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Builders Support Bush Plan to Ease Foreclosures
President Bush and Treasury Secretary Henry Paulson on Dec. 6 announced a plan supported by NAHB that seeks to limit foreclosures by working with key mortgage lenders and investment firms to freeze interest rates for five years on certain subprime mortgages. The Bush/Paulson plan to stave off foreclosures, which emerged from discussions with various groups including lenders, builders, investors, consumer activists, housing economists and regulators, is aimed at borrowers with loans that were originated between Jan. 1, 2005 and July 31, 2007, with rates that are scheduled to reset between Jan. 1, 2008 and July 31, 2010.
Home owners with steady incomes who have been making timely payments on their mortgages, but who cannot afford the higher adjusted rate, could qualify for a freeze of up to five years on their current interest rate if they meet certain conditions. They could also be placed on a fast-track approach that would enable them to refinance or modify their loans. To ensure that the break is not granted to real estate speculators or investors, the plan would only be available for owner-occupied homes.
NAHB issued a positive media statement on the Bush/Paulson plan. "The Administration's plan to help struggling borrowers stay in their homes is one of several steps that can help stabilize the housing market and reassure consumers and investors in the mortgage market," said NAHB President Brian Catalde. "We applaud this action and urge Congress to follow up quickly on pending legislation that would provide additional help in easing the credit crunch and restoring confidence in the marketplace."
Specifically, Catalde called on Congress to:
-- Enact FHA reform legislation to allow the agency to insure more home loans and help subprime borrowers.
-- Strengthen regulatory oversight of Fannie Mae and Freddie Mac and allow them to purchase mortgages in high-cost markets.
-- Enact legislation that eliminates taxes on mortgage debt that is forgiven as part of a loan workout.
Less than an hour after the official announcement, NAHB CEO Jerry Howard appeared live on CNBC's "Street Signs" with host Erin Burnett to discuss NAHB's reaction to the Bush/Paulson plan and he also did interviews with the Chicago Tribune, MultiHousing News, Inman News and XM Radio. For more information, contact Dave Ledford at 1-800-368-5242, x8265.
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Senate Approves AMT Relief, Next Move Up to House
By an overwhelming 88-to-5 vote, the Senate on Dec. 6 voted to extend short-term relief from the Alternative Minimum Tax (AMT) for another year, which would prevent an additional 20 million Americans from being captured under the tax. However, the bill includes no offsetting spending cuts or tax increases, a significant difference from the House-passed AMT relief measure.
Earlier this year, the House passed “pay-as-you-go” rules that require offsets for all tax cuts to make them revenue neutral. One of the primary revenue offsets for the one-year AMT patch approved by the House last month is changing the taxation of carried interest from the current 15% capital gains rate to ordinary income tax rates that can run as high as 35%. NAHB opposed the House AMT bill because the move to tax "carried interest" to pay for the measure would impose a multi-billion dollar tax increase on real estate at a time when the industry is already experiencing a downswing.
Making the issue more complicated, there are two schools of thought in Congress. On the one hand, many lawmakers in the Senate strongly believe that a “clean” AMT bill should be approved without any revenue offsets because AMT revenue was never intended to be collected at all. This philosophy is at odds with that of House Democratic leaders, who insist that pay-as-you-go budget rules are essential to enforcing fiscal discipline and not adding further to the national debt.
The Senate bill now goes to the House, and Ways and Means Committee Chairman Charlie Rangel (D-N.Y.), who insists that Congress must pass AMT relief without adding to the national debt, has indicated a willingness to compromise. “We will make adjustments to the bill to address some of the political opposition in the Senate as it relates to bringing equity into the tax code for managers of equity and hedge funds, but we will continue to pursue this issue,” said Rangel. “At this time, we are looking to close a loophole where billions of dollars in offshore funds have escaped taxation.” Meanwhile, the Bush Administration continues to warn that further debate on AMT relief risks delaying millions of tax refunds, because the IRS won’t have enough time to reprogram its computers to cope with late congressional action.
NAHB continues to urge Congress to move quickly to pass a fix to the AMT and to drop a provision that raise taxes on the carried interest of private equity managers, venture capitalists and real estate investors. For more information, contact Greg Brown at 1-800-368-5242, x8421.
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Sen. Coburn Blocks FHA Reform Once Again
With NAHB's backing, Senate Majority Leader Harry Reid (D-Nev.) on Dec. 6 attempted to bring FHA reform bill S. 2338 to the Senate floor by unanimous consent for the second time in three weeks. Once again, Sen. Tom Coburn (R-Okla.) opposed the measure, but NAHB continues to keep grassroots pressure on the Senate as a whole, and specifically Sen. Coburn, to pass FHA reform before Congress adjourns for the year. In addition, NAHB staff is in continual contact with senior staff on the Senate Banking Committee to monitor the situation and this week met with a coalition of interested groups to discuss the latest intelligence and grassroots lobbying tactics. For more information, contact Scott Meyer at 1-800-368-5242, x8144.
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Onerous Building Code Provisions Removed from Energy Bill
The House on Dec. 6 passed an amended version of H.R.6, comprehensive energy legislation, by a margin of 235 -181. The reworked energy bill would increase vehicle fuel standards, mandate renewable energy use for electricity generation on a broad scale, and establish lighting and appliance efficiency standards, as well as green requirements for federal buildings. Most importantly to NAHB, the detrimental building code provisions that would have called for states to increase code requirements by 30% and 50% in 2010 and 2020 were not included. NAHB lobbied successfully, along with several in the real estate industry, to get the provisions removed prior to House consideration. The legislation also includes a number of tax provisions for renewable energy that would be funded by repealing lucrative oil and gas industry subsidies. The tax provisions were immediately decried, mostly by Senate Republicans, who voted successfully to block a cloture motion on Friday morning and stop further progress of the bill. Meanwhile, the Administration has threatened to veto the measure.
In a related development, the Senate Environment and Public Works Committee this week passed a major climate change bill – S. 2191 – that would establish the first carbon cap-and-trade system in the U.S. The bipartisan legislation, introduced in October by Sen. Joe Lieberman (D-Conn.) and Sen. John Warner (R-Va.), passed after more than nine hours of deliberation by the committee and consideration of more than 40 amendments, most by the Republicans who tried to add provisions for nuclear energy and natural gas production. NAHB has lobbied against building code provisions in the bill and continues to highlight the fact that new homes are substantially more efficient and that additional regulation on new construction is misguided and will not produce significant energy savings. Many leaders in the real estate industry are working with NAHB in this effort. Floor time for the measure has not been scheduled, but the bill faces mounting opposition from many industry and trade groups. For more information, contact Elizabeth Odina at 1-800-368-5242, x8570.
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NAHB Weighs In on Bankruptcy Measure
The Senate Judiciary Committee on Dec. 5 held a hearing on foreclosures and the housing lending industry. NAHB submitted a statement for the record urging lawmakers not to adopt broad legislation that would change the way all mortgages of primary residences are treated in bankruptcy. Specifically, NAHB opposes S. 2136, the Helping Families Save Their Homes in Bankruptcy Act of 2007. The measure would allow the terms of a mortgage on a primary residence to be modified during bankruptcy. By allowing bankruptcy judges to modify the terms of a mortgage on a primary residence, Congress would add substantial new risks to investors in the secondary market, decreasing liquidity in the marketplace and creating new barriers to homeownership with higher downpayment requirements and mortgage rates, the letter stated.
Rather than changing the way that all these mortgages are treated in bankruptcy, NAHB said that Congress should focus on the real problem, namely subprime adjustable rate mortgages. To help achieve this aim, NAHB called on the Senate to move quickly to pass FHA reform bill S. 2338 and S. 1394, legislation that would end the taxation of forgiven mortgage debt. To view any of the bills listed above, click here and type the bill number in the box in the upper center screen. For more information, contact J.P. Delmore at 1-800-368-5242, x8412.
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NAHB Participates in Press Conference on Immigration
NAHB CEO Jerry Howard on Dec. 7 talked about the impact of state and local immigration laws at a press conference in Washington, D.C. He was joined at the podium by Thomas Donohue, president and CEO of the U.S. Chamber of Commerce, and State Rep. Sharon Tomiko Santos (D-Wash.) of the National Conference of State Legislatures (NCSL). The press conference opened a day-long seminar entitled "State & Local Immigration Laws: An Open Dialogue," which took place at U.S. Chamber headquarters. Co-sponsored by NAHB, the Chamber, NCSL and the National Roofing Contractors Association, the event brought together business leaders, state officials and immigration experts. They examined the current legislative proposals on immigration at the state and local levels, the impact of these proposals, and how to improve dialogue between businesses and public officials to prevent unintentionally hindering economic growth. For more information, contact Steve Gallagher at 1-800-368-5242, x8319.
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