NAHB Compromises to Obtain Housing Relief
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In an effort to hasten the passage of housing relief legislation, the National Association of Home Builders (NAHB) officially abandoned its support of a controversial provision in the Senate-passed bill that would have allowed builders to carry back their losses two additional years. The provision could have saved the industry $25 billion by allowing builders to recoup taxes paid when business was booming. It would have helped the biggest builders in particular.
The NAHB has decided instead to focus on the passage of a home buyer tax credit, which, it said, should be as broad as possible. House-passed legislation includes a $7,500 credit for first-time home buyers that would have to be repaid to the government within 15 years. The Senate bill would enact a $7,000 credit to purchase homes in foreclosure for one year. The home buyer tax credit, the NAHB says, would do the most to help the industry.
The concession comes as the NAHB mounts an all-out effort to try to get legislation passed before Congress’s July 4th recess, figuring that there won’t be much time to act after it returns.
After recent revelations that two Senators received VIP breaks on mortgages written by Countrywide, it’s going to take an extra push to get the bill through Congress. Plus, the House and Senate need to reconcile some differences between the bills that passed their respective chambers. And the president has promised to veto legislation. Judging by a recent vote on a procedural matter, there may be enough votes in Congress to override a veto, depending on what’s in the final version.
The House and Senate bills have several basic provisions in common. They provide a special $10 billion allocation of mortgage revenue bonds for new-home purchases and refinancing, allow the Federal Housing Administration (FHA) to insure mortgages written in high-cost areas, overhaul the regulation of Fanny Mae, Freddie Mac, and the other government-sponsored enterprises (GSEs), and expand the Low Income Housing Tax Credit program.
The NAHB this week placed an “An Open Letter to Congress” ad in The Washington Post and USA Today, along with several Capitol Hill publications, urging Congress to act. In it, NAHB President Sandra Dunn, a builder from West Virginia, writes that “The landmark housing stimulus legislation now before both the House and Senate would help end the downward housing spiral that is the biggest threat to the health of our economy.” You can view a copy of the letter at www.nahb.org/openletter.
The association’s Builderlink service provides talking points to use in conversations with Senators and Congressmen. The NAHB recommends that builders tell their representatives personal stories of how the downturn has affected them and their family, especially tough decisions to lay off personnel. It even offers to connect members free of charge to Capitol Hill through a hotline: 866-924-NAHB (6242).
Several differences in legislative approaches between the House and Senate remain to be negotiated, though leaders in both chambers remain optimistic they can deliver a finished piece of legislation within two weeks. The House has proposed a $729,900 limit for loans in high-cost areas that could be insured by FHA and bought by Fannie Mae and Freddie Mac. The Senate set a more modest $550,000 limit.
The other sticking point is how to pay for foreclosure assistance. Both bills authorize FHA to help some borrowers saddled with subprime loans to trade them for more stable FHA-insured mortgages. FHA could refinance as much as $300 billion in troubled mortgages. The Senate wants to pay for this assistance operating revenues at Fannie Mae and Freddie Mac. The House bill doesn’t specify a source to recoup the cost.