As tempted as I am to fire off a snappy (read: snippy) response to some of the misunderstandings contained in Frank LLosa’s recent post about RPAC, I’m reminded of Seth Godin’s admonition that miscommunication is almost always the fault of the communicator, not the recipient. So if Frank has his facts wrong about something VAR does…especially something so essential to his business as RPAC…it’s likely VAR’s fault for not communicating more thoroughly or frequently or clearly.

So, herewith, a primer on RPAC for them what want or need to know:

1. RPAC is the largest PAC in America. RPAC of Virginia is the biggest business PAC in Virginia. Big deal? Heck, yeah. When it comes to the funding of a Political Action Committee, size matters…at least it does to candidates and elected officials. The better funded your PAC, the more likely elected officials are to think twice before doing something that would negatively impact your real estate business, or more importantly your customers and clients. It’s the “carry a big stick” theory of politics, and it’s effective. That’s why we beg and plead with you to invest every year. Because it’s the only protection you’ve got against bad law and regulation. Sure, you can give individually to whomever you wish…but where’s the big stick? (And yes, that makes it all the more imperative that we consider and develop carefully our policy positions so that they’re about what’s good for Virginia, good for our communities, good for consumers…and not solely self serving).

2. RPAC of Virginia gives fairly evenly to Democrats and Republicans. National RPAC does, too. We’re not affiliated with a political party. We represent candidates who support private property rights and fair land use policies and housing opportunity and free enterprise. In the recent General Assembly election cycle here in Virginia, we supported more Republicans than Democrats…which makes sense, considering the Republicans were the party controlling both houses of the General Assembly at the time. With the Dems now in control in the Senate, I suspect it’ll be different next time around.

3. RPAC is governed by about 20 trustees who are REALTORS just like (most of) you. They run real estate businesses AND they’re active in state and local politics. So when funding decisions are made, do remember that they’re made by folks who do what you do for a living and understand the issues confronting your profession.

4. This is a biggy: RPAC funds can only be used for CANDIDATES. We’re prohibited by law from using it to lobby; we’re prohibited from using it in issues campaigns (say, to support or oppose a grantors tax increase). Lobbying and issues campaigns are funded with your dues dollars, not with RPAC funds. You invest in RPAC so that your association has funds to help elect candidates who support what’s best for your business and for homeownership in Virginia. That’s pretty much all that your RPAC money is used for. The vast majority of RPAC overhead costs — staff, recognition, brochures, etc — are paid for from your VAR dues dollars, not from the PAC.

5. Before the RPAC Trustees decide to support/endorse a candidate (which usually means we give them money or in-kind campaign support, but not always), we interview the candidates to determine which is best for your interests. We don’t pay attention to a candidate’s stand on social issues; instead, we ONLY look at his or her position on real estate issues. We almost always interview in races for an open seat. In races where an incumbent who has supported your issues is running, we’re less likely to interview; after all, such a candidate has a track record, and we can tell if he’s been for us or against us. On the other hand when an incumbent hasn’t supported us, we either stay out of the race, or we look for someone to challenge him/her in the election. Likewise, most local associations interview candidates before they make endorsements in local races.

6. Which reminds me: Of every dollar you invest in RPAC, 30 cents goes to NAR for use in federal (Congress and US Senate) races. The remaining 70 cents is used in Virginia for statewide and General Assembly races AND in local races (and the local portion is controlled by your local association, but their rules and process for candidate contributions are nearly identical to VAR’s)

7. There are serious limits to what National RPAC can give to Federal candidates (Congress and US Senate). I’ll spare you the gory details, but it totals $15,000 per candidate per election cycle. National RPAC does NOT get involved in the presidential race. In Virginia, however, there are no limits. Still, I think you’ll find the size of our contributions to be in line with those of other groups. There’s a limit, of course, to what the market will bear, and any contribution that seems larger than the market will put us in every newspaper in the state, and…let’s just say the coverage wont be flattering. You can find a record of all political contributions in Virginia at http://vpap.org.

8. Despite the conclusion one might draw from the National Home Builders Association’s recent decision to cease all funding of Congressional candidates until Congress does what the builders want, it’s not about buying votes. Sometimes I wish it was that easy, but I’m glad it’s not. What it’s about is electing thoughtful officials who’ll at least listen when we come to them with good, sound policy proposals. It’s an open door. But if we’re not fighting to elect that kind of candidate, there are plenty of other groups out there with different ideas from you who’ll fill the void with their brand of candidate, and you’ll be out in the cold. If we’re not engaged in political advocacy, we can’t effectively represent you. That’s what RPAC is for.

That’s enough for now. Three last things:

> You’ll find a really cool member-produced video about RPAC on VAR’s website. It’s short, it’s current, and it’s worth your time.

> Here’s a list of 2007 VAR legislative successes, powered by VAR’s first rate lobbying team and your support, but undergirded by the “big stick” that is RPAC. Do note how many of the issues we’re invlved in aren’t only about us, about REALTORS®; rather, they’re about better communities and moving Virginia forward.

> Lastly…I do apologize for being so pedantic. I understand that politics can be an unpleasant and divisive business. But to those REALTORS® who would recoil from it and refer to RPAC as something nasty and say that politics is distasteful and REALTORS should have no part of it, I say this: When they declare that ditch on your investment property a wetland, and they put a tax on your commissions, and they decide to fund the bulk of transportation infrastructure on the backs of homebuyers and sellers, and implement all manner of regulation that negatively impacts your bottom line, you’re going to want to say “Where was RPAC?” And I’ll have to bite my tongue to keep from replying, “Where were YOU?”

Bringing backroom discussions to the forefront appears to be part of the mission for VARBuzz.com , so I thank them for this opportunity!

Back to the post… I’m torn.

Give to NVRPAC and Virginia RPAC or not?

I’d like to discuss my understanding of what NVRPAC is (I could be wrong and I’m looking to your comments to correct me), and my dilemma on whether to contribute (which is not tax deductible).

NV/RPAC stands for Northern Virginia REALTOR® Political Action Committee. Their slogan is “Your bi-partisan voice in politics.” What else? I don’t know. A search for them brings up only 3 pages (here is one). They don’t own NVRPAC.com and they don’t have an interactive blog giving us updates on what they are doing. It has been run by Mary Beth Coya, the Vice President of Public & Government Affairs for many years.

I still don’t get it. To me it seems like “Give us money, don’t ask why, but we will push the REALTOR agenda. Thanks for the $200,000, now we can give that to candidates so they will listen to us.”

Is giving money to candidates a necessary evil?

So here is where the dilemma starts.

1. I frequently disagree with the REALTOR agenda. For example, recently a transportation bill, which would raise taxes (backed by NVRPAC), was shot down as being unconstitutional. If my political belief is that government is too big, and we need less taxes, how do I justify giving them $100 to back something I am against?
2. I also disagree with the message the REALTOR® associations put out, like the “It’s a great time to buy or sell a home” campaign. Yet two years later we are flooded with Short Sales and foreclosures.
3. And here is the big picture issue that I have… Where exactly does the money go?The weblink above says, “Contributions go to candidates who are supportive of private property rights and who are sensitive to the REALTOR® point-of-view on key issues.”

Is it to help candidates win, or is it to buy a voice?

Do we give even $1 to a candidate that is ahead 30% in the polls? If so, it doesn’t seem like we are helping him win, instead it seems like we are buying the right to be heard.

One can easily say, “That is how it works in DC, either play ball or lose.”

But I am fundamentally against a Congressperson accepting $100,000 from a special interest group, that they are expected to regulate.

Yes we want our voices heard, but why do we have to give them $100,000 for that right? It seems more like a bribe. (Update 3-3-08: See comments for clarification on this number. Most donations are much smaller, but they have been as high as $50,000 for one candidate in one year and over $80,000 for a few candidates over a few years)

Maybe that is the process in DC, but what if you oppose the process?

So this is my personal debate. I’d love to see your opinion. And if you still want to donate, here is a link to contribute to NVRPAC online. Actually they only accept contributions by mail or fax or check. Cutting edge!

The hope is that this post will INCREASE contributions if that is what the REALTOR wants. I’d rather them contribute because they understand and accept the process, and not because they are told to, or are offered a raffle or a trip to Jamaica.

And here is a video on Youtube from Virginia’s RPAC.

I look forward to the discussion. I hope we all agree that discussing this is the best way to understanding it.

- Written by Frank Borges LL0SA- Broker FranklyRealty.com

Update 3-3-08: P.S. The comments are better than the post. Don’t miss them!

It’s Tuesday and I’m still recovering from the “busy-ness” of last week in Richmond! Here you can see John Dickinson and me enjoying REALTOR® Day on the Hill last Wednesday.

The Legislative Conference was a very successful event. We made an impact on the Hill with our large numbers of attendees. We had more Legislators attend our Social Function at the Jefferson Hotel than we have in the past. We had the largest attendance ever, close to 600, who came to the Conference to take part in the Education classes that were available. Thanks to the work of the Staff and AG’s who all contributed to putting together the “extravaganza”!

I am officially making my Blogging debut with this post. I have encouraged our membership to become aware of the whole Social Media world and as your fearless leader, I’m jumping into it wholeheartedly. Ben Martin is helping down this path and I will be posting regularly as I travel around the State meeting with our local Associations.

My style, is to reach out for opinions and input…..so keeping with that thought I’d like for you to send me ideas or subjects about which you would like me to blog. Add comments or contact me at pat j at cfw dot com (Just learned this trick….keeps spammers from finding me from my email address!) I am excited about learning about the technology that is available to us and following this blog will create my FaceBook profile. Watch out Linkedin, I’m heading your way.

This, from NAR:

On February 13, 2008, the President signed the stimulus bill, H.R. 5140.  This is the first in a series of memorandums discussing the implementation of the two mortgage related provisions included in the signed measure.  The bill provides temporary increases to both the Federal Housing Administration (FHA) and government sponsored enterprises (GSE) mortgage limits until December 31, 2008.  NAR will provide updated information on these provisions as it becomes available.

The new law makes seven temporary changes to the FHA and GSE loan limits: 
> Raises the base FHA loan limit (“floor”) to $271,050 (65 percent of the current GSE limit of $417,000),
> Sets the base GSE loan limit (“floor”) at $417,000.
> Raises the maximum FHA loan limit from $362,750 to $729,750 (175 percent of the Fannie/Freddie (GSE) floor of $417,000)
> For all areas where the FHA limit exceeds $417,000, the GSE limit will be the same as the FHA limit.  So, for example, if the FHA limit is $590,000, the GSE limit will also be $590,000.
> Increases the factor used to calculate FHA limits from 95 percent to 125 percent of area median sales price.  Any area with an area median sales price above $216,840 will benefit from this change.
> Replaces the existing FHA ratios used to calculate maximum loan amounts for two-, three- and four-family units financed by FHA with the ratio used by Fannie Mae/Freddie Mac ratios to calculate their limits for two-, three- and four family unit properties.

Fannie Mae and Freddie Mac two-, three- and four family unit loan limits increase the same percentage that the single family limit increases.  In 2006, for example, the GSE single family limit increased 15.95 percent and the mortgage limits for multiple units increased 15.95 percent.  This change should result in significant increases in FHA limits for multi-unit properties.  The Secretary of the US Department of Housing and Urban Development (HUD) will now have the discretion to raise the maximum FHA loan limit by an additional $100,000 for all properties (including 2-4 family units).

Implementation
HUD is required by the law to publish the new mortgage limits by March 14, 2008.  These new limits will be effective for FHA immediately upon publication.  NAR developed estimates of the temporary FHA and GSE single-family loan limits.  This data can be found here.

The NAR sent a letter to HUD on February 13, 2008, urging HUD to implement the limits as quickly as possible.

The implementation schedule is complicated by the fact that Fannie Mae and Freddie Mac will be using the same limits above $417,000 and Office of Federal Housing Enterprise Oversight (OFHEO) Director James B. Lockhart, III (Fannie and Freddie’s regulator) noted in a recent speech that implementation could take up to three months with an additional month for partial enactment.  Mr. Lockhart offered no explanation as to what partial enactment means.  NAR sent a letter to OFHEO on February 13, 2008, urging immediate adoption of the new loan limits.

To date, Fannie Mae and Freddie Mac have not indicated their implementation plans once limits are established by OFHEO.

Eligible loans
> FHA – The statute applies to “mortgages for which the mortgagee has issued credit approval for the borrower on or before December 31, 2008”.  We believe this means any loan which receives underwriting approval before January 1, 2009.

> GSE – The statute applies to “mortgages originated during the period beginning on July 1, 2007, and ending at the end of December 31, 2008”.  We believe this means any loan originated before January 1, 2009.  This also means that GSE can buy loans that meet the new loan limits that were originated after June 30, 2007.  Consumers with existing jumbo mortgages may want to consider refinancing under the new loan limits prior to January 1, 2009.

What if I don’t think my loan limit accurately reflects the median home price?
FHA has a process by which the local area median loan limits may be challenged.  If you do not believe the published loan limit accurately reflects 125 percent of your median home price, you may provide HUD with comparable home sales data to make the case that the loan limit should be raised.  NAR is currently creating a guide for REALTORS on how to challenge your loan limit and it will be available shortly.

The opinions expressed below are from consultant Brian Chappelle, Partner, Potomac Partners 2127 S. Street N.W. Washington D.C.  20008.   These are the consultant’s opinions and do not necessarily reflect the views of NAR.

While every client must make their own decision on this topic, below is an assessment of the risks.

Areas at the new base loan limit (“floor”) of 65 percent of the current GSE limit ($417,000) = $271,050

Since this amount is established in the bill and the law requires that HUD implement the provision in 30 days, there appears to be minimal risk in taking applications at the higher base loan limit (“floor”) immediately.

If you wanted to close a loan at the higher base limit prior to HUD’s implementation of the statute, the primary risks are two-fold.  1) You would have to run the loan through the Total Scorecard again to remove the “Ineligible” message because of an excessive mortgage amount for the area.  If the borrower’s credit quality deteriorated in the interim, there could be an eligibility issue.  You could underwrite the loan manually to avoid this issue and 2) the insurance endorsement process.  A loan must be submitted within 60 days of closing.  Otherwise, the lender is required to certify that the most recent payment was made in the current month (See Mortgagee Letter 2005-23 for FHA late endorsement requirements)

High cost areas (Above $271,050)

The mortgage limit is determined by calculating 125 percent of the area median sales price which is determined at the county or metropolitan statistical area (MSA) level.  We believe that HUD is likely to use the same methodology and data that were utilized for calculating the 2008 mortgage limits.  However, although it has been less than 30 days since HUD published those limits, it is also possible that HUD could update its data.

Risk is Divided into Two Categories:
> First, for areas with mortgage amounts below the current Fannie/Freddie mortgage limit ($417,000), we see less risk since HUD will be able to make its decision independently and implement these limits reasonably soon (i.e. less than the month) and will probably not implement any special underwriting requirements.  The main issue is, of course, the calculation process for the maximum mortgage amount.  In this regard, maximum loan amounts are increasing in many high cost areas because of the 125 percent of area median calculation (instead of 95 percent that was previously used).  The issue is really how much.

> Second, for areas that will have maximum mortgage limits above the current Fannie/Freddie maximum limit, it is more complicated because of the impact on Fannie Mae and Freddie Mac, the role of their regulator (OFHEO) and possible special pricing and underwriting requirements for these loans in addition to the calculation issue discussed above.

We believe there is much more uncertainty about the speed with which the new provisions will be implemented for loans above $417,000 particularly for conforming loans.  However, pricing and underwriting issues would also apply for FHA loans.  For example, since these loans will be available for a short period of time (until December 31, 2008), it is possible that Ginnie Mae would form special customized pools that could affect pricing.

NAR Contacts
> FHA Programs Regulatory Contact:
Jerome Nagy, jnagy@realtors.org, 202.383.1233

> FHA Programs Legislative Contact:
Megan Booth, mbooth@realtors.org, 202.383.1222

> GSE Programs Regulatory Contact:
Jeff Lischer, jlischer@realtors.org, 202.383.1117

> GSE Programs Legislative Contact:
Lynn King, lking@realtors.org, 202.383.1156

– Scott Brunner, CAE

The Governor was inadvertently introduced as Tim McCain (freudian slip?).

• Highlights mortgage problems
• Mentions the Commonwealth’s Foreclosure Task Force
• Lots of mixed signs in the economy
• The good:
  • Significant new economic development deals brought to Virginia
  • Virginia named the best place to be born (children born in Virginia have the best chances for success in life; education, etc.)
  • Virginia named #1 state in which to do business
  • Virginia ranks high in education
• The bad
  • Recession may be looming
• Virginia has three powerful things going for it:
  • Very diverse economy
    • Despite our strong government services industry the number one industry is agriculture and forestry.
    • Strong education system
    • Global connections
  • The state has a “rainy day fund” of $1.3 billion
    • helps it weather difficult economic times
  • Virginia doesn’t have major budget challenges
    • pensions, etc. are well funded
    • great bond ratings
• Virginia’s economy is most threatened by any future reduction in federal government spending
• Virginia is and will continue to be in a good position relative to the rest of the country
• This is a challenging time, but we have the tools to get through it
• Education and workforce training are not being touched in the state’s recent budget cuts
• Kaine proposing major capital construction project at community colleges
• Kaine rattling off economic development deals in…
  • Petersburg
  • Danville
  • Falls Church
  • Harrisonburg
• Construction at educational facilities has both short-term and long-term economic development
• Expanding workforce activities and bringing them under the Commonwealth’s Chancellor of the Community College system
• Times are tough, but there’s no reason for doom and gloom
• Question from the audience about Prince William foreclosures
  • Kaine unsure how exactly to address the problems
  • Nearly $1 million in the budget for consumer counseling
• Question from the audience about immigration and what’s going to happen
  • 137 immigration bills were introduced in Virginia this year
  • Governor will pursue bad behaviors
  • Will oppose anti-immigrant policies in Virginia in defense of foreign economic development
  • Being unwelcoming to foreigners harms our ability to bring in foreign investments and squanders our international assets (Hampton Roads ports and Dulles Airport)
  • So many of the economic development deals under Kaine have been foreign investments
• Question from the audience about rail to Dulles
  • This project is Kaine’s albatross
  • Washington DC’s international airport should have a rail connection to the city
  • Virginia and the localities are putting forward 75 percent of the cost for a fixed-cost contract to build rail from Falls Church to Dulles
  • FTA denied the grant of the other 25 percent in January
  • The goalposts are being moved
  • The congressmen are pressuring FTA to approve the project
  • Kaine “will not rest until we make this thing work”
  • Dulles has more capacity for international flights that can be tapped if public transportation link to airport is developed
• Question from the audience about transportation especially the I-81 corridor
  • Major transportation investment, especially in Hampton Roads and Northern Virginia
  • State and federal revenues being combined to make safety improvements, but no significant expansion planned.

Here’s what others are saying about VAR’s Legislative & Education Conference:

• Jeremy Hart on the NRVLiving blog
• Matthew Rathbun on the VLA blog
• Matthew Rathbun on the VLA blog #2
• Candy Lynn on the Musings from the Valley of Virginia blog
• Michael Wurzer on the FBS blog (added February 15)
• Tony Arko and Danilo Bogdanovic on RealDiaBlog (added February 15)
• Jim Duncan on the RealCentralVA.com blog (added February 15)
• Laura Flournoy, CEO of the Eastern Shore Association of REALTORS (added February 15)

Leave a comment or trackback if you have perspectives of your own to share.

VAR members laugh and stretch their necks to catch a glimpse of the RPAC luncheon special guest, a Senator Clinton impersonator, as she makes her entrance.

Members of VAR’s Leadership Team enjoying themselves before lunch.

Senator Houck enjoys a light moment with members from the Fredericksburg Area Association of REALTORS.

Members from the Richmond Association of REALTORS greet Senator Watkins.

REALTORS from the New River Valley Association pose with Delegate Nutter.

Delegate Poindexter with VAR members.

Delegate Iaquinto speaks with members from the Hampton Roads REALTORS Association.

Senator Herring greets members from the Dulles Area Association of REALTORS.

Delegate Terri Suit addresses REALTORS as VAR’s legislative counsel Chip Dicks watches on.

Kathy Nunnally and Pat Jensen pose as the Roanoke Valley Association of REALTORS accept an RPAC award.