Washington Update - 01/16/2009 (Plain Text Version)

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NAHB Testifies Before Congress on Use of TARP Funds

NAHB Chairman-elect Joe Robson on Jan. 13 testified before the House Financial Services Committee. With Congress mulling whether to release the second half of the Treasury’s $700 billion Troubled Asset Relief Program (TARP) rescue fund, he urged lawmakers to use a portion of the funds to stem the rising tide of foreclosures and increase the flow of credit for housing production. Robson also urged passage of legislation to stimulate housing demand.

“Up to this point, the TARP program has failed to expand the flow of credit to business and consumers on competitive terms,” he said. “In addition the TARP program has not adequately responded to the nation’s foreclosure crisis, which must be addressed to keep people in their homes, help stabilize home prices and promote recovery of the housing market and economy.”

With falling home values at the core of the current economic crisis, Robson said that foreclosure relief absent a plan to address demand for housing will not succeed in fixing the nation’s housing and economic woes. He urged Congress to enact NAHB’s proposal to boost housing demand by providing a bigger and better home buyer tax credit and offering below-market fixed-rate mortgages on home purchases, which would increase home sales by 1.1 million in 2009 and create more than 539,000 jobs.

NAHB also supports foreclosure prevention measures advocated by Federal Deposit Insurance Corporation Chairman Sheila Bair, which would use $24 billion of the funds Congress authorized for the TARP to provide loan guarantees to achieve greater success in foreclosure mitigation efforts. FDIC estimates that the program could help about 1.5 million home owners to avoid foreclosure.

He also called on bank regulators to improve accountability through monitoring and reporting requirements for banks receiving TARP funds. “Builders are reporting it is much more difficult to obtain AD&C loans and those with outstanding loans are experiencing onerous new requirements or are having their loans called in. In short, many good loans are unnecessarily being turned into problem assets as a result of these actions.”

NAHB is seeking an allocation from TARP explicitly targeted to AD&C lending, which would enable financial institutions to allow builders to complete viable projects.

With production of badly needed new affordable housing units declining in the current economic climate, Robson offered several suggestions to improve the financial health of the Low Income Housing Tax Credit (LIHTC), the single most important affordable housing production program in the federal government. He urged Congress to:

Bring individual taxpayers back into the LIHTC investment market by changing the passive loss rules established as part of the Tax Reform Act of 1986.
Make the LIHTC a refundable tax credit to stimulate investment and ensure that existing credits are not resold in the syndication market, thus checking the decline in LIHTC prices .
Expand the LIHTC carry back rule from one year to five years to ease the downward pressure on LIHTC by allowing credits to be claimed by investors that may not have federal tax liability in the current year.
Allocate funds to state housing finance agencies to make up equity shortfalls in developments which have LIHTC allocations but have not generated sufficient equity for the projects to move forward.

For more information, contact Scott Meyer at 800-368-5242 x8144.

House Dems Outline $825 Billion Stimulus Plan

House Democrats unveiled an $825 billion stimulus package that calls for $550 billion in spending and aid to states and $275 billion in tax cuts. The legislation is expected to be formally introduced next week and Congress is poised to move quickly. Both tax-writing committees (Senate Finance and House Ways and Means) will mark up their legislation on Thursday, Jan. 22. Appropriations Committees may do so as well next week but that is still unclear. Both chambers will then need to clear their own bills and then conference the two into a single package. The ultimate goal is for a completed bill to be on the President’s desk by Feb. 13.

Meanwhile, NAHB this week continued its push to incorporate the Fix Housing First housing proposals into the stimulus package. Building on the momentum generated by last week's
successful “fly-in” campaign where scores of builders from across the country met with targeted members of Congress, NAHB lobbyists met with key members of Congress and congressional staff to seek broad-based political support for the plan. We conveyed the following message to lawmakers: A housing stimulus is urgently needed and restoring demand for housing is the fastest and most effective way of reviving the economy. NAHB also provided a briefing on the issue for 80 members of the HBA of Raleigh-Wake County who this week traveled to Washington to meet with their North Carolina congressional delegation to deliver the same message.

In addition, NAHB coordinated with Fix Housing First coalition members to identify key targets and assess group resources and grassroots activities and sent a letter to members of Congress outlining the dire economic situation and the urgent need to make housing stimulus a centerpiece of the recovery plan. For more informaton, contact Greg Brown at 800-368-5242, x8421. [return to top]