Builders Testify Before Congress on Use of TARP Funds
As Congress considers releasing the second half of the Treasury’s $700 billion Troubled Asset Relief Program (TARP), the National Association of Home Builders (NAHB) urged lawmakers to use a portion of the funds to stem the rising tide of foreclosures and increase the flow of credit for housing production. NAHB also urged passage of legislation to stimulate housing demand.
“Up to this point, the TARP program has failed to expand the flow of credit to business and consumers on competitive terms,” NAHB Chairman-elect Joe Robson, a home builder from Tulsa, Okla., said in testimony before the House Financial Services Committee. “In addition the TARP program has not adequately responded to the nation’s foreclosure crisis, which must be addressed to keep people in their homes, help stabilize home prices and promote recovery of the housing market and economy.”
Specifically, Robson urged Congress to enact NAHB’s proposal to boost housing demand by providing a bigger and better home buyer tax credit and offering below-market fixed-rate mortgages on home purchases, which would increase home sales by 1.1 million in 2009 and create more than 539,000 jobs.
With production of badly needed new affordable housing units declining in the current economic climate, Robson offered several suggestions to improve the financial health of the Low Income Housing Tax Credit (LIHTC), the single most important affordable housing production program in the federal government. He urged Congress to:
- Bring individual taxpayers back into the LIHTC investment market by changing the passive loss rules established as part of the Tax Reform Act of 1986.
- Make the LIHTC a refundable tax credit to stimulate investment and ensure that existing credits are not resold in the syndication market, thus checking the decline in LIHTC prices.
- Expand the LIHTC carry back rule from one year to five years to ease the downward pressure on LIHTC by allowing credits to be claimed by investors that may not have federal tax liability in the current year.
- Allocate funds to state housing finance agencies to make up equity shortfalls in developments which have LIHTC allocations but have not generated sufficient equity for the projects to move forward.
View the full press release here.
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