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Senate Votes 93-1 to Approve FHA Reform
Intense lobbying efforts by NAHB cleared the path for Senate passage of FHA modernization bill S. 2338 on Dec. 14. The measure was approved by a near unanimous vote of 93-to-1. The lone dissenter was Sen. Jon Kyl (R-Ariz.). The break came on Dec. 13, as related by a story in CQ Today which said: “After intense pressure from lobbyists … Tom Coburn, R-Okla., agreed Thursday to release his hold on a bill that could help relieve the subprime mortgage crisis.” Before the vote, NAHB sent a letter to every senator designating passage of S. 2338 as a “key vote” for the housing industry.
Prior to Coburn dropping his hold on the bill, NAHB lobbyists this week remained in close contact with key Senate committee and leadership staff in an effort to urge passage of S. 2338. NAHB grassroots reached out to the office of Sen. Jim DeMint (R-S.C.) to find out where he stood on FHA reform bill S. 2338. By mid-week we learned that Sen. DeMint had dropped any objections to the bill and was no longer holding up the legislation. NAHB continued its advocacy efforts with other GOP senators who still had concerns with the bill, including Sen. Coburn. These efforts were ultimately successful, resulting in the bill going forward.
In a press statement issued after the vote, NAHB President Brian Catalde said that the "measure would offer borrowers a safe and fair mortgage alternative to the volatile subprime market. We urge the House and Senate to move quickly to iron out differences between their bills and bring this legislation to the President's desk before year-end."
For more information, contact Scott Meyer at 1-800-368-5242, x8144.
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Baucus Seeks Action on Mortgage Debt Forgiveness Bill
This week the Senate Finance Committee held a hearing entitled, The Housing Decline: The Extent of the Problem and Potential Remedies, to discuss the current mortgage crisis as well as options for mitigating its immediate and long-term impacts. This is the first in a series of hearings to be held by the committee that will continue into 2008. All of the panelists supported congressional action to eliminate any taxes home owners might face when banks renegotiate the terms of a home loan and forgive a portion of the outstanding mortgage debt.
Committee Chairman Max Baucus (D-Mont.) stated at the end of the hearing that the panel would try to move a bill on mortgage debt cancellation – S. 1394, the Mortgage Cancellation Relief Act of 2007 introduced by Sens. Debbie Stabenow (D-Mich.) and George Voinovich (R-Ohio) – before the Senate adjourns for the holidays. The Senate measure would provide temporary relief while legislation approved by the House In October would permanently eliminate taxes on forgiven mortgage debt. Resolving these differences will be crucial to ultimate passage of the legislation. NAHB continues to advocate strongly for a change in the tax law that would eliminate this tax burden on mortgage indebtedness as part of an overall response to the crisis in the housing market. For more information, contact Greg Brown at 1-800-368-5242, x8421.
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House AMT Bill Omits Carried Interest Plan, Offsets Remain
By a vote of 226-193, the House on Dec. 12 approved legislation (H.R. 4351) that would provide a one-year patch to the Alternative Minimum Tax, effectively keeping its reach away from an additional 20 million taxpayers in the 2007 tax year. The bill includes revenue offsets to pay for the measure but differs in one key respect from a similar measure passed by the chamber on Nov. 9. In a victory for multifamily home builders, the revised legislation no longer includes a provision to tax “carried interest” to pay for the bill. NAHB lobbied intensively to remove this controversial measure from the legislation because it would impose a multi-billion dollar tax increase on real estate at a time when the industry is already experiencing a downturn.
The fate of the bill remains uncertain because Republican senators and President Bush still insist on a stand-alone AMT relief bill that should be approved without any offsetting spending cuts or tax increases, arguing that AMT revenue was never intended to be collected in the first place. They are at odds with 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 White House also issued a new veto threat, warning that the failure of Congress to move quickly will cause the IRS to delay millions of tax refunds because the agency will be unable to process the necessary administrative changes in a timely manner. At this point, it remains uncertain which chamber will blink first, or whether the deadlock between the House and Senate will ultimately result in no AMT relief for American taxpayers.
NAHB continues to urge Congress to enact swift passage of AMT relief and ensure that the carried interest proposal stays out of any final bill because of its damaging impact on real estate development. To view the bill, click here and type H.R. 4351 in the box in the upper center screen. For more information, e-mail Greg Brown or call him at 800-368-5242 x8421.
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Senate Energy Bill Drops Tax Package
The Senate passed a revised energy bill late on Dec. 13 after an attempt to include a $22 billion tax package fell one vote short earlier in the day. The revised bill was approved by a wide margin of 86-8 without the controversial tax package that brought objections from senators in both parties and the White House. The measure includes the first increase in vehicle fuel economy (CAFÉ) standards in 32 years for cars and light trucks, and also sets mandates for renewable fuel production, appliance and lighting efficiency, and green building requirements for federal construction. Notably, the building code provisions that NAHB and several real estate leaders lobbied against were not included in the final bill. After agreeing to remove the controversial tax items following two failed attempts to keep them, Senate leaders were able to gain wide bipartisan support and the President has hinted that he is now likely to sign the bill. The House passed the bill last week by a margin of 235-181 with an $11 billion tax title and now is expected to hold a vote early next week to approve the Senate changes before sending the legislation to the White House. For more information, contact Elizabeth Odina at 1-800-368-5242, x8570.
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Democrats to Shift Funding to Meet Bush Budget Demands
House and Senate leadership and appropriators struggled over the past week to come to a conclusion on the 11 remaining fiscal 2008 appropriations bills that have yet to be enacted. The funding bills -- which cover federal government spending on everything from key housing programs, to job training and OSHA, to Census Bureau funding for the decennial census -- remain locked up in a battle between the White House and congressional Democrats over the total funding levels for all discretionary programs.
During the past few weeks, President Bush has consistently opposed the fiscal 2008 appropriations bills because they exceed by $23 billion the budget proposed by the White House. Even after Democrats agreed to "split the difference" and cut the $23 billion figure to $11 billion, the White House held firm, insisting that the President would only sign an appropriations measure that funded the government at the Administration’s original level.
Late this week, almost three months after the beginning of fiscal 2008, congressional leaders finally capitulated to the White House’s demands, agreeing to go back to the drawing board to re-craft all 11 bills to meet the Administration’s original caps. Congressional staff will work through the weekend to pull together appropriations bills that adhere to this level, while also shifting funding within the bills to meet the Democrats' policy priorities. It is anticipated that House lawmakers may release a draft version of the bill on Sunday, Dec. 16, and they hope to be able to vote on the massive omnibus package on Dec. 17, or Dec. 18—essentially clearing the decks for the House to go home for the holiday. Behind the scenes, the House and Senate appropriations staff continue to struggle to agree on spending cuts and funding for priorities and the sessions this weekend are likely to be contentious as lawmakers argue over which programs to cut to meet the Administration’s demands. The Senate is likely to be in session through the end of next week in order to complete the spending bills.
As all of these negotiations continue, the Congress passed another Continuing Resolution (CR) this week to keep the government operating until Dec. 21, 2007. The current CR, which was passed just before Thanksgiving, funded the government through December 14. Should Congress fail to enact appropriations bills before the upcoming holiday, another CR will be required to avoid a full government shutdown. The U.S. Constitution requires appropriations bills funding the federal government to be enacted each year by Congress. For more information, contact Jenna Hamilton at 1-800-368-5242, x8407.
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Clean Water Act Proposals Go Too Far, NAHB Tells Senate
During a hearing before the Senate Environment and Public Works Committee this week, NAHB told lawmakers that proposed legislation that would broaden the authority of the Clean Water Act is a leap in the wrong direction. The hearing focused on legislation introduced by Sen. Russ Feingold (D-Wis.), S. 1870, the Clean Water Act Restoration Act, as well as a companion House bill sponsored by Rep. Jim Oberstar (D-Minn.). During the past year, NAHB has worked against these bills because they would greatly expand the scope of the Clean Water Act , dramatically increase the number of permits required by home builders and hamper the industry's efforts to keep housing affordable.
Testifying before the panel, Duane Desiderio, NAHB Staff Vice President for Legal Affairs, outlined NAHB's concerns with efforts to expand the jurisdiction of the Clean Water Act. NAHB has long supported the goals of the Clean Water Act, but believes that broadening its scope to include all waters -- including roadside ditches -- within its regulatory reach would add on more regulation without a corresponding environmental benefit. With a credit crisis exacerbating the housing slowdown, Desiderio said that NAHB believes Congress should focus its limited time and resources on legislation to help home owners and home buyers, rather than pursue legislative ideas that not only will restrict the industry's ability to recover, but also make new homes more costly. For more information, see NAHB's press statement or contact Annie Raymond at 1-800-368-5242, x8307.
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Bankruptcy Bill Could Wind Up Harming Home Buyers
The House Judiciary Committee on Dec. 12 completed its markup of H.R. 3609, the Emergency Home Ownership and Mortgage Equity Protection Act of 2007. Introduced by Rep. Brad Miller (D-N.C), the measure would allow bankruptcy judges to reduce the value of a home loan, extend the terms of the loan, lower the interest rate, delay the effective date of an adjustable rate increase and make other similar changes to a mortgage for home owners going through Chapter 13 bankruptcy proceedings.
NAHB is concerned that this legislation would add substantial new risks to investors in the secondary market. The likely effect would be to reduce liquidity, make it more difficult for borrowers to obtain a mortgage or refinance, and increase mortgage rates. In a joint letter sent to the committee by NAHB and several other trade associations, it was noted that “H.R. 3609 will actually cause harm to future homebuyers. Last week, during a hearing in the Senate Judiciary Committee, several economists testified that granting bankruptcy judges new powers to alter the terms of a mortgage will increase the cost of mortgages for all future borrowers.” The potential for higher mortgage rates is a big concern, as even a small increase in mortgage rates will eliminate millions of Americans from the marketplace.
The committee approved the bill by a mostly party-line vote of 17 to 15, with only one Republican voting in favor, after adopting a compromise agreed to by Chairman John Conyers (D-Mich.) and Rep. Steve Chabot (R-Ohio). While the compromise does limit the scope of the bill, it may only serve to undermine the Administration’s efforts to encourage voluntary loan restructuring by incentivizing bankruptcy while adding uncertainty into the mortgage finance market. To view the legislation, 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 Opposes Measure to Limit Arbitration
On Dec. 12, the Constitution Subcommittee of the Senate Judiciary Committee held a legislative hearing on S. 1782, the Arbitration Fairness Act of 2007. introduced by Sen. Russ Feingold (D-Wis.), the bill would prohibit two parties from including in a contract a pre-dispute arbitration agreement and would also invalidate pre-dispute arbitration agreements in existing contracts. NAHB opposes S. 1782.
In testimony submitted for the hearing, NAHB noted that this bill “…will introduce, retroactively, significant risk to many businesses, as they would now face the potential for higher legal costs associated with litigation but would be unable to adjust existing contract prices to reflect this new risk.” NAHB believes that alternative dispute resolution, including arbitration, is often the most rapid, fair and cost-effective means to resolving disputes -- for both the builder and the buyer -- arising out of the construction and/or sale of the home. In contrast, litigation is expensive, time-consuming and unlikely to produce the desired result, which is having a problem repaired. Consequently, NAHB will strongly oppose S. 1782 and any other attempt to prohibit the use of pre-dispute arbitration in home construction defects. To view the legislation, 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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Bill Would Help Enlistees Qualify for Affordable Housing
This week the Senate passed S. 1593, the Defenders of Freedom Tax Relief Act of 2007, NAHB-supported legislation that would provide greater access to affordable housing for enlisted military personnel and their families. The measure includes a provision that excludes a service member’s basic allowance for housing (BAH) from income when determining income eligibility for the Low Income Housing Tax Credit. This provision was taken directly from S. 839, the Military Access to Housing Act, introduced by Sen. Pat Roberts (R-Kan.) and co-sponsored by Sen. Ben Nelson (D-Neb.), among others. The next step forward in the legislative process is unclear at this point. The House could choose to consider and pass Senate bill S. 1593 or decide to take up its own version of the legislatiion, H.R. 3997, and reconcile the two bills in a formal conference. If the former occurs, the legislation could become law before the end of the year. However, if the latter occurs, then it will be put off until 2008. For more information, contact Greg Brown at 1-800-368-5242, x8421.
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House and Senate Tussle Over TRIA
The House this week approved revised legislation (H.R. 4299) that would extend the Terrorism Risk Insurance Act for seven years. The original House bill extended the program for 15 years. The House bill must still be reconciled with Senate bill H.R. 2761, which also would extend TRIA for seven years. However, there are significant differences between the two bills. The House bill would reduce the threshold from $100 million to $50 million that would trigger coverage and expand the program to cover life insurance. The Senate bill does not include these provisions and it is uncertain if the Senate will accept the House bill. In addition, the White House this week threatened to veto the House approach, though it said it would accept the Senate version.
If the Senate fails to approve the House bill, House Financial Services Committee Chairman Barney Frank (D-Mass.) indicated that it is "possible" that the House would be open to passing the Senate version of TRIA. Under current law, TRIA is set to expire at year-end. Enacted in 2002 in the wake of the Sept. 11 terrorist attacks, TRIA is intended to provide a backstop for insurance companies in the event of another terrorist attack on American soil. To view the legislation, click here and type the bill number in the box in the upper center screen. For more information contact Scott Meyer at 1-800-368-5242, x8144.
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