For the past year, NAHB has been in the forefront in pushing for legislation to address the turmoil in the financial and housing markets and to bolster the nation’s faltering economy. Senate Banking Committee Chairman Chris Dodd (D-Conn.), a chief architect of the bill, calls it “the most important piece of housing legislation in a generation.”  Echoing those comments, House Speaker Nancy Pelosi (D-Calif.) said that the bill “represents the most far-reaching reform of our nation’s housing finance system in a generation.”

H.R. 3221, the Housing and Economic Recovery Act of 2008, includes several provisions aimed at ending the current cyclical downturn in the housing industry and strengthening the housing finance system so that it will provide critical support as the marketplace gains strength.

The House on July 23 approved the legislation by a vote of 272-152, sending the measure back to the Senate where Senate Majority Leader Harry Reid (D-Nev.) shortly thereafter attempted to bring the bill up for immediate consideration through a unanimous consent agreement. Reid’s effort was thwarted by Sen. Jim DeMint (R-S.C.), a long-time opponent of the bill, who used parliamentary maneuvers to delay a final vote on the bill until July 26 when the Senate approved the measure by a solid bipartisan vote of 72-to-13.

The key elements of the bill are:

•  A temporary $7,500 first-time home buyer tax credit. The t ax credit will stimulate home buying, reduce excess supply in housing markets and shore up home prices. For details on how the tax credit works, NAHB has set up a new Web site at www.federalhousingtaxcredit.com
  
• FHA modernization.  A revitalized FHA will have greater flexibility to respond to the needs of borrowers, enable more working families to become home owners and play an important role in the mortgage markets. The new law includes a permanent increase in the loan limit for FHA-insured mortgages to 115 percent of an area's median home price -- up to $625,500. It also enables the FHA to simplify requirements for condominium loans. However, the FHA will now require a 3.5 percent downpayment from buyers rather than the previous 3 percent and seller-assisted downpayment programs must end as of Oct. 1.
  
• Foreclosure relief.  To address the foreclosure crisis, the FHA is given additional authority to insure up to $300 billion of mortgages to refinance loans headed for foreclosure. The Congressional Budget Office estimates this could help as many as 400,000 struggling borrowers to stay in their homes.
  
• GSE (government-sponsored enterprise) reform. The law reforms the regulation of Fannie Mae and Freddie Mac and permanently increases the conforming loan limit to help buyers in high-cost markets.
  
• A backstop for Fannie Mae and Freddie Mac. To reassure financial and global markets, the government will temporarily expand its line of credit to Fannie and Freddie and permit the U.S. Treasury to purchase an equity stake in the companies through the end of 2009.
  
• Mortgage Revenue Bond Program. The measure gives states the ability to issue an additional $11 billion in mortgage revenue bonds, which will help strapped borrowers seeking to refinance their home loans.
  
• Low Income Housing Tax Credit. Enhancing this program will expand the supply of much-needed affordable rental housing.

Tax Credit Centerpiece of Housing Bill
The centerpiece of the housing bill is a temporary, $7,500 first-time home buyer tax credit for the purchase of any home. The tax credit can be used for homes purchased between April 9, 2008 and July 1, 2009. It is expected to provide a significant — and temporary — financial incentive for home buyers.

As first drafted, the tax credit was set to expire on April 1, 2009. At NAHB’s urging, Congress extended the expiration date through June 2009.  “Extending the credit an additional 90 days was important so that home buyers would have use of the credit during the critical 2009 spring and early summer buying season, when we believe the bulk of home purchases will occur,” said Dunn.

Further resources to help NAHB members promote consumer awareness about the credit are also available at www.nahb.org/mythbuster.

To read the legislation, click here and enter H.R. 3221 in the box at the center of the page.
For more information on the tax components of the legislation, contact Rob Dietz at 800-368-5242, x8285; to learn more about the other provisions in the housing bill, contact Scott Meyer at x8144.

Given the number of states who have mandated that employers use Basic Pilot/E-Verify, several lawmakers expressed concern that the Social Security Administration and its field offices could become inundated with workers trying to fix problems that may lead to the government denying them employment eligibility in the U.S.  The funding provision is aimed at ensuring that SSA does not face a sudden backlog of cases that could lead to legal U.S. workers being denied employment.  Additionally, the reauthorization bill also requires the Government Accountability Office (GAO) to conduct to studies on the error rates in the government databases, and the direct and indirect costs to small businesses who attempt to use the program.

At this time, it is unclear how or when the Senate will take up this legislation, although several key senators have indicated an interest in moving quickly to reauthorize the program. To view the legislation, click here and enter the bill number in the box in the upper center screen. For more information, contact Jenna Hamilton at 800-368-5242, x8407. [return to top]

NAHB CEO Jerry Howard testified on the legislation in June and some improvements were made to the bill during mark up based on recommendations by NAHB.  However, NAHB is still very concerned about some of the mandatory provisions and hopes to continue to work towards additional changes prior to any House floor action in the fall.  To view the legislation, click here and type the bill number in the box in the upper center screen. For more information, contact Elizabeth Odina at 800-368-5242, x8570. [return to top]