More Stimulus Needed to Stabilize Housing and Economy
On Jan. 24, House Speaker Nancy Pelosi (D-Calif.) and Minority Leader John Boehner (R-Ohio), along with Treasury Secretary Henry Paulson, announced an agreement on an economic stimulus package that would permanently raise the FHA loan limit from the current $367,000 to a maximum of $729,750. It would also provide a one-year increase in Fannie Mae’s and Freddie Mac's conforming loan limit, from $417,000 to a maximum of $729,750.
The package would also provide businesses a 50% bonus depreciation in 2008 and increase the current Section 179 expensing limit for small businesses.
“While the Administration and Congress are off to a good start in crafting an economic stimulus package to boost the ailing economy, the continuing deterioration in the housing market, as reflected in the new home sales numbers for December, underscores the need to do more to stabilize housing and the economy,” said Jerry Howard, executive vice president and CEO of NAHB.
Specifically, Howard called on lawmakers to:
- Raise the Fannie Mae/Freddie Mac conforming loan limit for two years instead of one and link this change to reform of the housing government-sponsored enterprises. “This will increase the availability of mortgage money in high-cost markets,” said Howard. “The one-year fix won’t work. By the time the plan is passed, regulators sign off and Fannie and Freddie are ready to implement it, we’ll be down to less than a six-month window to help borrowers in high-cost markets.”
- Allow businesses to carry back net operating losses for five years. “This would save jobs and maintain the viability of many businesses by providing them with a much-needed infusion of capital to prevent the liquidation of assets,” said Howard.
- Expand the mortgage revenue bond program, which allows state and local governments to issue tax-exempt debt that may be used to finance mortgages at below-market interest rates.
An expansion of the carryback period for Net Operating Losses (NOL) was initially included in the House stimulus package. However, it was cut at the last minute because of its cost. NAHB is now focused on the Senate, and the Finance Committee in particular, to restore the provision. The panel plans to mark up its version of economic stimulus legislation this week.
Before the White House and House leaders announced their agreement, NAHB worked aggressively to ensure that a housing component would be an important part of any stimulus package going forward. NAHB on Jan. 22 sent a letter to leaders on Capitol Hill that included an accompanying summary of policy options to aid Congress in addressing the housing crisis and helping to stimulate the economy.
Specifically, NAHB urged lawmakers to take the following actions when crafting a stimulus package: create a tax credit for first-time home buyers; expand the net operating loss deduction carryback; designate housing as an eligible investment for tax-preferred retirement accounts; increase the conforming loan limit for Fannie Mae and Freddie Mac; expand the mortgage revenue bond program; and modernize the FHA.
To further hammer home the message that housing should be a part of any stimulus plan, NAHB ran a series of ads in USA Today, Roll Call and the National Journal during the past week. The most recent ad (shown above) will appear in the Jan. 29 editions of USA Today and Roll Call.
For more information, contact Greg Brown at NAHB at 800-368-5242 x8421.