Key Stimulus Provisions Needed to Jump-Start Housing
The Senate is expected to take-up economic stimulus legislation next week, though it remains unclear what will emerge in the final package. On Jan. 30, the Senate Finance Committee approved legislation (H.R. 5140) that diverged from the House-passed bill in several key areas. Of importance to the housing industry, the Senate panel agreed to expand the mortgage revenue bond program by $10 billion over the next three years, expand the net operating loss (NOL) tax deduction for five years for business losses incurred in 2006, 2007 and 2008, and extend for one-year through 2009 the new home energy efficiency tax credit.
The House last week passed its own stimulus plan, which contains provisions to spur business investments by providing a 50% bonus depreciation in 2008 and more generous expensing rules. The Senate bill includes similar business incentive plans but also adds the NOL provision that would allow businesses suffering losses now to reclaim taxes previously paid. To address the mortgage crisis, the House package would raise the limits for one year on FHA loans from $362,000 to a maximum of $729,750 and provide a one-year increase in Fannie Mae’s and Freddie Mac’s conforming loan limit, from $417,000 to a maximum of $729,750. These provisions are expected to be added to the Senate bill during floor debate.
The day before the Senate Finance Committee considered its own economic stimulus plan, representatives from major builders, along with NAHB CEO Jerry Howard and his lobbying team, held meetings with 14 key senators and/or their top staffers on the need to include key provisions to revive the ailing housing market. Specifically, they called on lawmakers to extend the Fannie Mae/Freddie Mac conforming loan limit to two years instead of one and link this change to overall GSE reform; expand the mortgage revenue bond program to help troubled borrowers to refinance existing home loans; modernize the Federal Housing Administration to assist first-time home buyers; and allow businesses to carry back net operating losses for five years to help businesses weather the economic storm.
Next week, the Senate will vote on the Finance Committee plan, which needs at least 60 votes to move forward under Senate rules. NAHB has sent a letter to every senator urging them to approve the Finance Committee package. Along with FHA and GSE reform, the letter concludes by stating that the housing proposals in the bill “can provide real and sustained economic stimulus for the nation.”
If the Senate fails to muster the necessary 60 votes, it is likely that the chamber would then take up the House-passed bill. Senators may then try to broaden the House legislation by adding amendments that would make millions of senior citizens on Social Security and disabled veterans eligible for a tax rebate, extend unemployment benefits and help low-income earners who need heating assistance.
NAHB believes it is critical that the final economic stimulus plan approved by Congress includes key housing provisions to jump-start the housing market and move the economy forward. Therefore, the nation’s home builders continue to urge lawmakers to:
- Raise the Fannie Mae/Freddie Mac conforming loan limit for two years instead of one to increase the availability of mortgage money in high-cost markets.
- Modernize the FHA to enable the agency to insure more home loans for low- and moderate-income borrowers.
- Permit cities and states to issue tax-exempt mortgage bonds to help struggling borrowers to refinance existing mortgages and first-time buyers obtain low-cost loans.
- Allow businesses to carry back net operating losses for five years to save jobs.
For more information, contact Greg Brown at 1-800-368-5242, x8421.
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builders and America’s small businesses,” said Eckstein.