The Official Online Weekly Newspaper of NAHB
As Congress scrambled to come to agreement on a way to extend the payroll tax cut through 2012 before heading home for the holidays, NAHB was fighting extremely hard against a proposal that would help pay for that extension through an increase on guaranty fees charged to banks by Fannie Mae and Freddie Mac — a move that would ultimately raise the price of homeownership for all Americans seeking loans backed by those institutions.
"Congress is essentially proposing to raise taxes on millions of potential home buyers in order to pay for a payroll tax cut and other non-housing legislative initiatives,” NAHB Chairman Bob Nielsen said.
“With the housing market struggling to regain its footing, such a short-sighted move would be extremely counterproductive and threaten the fragile economic recovery,” he said.
“The guaranty fees — known as g-fees — that Fannie Mae and Freddie Mac charge lenders to protect against credit-related losses should not be used for purposes unrelated to the safety and soundness of the housing finance system."
Letters were also sent to House and Senate lawmakers opposing the g-fee increase. In addition, NAHB also made it clear to members of Congress that the association opposes any measures that would raise the cost of FHA loans.
Unfortunately, the House last week passed a version of the payroll tax extension legislation that included the g-fee provision.
Legislation passed by the Senate on Saturday morning by a vote of 89 to 10 extended the payroll tax cut for only two months, with funding coming entirely from the hike in GSE guarantee fees opposed by NAHB.
As this issue of Nation’s Building News went to press, House Republicans were expected to vote down the Senate-approved bill on the grounds that the extension should be for a full year.
The debate on this issue is expected to continue into the week as both chambers seek common ground.
Flood Insurance Extension and Funding the Government
Meanwhile, one bright spot in the House-passed legislation was the inclusion of NAHB-supported language to extend the National Flood Insurance Program for the next five years. The association is working to ensure that this particular part of the bill remains intact.
Separately, Congress reached an agreement on a $1 trillion spending bill to fund the government through next fall. It would extend federal flood insurance through the end of May in the event that the five-year flood insurance reauthorization plan in the payroll tax legislation falls through.
If Congress does not reach agreement on extending the payroll tax holiday, 160 million workers will see their payroll tax jump on Jan. 1 from this year's 4.2% back to its normal level of 6.2% — a $1,000 difference for a family earning $50,000.
For more information, email Scott Meyer at NAHB, or call him at 800-368-5242 x8144.