House Passes Key Housing Legislation, Includes Tax Credit Provisions
Late yesterday, the House of Representatives took action on legislation to address the crisis in the housing and mortgage markets by taking up a bill – H.R. 3221, the Foreclosure Prevention Act of 2008 – that was passed by the Senate in early April. In a series of procedural moves, the House amended the bill and replaced all of its original contents with three key amendments. Two of these amendments contained a number of proposals strongly supported by NAHB. Below is a brief summation of the three amendments and the final vote of the House on each.
Amendment #1 sponsored by Rep. Barney Frank (D-MA)—encompasses key elements of regulatory reform of Fannie Mae and Freddie Mac originally passed by the House last year and long sought after by NAHB. The amendment also contained key provisions for modernizing the Federal Housing Administration (FHA) system to provide additional tools and flexibility to address housing finance needs. For both the FHA and Fannie Mae and Freddie Mac, the amendment contains a permanent increase in loan limits. Finally, the Frank amendment contained an expansion of the FHA program to provide up to $300 billion in new guarantees to help finance at-risk borrowers into viable mortgages and prevent further foreclosures. This amendment passed by a vote of 266 – 154.
Amendment #2 sponsored by Rep. Charlie Rangel (D-NY)—consists primarily of the text of H.R. 5720, the Housing Assistance Tax Act of 2008 as reported from the Ways and Means Committee at the end of April. Key provisions of this bill include a temporary, $7,500 first-time home buyer tax credit for the purchase of any home and proposals to modernize the Low Income Housing Tax Credit (LIHTC) and tax-exempt bond programs. Further the amendment creates a special $10 billion allocation of tax-exempt housing bonds to the states for the purposes of refinancing subprime mortgages as well as for new lending for single family and multifamily housing. Finally, the amendment includes language to provide better coordination between the housing tax credit and multifamily bond programs and housing programs under the Department of Housing and Urban Development (HUD) and the Rural Housing Service (RHS), including actions to streamline and expedite transactions involving these different programs. This amendment passed by a vote of 322 – 74.
Amendment #3 sponsored by Reps. Steven LaTourette (R-OH) and Brad Miller (D-NC)—affirms the right of states to prevent abusive foreclosure practices and to establish rules concerning the foreclosure process by clarifying that this Act, the National Bank Act and the Home Owner’s Loan Act do not preempt state laws regulating the foreclosure of residential real property or the treatment of foreclosed property. This amendment passed by a vote of 256 – 160.
Now that the House has completed its work an informal process of negotiating will begin between the House and the Senate over differences between their two bills. There are several similarities (special tax-exempt bond allocation, home buyer tax credit, FHA modernization), but also several differences (LIHTC/bond modernization, Net Operating Loss (NOL) carryback, Federal Home Loan Bank enhancement of state/local infrastructure bonds) which need to be worked out. As well, the White House issued a veto notice on the House legislation which complicates the conference process even further. NAHB is urging quick action on the conference process between the two bills.
For more information E-mail Carmel McGuire, or contact her at 800-368-5242 x2807.
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