Mobile Area Association of REALTORS®

Legislative Lens: Staying informed on housing updates

Stay informed, engaged, and empowered in the ever-evolving world of housing legislation. We are excited to bring you the latest updates, insights, and analysis on the legislative issues shaping the housing landscape.

In today’s fast-paced world, keeping track of housing-related laws, regulations, and policies can be a daunting task. That’s why we’re here to simplify the process, ensuring you have a comprehensive understanding of the critical matters that impact your housing options, rights, and opportunities.

Local Updates

Annexation Update: On May 9, the Mobile City Council voted unanimously to pass four annexation referendums in West Mobile, giving the residents in the four areas the power to decide on the expansion of the city.

If the annexation comes to fruition, Mobile’s population will increase to 213,000 residents, making it the second largest city in Alabama, behind Huntsville. The historic vote comes after months of public discussion, an extensive third-party analysis of multiple annexation proposals and a series of public meetings in all seven council districts. Over the last year, Mayor Stimpson’s administration has conducted dozens of meetings with hundreds of stakeholders throughout Mobile to gather input on how to grow the City of Mobile’s population.

On Tuesday, July 18, residents in the four areas will be able to vote on whether to join the City of Mobile.

The four areas are:

  • Airport Corridor
  • Cottage Hill Corridor
  • Kings Branch
  • Orchard Estates

The City of Mobile released a website answering several questions residents may have when it comes to annexation. You can find that website here.

State Updates

876 bills were filed this session – 524 in the House and 352 in the Senate. Of the 876 bills, over 259 were signed into law. Out of the 13 bills that were opposed, none of them were successful in passing or they were changed to address the issues people had with them. Among the two bills proposed by Alabama REALTORS®, one was successfully passed, while the other, which aimed to address housing for workers, sparked a meaningful discussion as intended. Out of the 13 bills supported by Alabama REALTORS®, only one failed to pass or have a similar bill passed alongside it.

Electrical Contractors Board: This bill was about making the rules for electrical contractors stricter. But the original version of the bill would have taken away a rule that lets property owners do basic maintenance on their own property.

So, the Alabama REALTORS® policy team asked for a change to the bill. They wanted to add an exception that would let property owners, property managers, and their employees do some electrical work without needing a special license. This exception would only apply in certain situations. For example, property managers could change light fixtures and switches, and licensed plumbers or HVAC contractors could connect appliances or equipment when they were working under their own licenses.

The bill was approved by the House, but it didn’t get approved by the Senate committee, so it didn’t become a law.

40-Year Listing Agreement: A new law supported by REALTORS® in Alabama has been passed to address two important problems that are unfair to homeowners. The first problem is related to long-term agreements called “right to list agreements,” where companies were offering homeowners incentives in exchange for a 40-year agreement to list their home for sale. These agreements were recorded as liens on the property. The new law states that any agreement to list a home cannot last longer than one year, and it cannot be recorded as a lien on the property.

The second issue tackled by the law involves the wholesaling of residential properties. It now requires wholesalers to disclose their intentions to both the seller and potential buyers. However, the law doesn’t completely prevent the parties involved from making different agreements if they wish to do so. The purpose of this provision is to protect homeowners and buyers who may not be aware of the wholesaler’s involvement. It’s important to note that this law only applies to residential properties and doesn’t include commercial or other property types.

Additionally, the law includes provisions for punitive damages to be imposed on anyone who violates these regulations regarding the long-term listing agreements and wholesaling.

Workforce Housing Incentives: REALTORS® supported a bill in Alabama that aimed to address the lack of affordable housing for workers. The bill proposed a tax credit program to encourage developers to build more affordable housing units. The Alabama Housing Finance Authority would manage the program, and projects would be awarded in partnership with the Alabama Department of Commerce.

These developments would provide affordable housing for workers earning up to 60% of the median income in their community. The tax credit would reduce state tax liability and could also use federal funding. The Workforce Housing Tax Credit successfully started a conversation on the issue and will be reintroduced next year.

Electronic Security Board – REALTOR® Amendment: A new law was passed that changes the rules for getting a license to work with electronic security systems. This law also includes a change suggested by REALTORS®. The law is about locksmiths and people who install electronic security systems.

The change suggested by REALTORS® means that owners, property managers, and their representatives don’t need a license as long as they don’t advertise themselves as locksmiths. This change is meant to give these individuals more flexibility and recognize their important role in managing properties, without forcing them to get a locksmith license.

Indemnification Agreements Limitation in Contractor Contracts: The Alabama REALTORS® and other business groups were against a proposed law that would restrict the ability to make agreements about responsibility and protection between contractors and subcontractors. People supporting the law believed that subcontractors were being unfairly asked to agree to take responsibility for things they didn’t cause, which led to them being included in unnecessary lawsuits.

Trial lawyers often file lawsuits that involve many contractors and subcontractors, even if they are not actually responsible for any problems. As the lawsuits progress, those who are not responsible are let go through settlements or dismissals.

Those who opposed the law argued that it would limit the freedom to negotiate contracts and result in more lawsuits in the construction and real estate industries, which would be bad for property owners. Ultimately, the bill was not approved.

National Updates

On May 10, the Federal Housing Finance Agency (FHFA) made an announcement. They said that they would not go ahead with proposed increases in loan level pricing adjustments (LLPAs). LLPAs are fees charged by Fannie Mae and Freddie Mac to borrowers based on different risk factors like credit score and down payment amount.

Earlier this year, FHFA had stated that starting from August 1, they would introduce a new LLPA for borrowers whose debt-to-income (DBI) ratio is above 40 percent. However, the National Association of Realtors (NAR) strongly opposed this change. They argued that DBI is not an accurate measure of risk and that the fee would make it harder for low-income individuals to become homeowners. NAR also pointed out that the fee itself could increase the risk of borrowers defaulting by adding to their total debt.

As a result of NAR’s efforts, FHFA not only cancelled the DBI-based fee but also decided to seek feedback from the public before implementing any new fees.

Remember, staying engaged doesn’t end with this newsletter. It is an ongoing commitment to staying informed, advocating for change, and participating in the democratic process.

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