American Land Title Association President Mike Pryor told lawmakers Wednesday that the $8,000 first-time home buyer tax credit helped many title companies avoid shuttering operations during the summer.
‘I would be reluctant to declare [the credit's] effect a boom, but I can tell you that without that action, many in our industry would have closed their doors,’ Pryor testified before the House Small Business Committee. ‘Unfortunately, the threat of closure still exists. Unless Congress acts quickly, it will be a very long winter for many of us.’
The credit is currently due to expire Nov. 31, although legislation that would extend the credit through next year has been introduced.
Without the tax credit stimulus, the summer season, which is typically the real estate's strongest period, would have been dismal, Pryor said. "The lack of summer reserves, coupled with exhausted or unavailable credit has left too many of our members struggling for their economic lives," he stated.
Pryor also warned of the unintended consequences the proposed Consumer Financial Protection Agency (CFPA) would have on all small businesses. The CFPA would impose a third layer of regulation and an additional federal bureaucracy onto the title insurance and settlement services industry, according to Pryor.
Unlike many other small businesses, title insurance agencies cannot easily pass additional costs onto customers because rates and charges for title-related services are regulated by state insurance departments. The title industry is additionally regulated by the federal government through the Real Estate Settlement Procedures Act (RESPA).
"The CFPA is simply ill-timed and ill-conceived," Pryor said. "I know that hope and optimism are required traits for small business survival, and I can say that, right now, neither is in great supply for America's small businesses. We must not extinguish this remaining spirit of small business. Nowhere is it more tenuous than in our real estate sector."
SOURCE: American Land Title Association