Who is NARHRI & why you should be a member - by John Grant

     The National Association of Responsible Home Rebuilders and Investors (NARHRI) serves as the voice of the real estate investing community before state and federal legislative bodies and governmental agencies. NARHRI, conceived just four years ago, began operations at the state level three years ago in response to two major challenges: first, a significant upswing in state legislative proposals governing the industry, and second, a complete lack of a national legislative strategy capable of delivering a cohesive message to officials throughout the country.

     At the heart of NARHRI’s representation of the real estate investing is an ongoing commitment to raising the standards of acceptable behavior for those in the industry. The hundreds of media articles, as well as consumer group reports, detailing so-called “foreclosure rescue scams” present both a challenge and an opportunity for this industry. Without a strong, national response to the actions of a few unscrupulous investors that involves coordinated talks with state attorneys general and lawmakers, the future of the industry will remain at best uncertain, and perhaps even in peril.

     NARHRI’s experiences during the last three years have taught us that our strategy for representing the industry works, and will continue to provide beneficial results for our members and the community as a whole. Whether it is direct negotiations with lawmakers and attorneys general on a piece of legislation currently under consideration, or proactive outreach programs instituted to educate key political decision-makers about our industry, NARHRI has had and will continue to have the most direct and influential voice for investors.

     As Congress is on recess until the fall and most state legislatures are either adjourned or on recess, now is an opportunity to look ahead to challenges facing the industry in 2008 and to provide the industry more details about how NARHRI operates, our work in the states, and why the industry needs to unite behind NARHRI for its governmental affairs needs. NARHRI’s position on this final issue is simple: honest, professional real estate investors deserve a national association that can coordinate an effective, nationwide campaign to protect their interests. NARHRI has delivered for our members and will continue to do so as we expand into additional states. Further information about our ongoing educational outreach and legislative campaigns can be found at www.narhri.org

How Does NARHRI Coordinate Our State Campaigns?

     In any business venture, one always seeks the best possible people to work with at the best possible price. This is the philosophy of NARHRI as well, and we are able to provide this industry with the best possible advocates at great rates. NARHRI achieves this goal through the implementation of a regional lobbying strategy, whereby we retain law firms and lobbying firms to cover multiple states for us. This strategy is also employed by the largest U.S. corporations for a simple reason: it substantially reduces costs without impacting effectiveness one iota. Later this year, NARHRI will announce our 2008 state legislative campaigns, and we expect to be able to serve a significant number of states next year through our regional lobbying strategy.

     Another strategy employed by all NARHRI lobbyists and advocates is what we term “top-down lobbying.” Essentially, this means that when NARHRI enters a state we immediately coordinate meetings with the governor’s office, the office of the state attorney general, and state legislative leadership as well as any applicable state agencies. The instincts of non-governmental affairs professionals when faced with a legislative crisis is to employ a grassroots campaign that involves blast faxes and phone calls to lawmakers.

     As a government affairs professional who has worked with hundreds of state and federal lawmakers, I can share their feedback on these types of campaigns, which is almost always negative. These types of grassroots campaigns tie up phone and fax lines, preventing lawmakers and their staff from doing their work. Boilerplate letters and faxes are not read, and a significant number of the phone calls received are hostile and serve no one. While it may make people feel good to unload on a politician, it is not the way to get results. The most effective way to get results is through direct, thoughtful meetings with lawmakers, government officials and their staff, and that is what NARHRI does on behalf of the real estate investing industry.

     This is not to say that NARHRI completely discounts direct interaction between investors and their representatives. NARHRI established the Community Appreciation and Rehabilitation Educational Services program (NARHRI CARES Program) to give investors an effective, direct voice to lawmakers. The CARES Program is an educational outreach program designed for lawmakers, government officials and the media. Our CARES Program involves direct meetings with key political figures in a state accompanied by a site visit of a home or community invigorated by the work of an investor. Similar programs are in place at large corporations as well because this system of grassroots outreach is a proven winner.

What type of Legislative Challenges Does the Industry Face in 2008?

     NARHRI has two primary legislative challenges in 2008. The first is the containment of legislation designed to protect consumers but has unintentional (or sometime quite intentional) negative consequences for honest professionals in the real estate investing industry. NARHRI has made great strides on this front, most recently with the defeat of a measure in North Carolina that would have banned all “subject to” transactions. However, our work continues in other states, for example Texas, where a ban on lease option transactions occurred before the formation of NARHRI still stands.

     Our ability to track and analyze legislation from around the country allows NARHRI to have some important insight into the containment strategy. As we have seen for the past several years, many states are targeting what are known as “leaseback to owner” transactions. Massachusetts has proposed an outright ban on these transactions, while most other states are substantially regulating them through a variety of provisions, most notably the “82% Rule.” Media accounts of foreclosure rescue scams often refer specifically to leaseback to owner transactions, and the Federal Trade Commission has issued guidelines warning consumers of this transaction.

     Clearly, it is only a matter of time before this transaction is regulated nationally. NARHRI’s strategic objective is to contain regulation of the industry to this transaction and judge the impact this regulation has on the number of foreclosure rescue scams. NARHRI will continue to protect home rehabbers and creative real estate investing techniques besides the leaseback to owner transaction. This makes sense not only from a strategic point of view, but also from a consumer protection viewpoint. One observation that must be made is that the pervasiveness of these foreclosure rescue scams are somewhat exaggerated. Often, it is a few individuals in a state scamming a number of people. NARHRI makes this observation based upon discussions with enforcement officials in states who provide real data regarding the number of complaints and investigations. NARHRI takes all of these complaints seriously, but some perspective is warranted out of fairness to the industry as a whole.

     NARHRI has had to “play defense” the last few years in order to stop some onerous legislation but also to establish where enforcement officials stand in terms of regulating the industry. Our next major challenge will be the creation of a standard NARHRI-sponsored measure that can serve as an alternative to a variety of proposals in any state. This will be difficult on two fronts, first creating a bill that will satisfy the majority of lawmakers, and secondly creating a bill that reflects the consensus of the industry. NARHRI does have some language already under consideration. As an organization that is committed to consumer protection, NARHRI has promoted regulation and will continue to work toward a consensus measure that targets unscrupulous investors.

Supporting NARHRI

     As NARHRI expands its work in the states, it is essential that we represent the full spectrum of the industry. National and regional speakers, state investor clubs, investor franchises, corporations, and individual investors have come on board to support us. NARHRI is hopeful that other groups, such as industry data providers, title companies and lenders will also see the benefits of sponsorship.

     NARHRI will continue to work to expand its existing support bases as well. Speakers and corporations have the most to lose if NARHRI does not succeed, and NARHRI hopes that those with also the most to gain by our success will join with our current sponsors. State investor clubs present an excellent opportunity for expansion of our membership base in 2008. These clubs collectively are comprised of thousands of investors per state, and NARHRI has provided clubs a voice in the states and can continue to do so with continued support and expanded participation.

     NARHRI encourages all club presidents to join our effort so that the governmental affairs aspects of the industry are in the hands of governmental affairs professionals. As discussed, NARHRI is effective both in terms of cost and representation, and we will have a seat at the table when discussions of regulating the industry occur. We hope that state investor club presidents will want to join in the type of access we provide and have the voices of all of their members heard. There is absolutely no downside for a state club in supporting us and coordinating their concerns with us. After all, NARHRI is here to serve the industry, and our advocates are ready to help.

One final note on this topic, NARHRI plans to expand outreach to industry data providers and other industries with the stake in the success and protection of the real estate investing industry. Industry data providers depend on support from investors, and should give something back to the industry that allows them to be successful.

Conclusion

Ultimately, NARHRI’s effort to unify the entire industry will not be determined by a single speaker or state investor group getting behind us. Our actions, growth, effectiveness and commitment to distinguish our members from the rest of the industry will enable us to lead the industry. From the governmental affairs perspective, this coming year is incredibly important to everyone in the real estate investing industry, and NARHRI is pleased to be working on behalf of the industry in the states and federally as well. For investors who want a high-level of representation and a truly effect voice to represent their interests, NARHRI is the answer. The challenges facing our industry are as apparent as the solution to those challenges: NARHRI.