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Bills Pending to Address Credit Crunch
Though federal lawmakers adjourned early last week to attend the funeral of Rep. Paul Gillmor (R-Ohio) and mark the observance of Rosh Hashana, the Jewish New Year, legislative proposals were floated in both chambers to do more to fight the mortgage credit crunch.
Sen. Charles Schumer (D-N.Y.) on Sept. 10 introduced legislation that would temporarily lift the portfolio caps and loan limits for Fannie Mae and Freddie Mac to allow the two financial institutions to provide liquidity to the jumbo mortgage markets and to help subprime borrowers refinance mortgages that could become burdensome when the interest rate is reset and monthly payments increase significantly. S. 2036, the Protecting Access to Safe Mortgages Act, would allow the two housing government-sponsored enterprises (GSEs) to increase their mortgage portfolios by 10% and to raise their conforming loan limits by up to 50% in high-cost areas. The temporary increase in the portfolio caps and loan limits would last one year.
Separately, House Financial Services Committee Chairman Barney Frank (D-Mass.) on Sept. 7 sent a letter to Federal Reserve Chairman Ben Bernanke arguing that the Fed and the Administration need to do more to allow Fannie Mae and Freddie Mac to address the problems in the mortgage markets. Frank suggested that Bernanke’s opposition to raising the portfolio caps of Fannie Mae and Freddie Mac is “ideological, not driven by safety and soundness.” Frank concluded his letter by asserting that Fannie and Freddie should be allowed to increase their mortgage portfolios and the conforming loan limit to help alleviate current problems in the subprime and jumbo mortgage markets.
Frank subsequently said on Sept. 11 that he plans to offer an amendment next week to Federal Housing Administration reform bill H.R. 1852 to allow Fannie Mae and Freddie Mac to purchase mortgages of up to $500,000. Frank said that his amendment would not only raise the conforming loan limit to $500,000, but also give the HUD secretary the ability to raise the limit when that action is warranted by market conditions. The full House is expected to consider the bill next week. NAHB has sent out a Legislative Alert calling on our members to contact their lawmakers and to urge them to support H.R. 1852. To read the legislation, click here and enter the bill number in the box at the center of the page. For more information, contact Scott Meyer at 800-368-5242 x8144.
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Policy Adopted on Credit Crunch, Flood Insurance and Davis-Bacon
At its meeting in Seattle on Sept. 5-8, the NAHB Board of Directors adoped policy on several important issues, including addressing the mortgage credit crunch, federal Davis-Bacon wage requirements, expansion of the National Flood Insurance Program, and repeal of government contractor tax withholding requirements. To view the complete set of resolutions, click here.
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Senate Approves HUD Funding Bill
The Senate on Sept. 12 approved its fiscal 2008 Transportation-Housing and Urban Development (THUD) spending bill by a vote of 88-7. Of particular interest to many NAHB members are the funding levels for several key housing programs:
HUD, overall: $38.75 billion
HOME program: $1.970 billion
HOME formula grants: $1.8 billion
Downpayment Assistance Program : $25 million
Community Development Fund: $4.060 billion
CDBG formula grants: $3.77 billion
CDBF Section 108 loans: $6 million
PATH Sec 205 exemption: $0, eliminated
Policy Dev and Research overall : $59 million
Section 8 tenant-based vouchers: $16.598 billion
Section 8 project based vouchers: $5.976 billion
Section 8 incremental vouchers: $0
Section 8 formula: 12 month
HOPE VI: $100 million
Rural Housing Econ Development : $17 million
Housing Counseling Assistance: $150 million
Brownfields Redevelopment: $10 million
OFHEO: $66 million
FHA Multifamily Loan Commitments: $45 billion
FHA Overall Commitment Authority: $185 billion
During floor debate, Senator Robert Menendez (D-N.J.) offered an amendment that was accepted by a voice vote to provide $380,000 in additional funding to the HUD Secretary to implement guidance in connection with assisting persons with limited English proficiency. Also, an amendment offered by Senator Mel Martinez (R-Fla.) and approved by the chamber adds $25 million back into the American Dream Downpayment Act. This account had been funded at zero in the original Senate version passed by the Senate Appropriations Committee. The bill must now be reconciled with the House version. Senate conferees have been named for the THUD appropriations conference committee, though no meetings have been scheduled.
The entire appropriations process remains in flux because President Bush has threatened to veto any spending bills, including the THUD bill, that exceed limits suggested by the Administration. In addition, all of the appropriations bills will not be completed by Sept. 30, the end of the current fiscal year. In the interim, Congress is expected to approve a six-week continuing resolution to keep the government funded and running through Nov. 9. If the President follows through on his veto threats over individual spending bills, Congress may subsequently decide to wrap all the bills into one giant omnibus spending package, effectively daring the President to veto the entire federal budget in one swipe of the pen. For more information, contact Jenna Hamilton at 800-368-5242, x8407.
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Senate Bill Would Alter Classification of Independent Contractors
Legislation introduced this week by Sens. Barack Obama (D-Ill.), Richard Durbin (D-Ill.), Ted Kennedy (D-Mass.) and Patty Murray (D-Wash.) would change the rules on classifying workers as independent contractors. S. 2044, the Independent Contractor Proper Classification Act of 2007, would repeal Section 530 of the Revenue Act of 1978, which allows a business to treat a worker as an independent contractor if the IRS or past industry practice has accorded such status to similar workers in the past. Senators Obama, Durbin, Kennedy and Murray regard Section 530 as a "loophole" that prohibits the IRS from collecting employment taxes from employers who "reasonably" misclassify their workers. Further, in their view, this provision allows employers to "cheat" workers and taxpayers out of money, benefits, and worker protections. Finally, the senators maintain that employees who “follow the rules” are at a competitive disadvantage because of their higher employment costs.
Two different committees in the House of Representatives have held hearings on this issue—the Ways and Means Committee and the Education and Labor Committee. NAHB submitted statements for the record in both cases in support of enforcing present law on classification of workers to protect employers who abide by the existing rules. However, we also maintained that Section 530 is an important policy tool for ensuring that inappropriate tax policy considerations do not interfere with efficient market operation and established business practice. Further, we oppose any attempt to legislate the particular circumstances under which professionals must be defined as employees or independent contractors or efforts to make general contractors liable for the legal and regulatory compliance of their subcontractors in areas such as verifying employee work authorization.
No bill has been introduced in the House at this point, but NAHB continues to meet with congressional staff to express our concerns. Further, NAHB’s State and Local Government Affairs Department is monitoring actions by state governments on this issue where much of the recent activity has taken place. For more information, contact Greg Brown at 800-368-5242, x8421.
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