Bill Called a Threat to Housing Finance System
Legislation introduced last week by Rep. Pete Stark (D-CA) eliminating Fannie Mae's and Freddie Mac's exemption from state taxes threatens to harm the nation’s housing finance system at a time when housing is helping to prop up an anemic economy and major efforts are underway to expand homeownership opportunities, according to the nation’s home builders.
“This could end up as a tax on housing and homeownership by driving mortgage interest rates higher,” said Jerry Howard, executive vice president and CEO of NAHB.
The “Secondary Mortgage Market Fair Competition Act,” which would require Fannie Mae and Freddie Mac to pay hundreds of millions of dollars in annual taxes, could have an adverse impact not only on the housing financial market but on the entire industry, Howard said. “Ultimately, these expenses would be passed on to consumers in the form of higher mortgage rates. And this would harm home buyers and home builders alike.”
Congress provided Fannie Mae and Freddie Mac with a special charter to allow them to extend affordable mortgage financing for home buyers. Changing their tax status would impair their ability to meet this charge.
“By putting upward pressure on mortgage interest rates, this bill could greatly impede efforts spearheaded by the Bush Administration to expand homeownership opportunities to more than 5 million households over the next decade, said Howard.