According to Secretary Donovan, with the FHA now backing about 30% of all loans for home purchases and 20% of refinancings, tighter risk controls are needed now than when the agency had a much smaller volume of business prior to the housing downturn. To date, however, FHA officials have not yet decided how much to increase up-front cash requirements for borrowers.

As for seller concessions, the agency now allows sellers to provide 6% of the home's value; Donovan said he wants the maximum permissible level lowered to 3%, in line with industry norms. In addition, agency staff are reviewing whether to increase the monthly insurance premiums charged to borrowers. Meanwhile, to protect itself against the riskiest borrowers, the agency has decided "for the time being" to raise its minimum credit score requirements for new borrowers – but again, staff are still determining what the new threshold should be. Read more in this Washington Post article or view Secretary Donovan's testimony here.  

FHA's proposed changes would have a significant impact on borrowers' ability to obtain FHA-insured loans. However, several of the proposals would require changes in the law, and the HUD Secretary did not provide a timeline for implementation of any of the changes he mentioned. Going forward, NAHB will continue to interact with HUD and FHA to ensure that viable mortgage borrowers are not prevented from using this essential financing assistance.  For more information, contact Scott Meyer at 1-800-368-5242, ext. 8144.

The Senate plan contains several notable differences from the bill that was recently passed by the House by a narrow 220 to 215 margin.

The Senate legislation would impose a surtax on high-cost “Cadillac” insurance plans to help finance coverage of the uninsured, while the House bill seeks to raise revenue by charging a surtax on taxpayers with adjusted gross incomes of $500,000 for single taxpayers and $1 million for joint filers. The two chambers differ in terms of abortion restrictions and the scope of the public option.

The Senate bill is far less burdensome to small businesses than its House counterpart. The House bill contains a broad employer mandate that the Senate bill does not. However, the Senate package would levy financial penalties on most firms that fail to provide health coverage and also would require all individuals to carry health insurance.

As the Senate bill currently stands, it does not have the necessary 60 votes to move forward. As a result, a number of amendments will be offered and debate will continue in an effort to pass the legislation by the end of the year. Senators must compromise on issues such as the public option, abortion, and immigration.

The following is a breakdown of key areas of the Senate health plan of interest to NAHB members:

• Employer Responsibilities. Those with more than 200 employees must automatically enroll all new workers in health care coverage. Employers with more than 50 employees must offer coverage to their employees. 
  
   Employers with more than 50 employees that do not offer coverage and have at least  one employee receiving the premium assistance tax credit would be fined the lesser of $750 multiplied by the number of employees or $3,000 for each employee receiving a tax credit. Businesses with 50 employees or less would be exempt from this responsibility.
  
  Employers with more than 50 employees would be required to pay a fine for implementing waiting periods for employees who want to enroll in coverage: $400 per employee during a 30-60 day waiting period; $600 for any employee during a waiting period exceeding 60 days.
  
  
• Small Business Tax Credit. These firms would receive tax credits equal to 50% of the amount of health coverage they pay for each employee. The tax credit would be limited to businesses with 25 or fewer full-time employees and with average annual wages below $40,000. The full credit would phase out for employers with more than 10 full-time employees or average annual wages.
  
  
• Income Tax. The Senate bill would increase the hospital insurance payroll tax by .5% on individuals earning more than $200,000 and couples earning over $250,000, effective 2013. 
  
  
•  Insurance Fees. The Senate plan would impose a 40% excise tax on employer-sponsored health coverage that exceeds $8,500 for an individual and $23,000 for families, effective 2013.

To view the Senate bill, click here and type H.R. 3590 in the box at the upper center of the screen. For more information, contact Carlos Gutierrez at x8242. [return to top]

The vote came less than a month before current law would totally eliminate the estate tax in 2010 and then restore it in 2011 with a higher rate and lower exemption.

Prior to the House vote, NAHB sent a letter to lawmakers in support of H.R. 4154. “While NAHB members would prefer outright repeal of the estate tax, our members support this legislation as an important step forward toward that ultimate goal,” the letter said.

How and when the Senate will deal with the estate tax issue is unknown at this time.

To view the legislation, click here and enter H.R. 4154 in the box in the upper center of the screen. For more information, contact Greg Brown at ext. 8421. [return to top]