Senate Focuses on Housing Fix to Jump Start the Economy
NAHB’s intensive long-term lobbying efforts paid dividends when the Senate last week unveiled its bipartisan blueprint for housing legislation that includes several association priorities:
- FHA modernization. The maximum Federal Housing Administration-insured loan would increase to 110% of a region’s median home price, up to a maximum of $550,000, with a minimum downpayment of 3.5%, up from 3% currently. When a temporary limit in the economic stimulus package of $729,000 for high-cost areas expires at the end of this year, the FHA limit is set to return to 95% of the regional median home price, up to $362,000.
- Home-buying tax credit. Home buyers would receive a $7,000 tax credit spread out over two years for purchasing homes in foreclosure or when foreclosure proceedings have begun.
- Net operating loss (NOL) carryback. Businesses that lose money in 2008 and 2009 would be able to use those losses to offset taxes they paid for the previous four years, compared with the two-year carryback allowed under current law.
- Mortgage revenue bonds. States would be provided new authority to issue $10 billion in bonds to be used to refinance subprime loans, mortgages for first-time home buyers and multifamily rental housing.
The legislation, entitled the Foreclosure Prevention Act of 2008, would also:
- Provide local governments with $4 billion in Community Development Block Grants, which could be used to purchase and rehabilitate foreclosed properties.
- Allow home owners who do not itemize their taxes to deduct up to $500 ($1,000 for married couples filing jointly) worth of property taxes.
- Provide $100 million in additional funding for housing counseling for mortgage borrowers at risk of default.
- Give soldiers returning from service more time before lenders can start foreclosure proceedings; it would also increases the VA loan guarantee amount.
This bill is an important first step in the process of enacting comprehensive housing legislation that will shore up the nation’s housing industry and the economy. It is anticipated that the Senate could hold a final vote on this measure as early as this week.
Meanwhile, House leaders are signaling tentative signs of support for the Senate measure but also indicating that changes will have to be made as they work to prepare their own housing solution. For example, House Financial Services Committee Chairman Barney Frank (D-Mass.) has said that he wants to go further to overhaul the FHA and plans to hold hearings on his foreclosure bill this week.
The House Ways and Means Committee is also expected to unveil housing-related tax legislation this week. NAHB is working closely with the House to ensure that NAHB's priorities are included in the bill.
“The Senate is to be commended for efforts undertaken on a bipartisan basis to advance a much-needed housing bill,” said NAHB President Sandy Dunn. “As the legislative process moves forward, NAHB will continue to work with Democratic and Republican lawmakers in both chambers with the goal of enacting the best possible legislation for housing and the economy — including a more robust home buyer tax credit with broader applications.”
After the Senate bill was introduced, NAHB sent a letter to Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) praising the Senate for moving forward on this carefully crafted compromise.
NAHB urged Senators to oppose amendments that could unravel the bipartisan agreement, such as a proposal put forth by Sen. Richard Durbin (D-Ill.) that would alter how primary residency mortgages are treated during bankruptcy. A follow-up letter was sent to every Senator opposing the Durbin amendment and designating it as a “key vote” because of the potential of this amendment to cause renewed turmoil in the credit markets. In a victory for NAHB, the Durbin amendment was subsequently tabled on a 58 to 36 vote.
NAHB is currently tracking several amendments that are expected to come up for a vote this week in the Senate. Of particular interest are amendments to expand the home buyer tax credit, attach the House-passed GSE reform bill and strike the NOL provisions.
A letter was also sent to the Senate leadership refuting accusations by the Laborers International Union of North America (LiUNA) that the net operating loss carryback provision was a bailout for the housing industry.
LiUNA had distributed a document on Capitol Hill entitled “A Multi-billion Dollar Bailout for Those at Fault: Corporate Homebuilders, the Housing Crash and the Mortgage Crisis.” NAHB noted that NOL is a “well-accepted economic stimulus proposal for responding to economic crises and is critical to helping home builders of all sizes to weather this economic storm.” The NAHB letter went on to rebut point-by-point every allegation made in the LiUNA document.
On the Public Affairs front, NAHB CEO Jerry Howard embarked on a financial news media tour in New York earlier last week to discuss the association’s housing priorities and policy initiatives being debated on Capitol Hill. Howard did a live studio interview on CNBC’s Closing Bell with Maria Bartiromo and was also interviewed by the LA Times, CQ, AP, Bloomberg, CNN Money and Politico.
After the Senate plan was unveiled, Howard provided NAHB’s perspective on the legislation in interviews with Bloomberg TV, CNN, AP, Roll Call, Nightly Business Report, CNN Money and Builder magazine. In addition, NAHB Chief Economist Dave Seiders discussed the Senate housing bill on CNBC’s Closing Bell.
Continuing its ongoing ad campaign calling on Congress to move quickly to jump-start housing and the economy, NAHB ran an ad in the March 29 and April 5 editions of the National Journal urging lawmakers to “act now to break the downward spiral in the housing market before it is too late.”
For more information on the Senate housing bill, e-mail Greg Brown at NAHB, or call him at 800-368-5242 x8421. To learn more about the Durbin bankruptcy bill, contact J.P. Delmore, x8412.