June, 2006
Washington Watch
Inspection News and Views from the American Society of Home Inspectors



Federal Policy Agenda Highlights

RANDALL PENCE

Randall Pence, Capitol Hill Advocates, Inc., represents ASHI’s interests in Washington, D.C. As the Society’s federal lobbyist, he regularly reports on ASHI’s success in furthering its federal policy agenda. Recent highlights appear below; more details are available here.

Latest news update

HUD Secretary Alphonso Jackson is telling some interest groups that HUD may be floating a new RESPA reform proposal at anytime. We have received word that HUD has indeed approached the Office of Management and Budget (OMB) to restart formal talks about an administration proposal. HUD is not floating any details as to the scope or substance of what it might propose in a new regulation.

This intelligence needs to be taken seriously, even though it seems to run counter to the indications of the political landscape, which would point against a near-term proposal.

I suggest that ASHI’s stance be that of watchful waiting, standing ready to fight bundling proposals and other mechanisms that might diminish the importance of home inspectors or threaten their
independence.

Budget and appropriations for the federal Community Development Bock Grant (CDBG) program are coming onto ASHI’s radar screen. It is becoming apparent that at least one Gulf Coast state, Mississippi, is planning to spend much of its allocation of CDBG funds on rebuilding homes—up to $150,000 each—that were destroyed or damaged by the 2005 hurricanes. This may reflect a trend for CDBG. CDBG is becoming a major means of funding housing reconstruction. $11.5 billion for Louisiana and $5 billion for Mississippi have already been appropriated. Based on the notion that these CDBG funds will be spent on homes that might provide markets for ASHI home inspectors, I recommend ASHI support CDBG funding.

The Bush administration budget has proposed a 25 percent cut in the CDBG account, so this is a matter in true disagreement.

There is pressure to move authority for housing reconstruction from FEMA, which is doing a lackluster job at best, to HUD. I suggest that ASHI support this shift to help move funds to actual reconstruction of homes.

There is a proposal to create a Katrina Fraud Prevention and Investigation team. It is unclear what the team’smission would be; it may have a home inspection element, or perhaps one could be added by amendment.

HUD has offered an FHA overhaul bill, citing the need to update the authorizing legislation originally passed during the Great Depression. This reflects the concerns ASHI heard last year that HUD feels it is becoming anachronistic, falling behind the private-sector housing market. HUD proposes updating the premium structure, loan limits and more to reflect trends in the private sector. ASHI will be following the bill for its impacts on home inspection, including any further movement favoring “pay for play” programs. ASHI will ask the Housing subcommittees to limit the bill’s encouragement of affinity programs managed in ways that could threaten the independence of professional home inspectors.

As the magazine went to press, we expected that the Small Business Health Plans bill would come to the Senate floor in May. ASHI has already issued a Legislative Alert on the issue. ASHI strongly supports Senate passage of the bill, and urges senators to vote against killer amendments, against all efforts to filibuster the bill, and for cloture to get to a final vote on the bill. Our evaluation is that if the bill is passed by the Senate in the near term, there is a reasonable chance that a House-Senate conference on the bill may be completed, and a bill sent to the President to be signed
into law, by the time Congress adjourns the 109th Congress sine die. This is important, because if the bill does not pass and either the House or Senate reverts to Democratic control for the 110th Congress, prospects for the SBHP, or anything similar, would diminishdramatically. As always, timing is crucial.

Ongoing positions with HUD

ASHI urges federal agency and congressional support to increase the voluntary use of home inspections by homebuyers, using federal assets to improve education and communication on home inspection to homebuyers.

In 2005, ASHI met with U.S Senate staff, a key congresswoman in the House, HUD and the Veterans Administrartion (VA) to discuss key documents that may constitute the only information many homebuyers will receive regarding home inspections. These efforts have been fruitful.

Specifics:

• HUD asked for ASHI materials to be used in training HUD inspectors and is using those documents today. ASHI worked hard to establish itself as a professional, reliable and reasonable source of information on all matters relating to home inspection. As a byproduct of these efforts, HUD agreed that it needs to update and upgrade the materials it uses to train future HUD inspectors. With that in mind, HUD asked ASHI for such materials late in 2005 and received them. They are now incorporated in its training modules. HUD also is providing guidance materials to its trainers to help them advise homebuyers how best to hire home inspectors based on professionalism that is a hallmark of ASHI home inspectors.

• In addition, at ASHI’s request, HUD updated its Web site to include a specific page on home inspection, and provides a link to the ASHI Web site. Considering the hundreds of thousands of homebuyers who will access the HUD Web site, we look forward to much greater penetration of ASHI materials, beliefs and values to be made available due to a new portal for access on the HUD Web site.

• Working in concert with ASHI, HUD has made important changes to its document “For Your Protection – Get a Home Inspection” to make the messages on home inspection clearer and more useful to homebuyers. Further, HUD has included a signature line on which homebuyers must affirm that they have made a knowing choice whether to obtain a home inspection. ASHI applauds HUD’s changes and its willingness to work cooperatively to improve communications to homebuyers. We look forward to future discussions to make improvements to other documents.

• HUD has abandoned the VC Sheet/ Notice to Lender that looked like a home inspection report. The VC Sheet provided a checklist for appraisals that easily could be mistaken for a makeshift home inspection. Homebuyers perceived the comprehensive VC Sheet appraisal checklists as de facto home inspections, which negated the need to obtain true home inspections. ASHI lobbied hard on this problem and targeted it during the General Accounting Office study requested by ASHI. We should regard HUD’s abandonment of the VC Sheet/Notice to Lender as a clear victory resluting from the consistent lobbying pressure brought by ASHI to eliminate this confusing series of government documents that compete with ASHI members’ message on home inspection.

• While the VA Lenders Handbook, Chapt. 13 Lender’s Notice of Value letter contains references urging homebuyers to obtain home inspections, ASHI believes the message can be improved by developing a separate information sheet on home inspection, converting that page to a Web page, and including that page in the Handbook Table of Contents link to the VA Web site home page. The VA is interested in working with ASHI to improve its home inspection messages and a follow-up meeting to discuss specific details is in the planning stage. The VA has asked ASHI to provide supporting data to justify a broader and more forceful effort to urge its customers to obtain voluntary home inspections.

• ASHI’s meetings with Senate Appropriations Committee staff quickly yielded good results. The committee accepted the notion that HUD needs to adopt a stance of educating homebuyers on the need for a home inspection and adopted language about the need to accompany the FY 2006 appropriation bill that provides HUD’s funding.

• ASHI’s Capitol Hill talks with a leading congresswoman on the Congressional Hispanic Caucus are likely to lead to an invitation to ASHI to present its new Hispanic language home inspection materials in a formal meeting of the caucus. The caucus has a strong interest in helping build a robust middle class for Hispanics, and ASHI can access the resources of Capitol Hill to be part of that national effort.

More Policy Positions

For additional information regarding ASHI’s position on the following issues, click here.

• HR1295, the Responsible Lending Act
ASHI supports HR1295, which includes language that would update the Mortgage Information Booklet mandated under RESPA.

• Retention of the Home Mortgage Interest Deduction
ASHI is aware of administration advisory groups advocating wholesale elimination of popular tax deductions, including the home mortgage interest deduction.

• Real Estate Sales Practices Act (RESPA) enforcement
ASHI is aware of certain fee promotional schemes in violation of RESPA requirements, so-called “Pay for Play,” being used around the country.

• Real Estate Sales Practices Act (RESPA) reform
ASHI, like several other home sales interests, is concerned about the impact that bundling of services could have on consumers and their ability to shop around for and obtain independent professionals to serve their needs in an unbiased fashion.

• Banks in realty?
ASHI has supported legislation to stop the U.S. Treasury Department and the Federal Reserve Board from implementing rules that would allow banks to function as real estate brokers in single-family home sales.

• Federal response to Katrina/plans for future disasters
As FEMA emerges from its overwhelmed condition and can use its Katrina experience to plan for the future, ASHI will encourage FEMA to develop a list of potential home inspector volunteers and a workable means of communication to reach them in times of future crises.

• ASHI talks with White House on “crystal meth”
ASHI has been in contact with the Office of National Drug Control Policy (ONDC) to ascertain whether there is some mechanism by which it can partner with the White House office on a new initiative to combat crystal meth production and use.

• Zero-Downpayment Bill introduced in congress
Inasmuch as ASHI does considerable work with HUD to improve its home inspection documents, it is probably beneficial to ASHI to see more customers using FHA financing—and receiving the FHA materials. The future of the bill is uncertain.