paying higher taxes to fund these projects. New York only state in the country with a strict liability standard No other state in the entire country has a strict liability standard in construction negligence claims. The last state to repeal a similar law was Illinois in It is time for New York to reform the Scaffold Law. 12

13 NYSAR OPPOSES ENACTMENT OF THE FOLLOWING: Mortgage Recording and Transfer Taxes Implementation and Extenders 1. S.5718-A(Young)/A.9167(Nojay) NEW Livingston County MRT Status: Senate Investigations & Government Operations/Assembly Ways & Means 2. S.5687(Gallivan)/A.9168(Nojay) NEW Livingston County Transfer Tax Status: Senate Investigations & Government Operations/Assembly Ways & Means 3. S.7165(Rules)/S.9838-A(Finch) NEW Cayuga County MRT Status: Senate Investigations & Government Operations/Assembly Ways & Means 4. S.5487-A(O Mara) Chemung County MRT Extender Status: Senate Investigations & Government Operations 5. S.6457(Gallivan)/ A.8729(DiPietro) Wyoming County MRT Extender Status: Senate Cal. No. 681/Assembly Ways & Means 6. S.6498(Tkaczyk)/A.8750(Lopez, P.) Greene County MRT Extender Status: Senate Cal. No. 682/Assembly Ways & Means 7. S.6587(Little)/A.8759(Stec) Warren County MRT Extender Status: Senate Cal. No. 684/Assembly Ways & Means 8. S.6549(Seward)/A.8959(Butler) Herkimer County MRT Extender Status: Senate Cal. No. 683/Assembly Ways & Means 9. S.6840(O Mara)/A.9142(Palmesano) Yates County MRT Extender Status: Senate Cal. No. 686/Assembly Ways & Means 10. S.6945(O Mara)/A.9302(Palmesano) Stueben County MRT Extender Status: Senate Cal. No. 688/Assembly Ways & Means Overview: Due in large part to state and locally imposed taxes, including the mortgage recording tax and real estate transfer tax, New York consistently has the highest in closing costs in the nation. Any proposal to increase the tax burden paid by homebuyers, homeowners and businesses is shortsighted and harmful to New York and the real estate industry. State and local governments should be considering legislation that encourages the transfer of real property and encourages 13

14 investment in our state. Why Does NYSAR Oppose: The most serious consequence of these proposals are that they make homeownership less affordable and deter economic development and investment in our State. New Yorkers already pay some of the highest closing costs in the nation. Many of these closing costs are fixed which affects low, moderate, and high income purchasers alike. Now is the time to create legislation that encourages economic development and draws more business, investors and homeowners to New York. These taxes simply put-up more roadblocks to homeownership and provide yet another reason for businesses and taxpayers to flee the Empire State. NYSAR does not believe there is a taxing problem in New York but rather a spending problem. What to ask from the MEMBER of ASSEMBLY at your meeting: Please ask your legislator to vote NO on all bills seeking to increase or extend mortgage recording and transfer taxes in New York. What to ask from the SENATOR at your meeting: Please ask your legislator to vote NO on all bills seeking to increase or extend mortgage recording and transfer taxes in New York. Specific Talking Points New York has among the highest closing costs in the nation - Hurts and discourages first time homebuyers who can simply not afford the already outrageous property taxes and fees imposed on the real estate transaction. These taxes also deter commercial investment thereby negatively impacting economic development in New York. Impacts those looking to refinance - Proposals to increase the mortgage recording tax will also have a chilling effect on people looking to lower their overall mortgage costs by refinancing. An increase in the mortgage recording tax results in higher upfront costs for homeowners and businesses looking to improve their financial position by lowering their interest rates through refinancing. With national interest rates are at historic lows, now is not the time to discourage those seeking to refinance. 14

15 Discourages homeownership - Makes homeownership less affordable to New York s working families. Closing costs include everything from title insurance, origination fees, attorney fees, appraisals, and inspections, etc. which easily total thousands of dollars in additional expenses to the purchase of a home. Counties need to reduce spending - Counties must find other ways to bring costs under control, drive important reforms, and provide relief to families and businesses when they need it most. Counties must realize that increasing taxes is not the way out of their fiscal situation. Now is the time to cut costs, eliminate waste, and most importantly, reduce spending. Unstable revenue stream - It is fiscally imprudent for governments at all levels to rely on projected revenue from increased taxes on a real estate market that is often unpredictable. These taxes do not create a stable funding stream and will most likely not produce the estimated revenues called for by the counties. Bigger impact on middle and low income purchasers - Mortgage recording taxes and transfer taxes are regressive taxes because the tax burden is disproportionately higher for middle to lower income households. In fact, if the purchaser is wealthy enough to pay cash for the property, they do not pay any mortgage recording tax at all. Need for Mortgage Financing - Nine out of ten homeowners in America take a mortgage when purchasing their home and these proposals simply place another hurdle towards homeownership. 15