Extended Term Sought for Home Buyer Tax Credit
In a major grassroots effort, NAHB is urging its members to contact their U.S. senators and representatives and ask them to have the effective date of the proposed home buyer tax credit extended for an additional 90 days to make it as effective as possible in turning around the current downturn in home sales.
“We are asking the House, as it begins making its changes to the bill, to add the months of April, May and June 2009 to the effective date of the credit,” said NAHB President Sandy Dunn.
“The credit should have an effective date of April 9, 2008 through June 30, 2009. The message we need to deliver to our representatives is simple: in order to maximize the effectiveness of the home buyer tax credit and get the most stimulus for the housing market and the economy as a whole, the credit must extend to June 30, 2009,” Dunn said.
NAHB members are being urged to contact their members of Congress through the association's free Legislative Hotline at 1-866-924-NAHB (6242). For complete instructions on how to participate in this telephone and e-mail campaign, click here.
H.R. 3221, the American Housing Rescue and Foreclosure Prevention Act, was approved by the Senate on July 11 by an overwhelming margin of 63 to 5.
The bill now goes to the House. While House and Senate lawmakers largely agree on the core provisions of the bill, the House is likely to make some modifications. The Senate will then need to approve any changes made by the House before the legislation can be sent to the President to be signed into law.
The centerpiece of the bill to help stimulate housing and the economy is a temporary, $8,000 first-time home buyer tax credit for the purchase of any home.
The tax credit would spur home sales, eliminate excess inventory, relieve downward pressure on house prices and bring otherwise qualified home buyers back into the market.
As the legislation now stands, the tax credit could be used for homes purchased between April 9, 2008 and April 1, 2009. Since Congress has taken so long to pass the housing bill and is not expected to finalize the bill until later this month, home buyers in effect will lose four months of being able to use the credit unless this provision is modified.
“The way the law is written, home buyers will not have the use of the credit during the critical 2009 spring and early summer buying season, when we believe the bulk of home purchases will occur,” said Dunn. “This is why it is so important for Congress to extend the effective date of the credit through June 2009.”
With housing and the economy continuing to falter, and renewed turmoil in the financial markets, Dunn said that Congress must act quickly to pass the housing stimulus package.
“Each passing day brings more layoffs, more foreclosures and more fear,” she said. “This legislation will help get home buyers back into the marketplace, stabilize house prices, stem the rising tide of foreclosures and restore confidence in our housing finance system. There’s no time to waste. Congress must finish the job now and pass this bill so that Americans can get some relief.”
In addition to the home buyer tax credit, H.R. 3221 contains several other provisions that would help put the economy back on track, save jobs and restore confidence. The bill would:
- Establish a more effective and balanced regulatory system for the housing government sponsored enterprises (GSEs) — Fannie Mae, Freddie Mac and the Federal Home Loan Banks. It would also permanently increase the GSE’s conforming loan limit up to $625,500, making home loans more affordable in high-cost areas. The House bill would permanently raise the conforming loan limit up to $729,750.
- Give the Federal Housing Administration (FHA) greater flexibility to respond to the needs of borrowers, help more working families become home owners, provide a viable alternative to the subprime market and play a greater role in stabilizing the mortgage markets. The maximum FHA-insured loan would be permanently increased up to $625,500 ($729,750 in the House version), helping prospective buyers to purchase homes in more markets across the country.
- Provide a temporary increase in state tax-exempt housing bond authority to help struggling home owners refinance their subprime loans and to increase access to affordable mortgage credit.
- Enhance the Low Income Housing Tax Credit (LIHTC) and tax-exempt housing bond programs to increase their effectiveness in addressing the nation’s continuing affordable housing needs.
- Expand the FHA program to provide additional authority to help at-risk borrowers refinance with viable mortgages and prevent further foreclosures. The Congressional Budget Office estimates this could help as many as 400,000 struggling home owners to stay in their homes.
The legislation was stalled for weeks by Sen. John Ensign (R-Nev.), who doggedly insisted on attaching an amendment to add $8.2 billion in energy tax break extensions to the package. Senate leaders surmounted those delaying tactics and were able to bring the bill to a vote early in the evening of Friday, July 11.
To read H.R. 3221, click here and enter the bill number in the box at the center of the page.
For more information, e-mail Greg Brown at NAHB, or call him at 800-368-5242 x8421, or contact Scott Meyer, x8144.