With Votes Looming, MBA Presses House on T-HUD Appropriations, Tax Extenders

As the House this week prepares to vote on a HUD appropriations bill and the House Ways and Means Committee considers “tax extenders” legislation, the Mortgage Bankers Association sent letters supporting the measures.

In a June 19 letter to the House, MBA reiterated its support for the overall FY 2020 Transportation, Housing and Urban Development (T-HUD) appropriations bill, which cleared a key House subcommittee earlier this month. MBA Senior Vice President of Legislative and Political Affairs Bill Killmer said while the T-HUD bill provides $130 million for HUD’s administrative contract expenses, MBA continues to support HUD’s initial budgetary request for $150 million.

“MBA continues to staunchly support providing the Federal Housing Administration with the resources, both in staffing and systems upgrades, it requires to maintain its important, countercyclical role as a government-backed mortgage insurer,” Killmer said, noting MBA has long been a proponent of adequate funding for staffing, project management and potential improvements that would allow the agency to better manage its operations and the risks associated with its Mutual Mortgage Insurance Fund.

MBA also expressed support for other key elements of the T-HUD bill, including:

–$300 million within the bill allocated to HUD’s Cybersecurity and Information Technology Fund to help the agency better meet its acute information technology needs on a broad basis, as well as the specified $20 million from that Fund to be used in the ongoing upgrade of FHA’s decades-old single-family IT infrastructure.

–For FHA’s multifamily and healthcare finance programs, MBA supports the $30 billion in commitment authority for the General and Special Risk Insurance Fund in its FY 2020 proposal, as well as adequate funding for rental assistance, particularly Section 8 Project Based Rental Assistance.

–For Ginnie Mae, MBA continues to support an increased level of funding for staffing, training and technology needs; Killmer said while the $27 million proposed in the T-HUD budget is consistent with FY 2019, MBA believes Ginnie Mae’s full request for $28.4 million for these purposes is more appropriate.

–A provision that maintains for a sixth year a prohibition on federal funds being used to facilitate eminent domain seizures of performing mortgage loans.

–A provision funding $60 million in housing and homeownership counseling. “

–Support for an amendment to be offered by Reps. Juan Vargas, D-Calif., and Pete Aguilar, D-Calif., as an outgrowth of broader efforts included in the Homeownership for DREAMers Act (H.R. 3154) that would provide certainty regarding FHA eligibility of Deferred Action for Childhood Arrivals recipients for lenders and borrowers alike. “We believe our members can serve this population well if provided a reasonable expectation of consistent federal policy through enactment of legislation,” Killmer said.

In a separate letter, MBA, the National Association of Home Builders and the National Association of Realtors asked members of the House Ways and Means Committee to support reauthorization of two critical tax provisions that have expired, known as “tax extenders,” that provide much-needed certainty to the residential real estate market.

The first provision (Section 101 of the Taxpayer Certainty and Disaster Tax Relief Act of 2019) ensures any mortgage debt that is forgiven by a lender in connection with a principal residence will continue to be excluded from the taxable income of the borrower if entered into before January 1, 2021. This prevents “underwater” homeowners from being taxed if their lender reduces the principal balance or a portion of their mortgage debt is forgiven in connection with a so-called “short sale.”

“If Congress were to fail to act on this provision, struggling homeowners who accept short sales or a loan modification offer could once again be faced with substantial tax assessments,” the letter said. “This provision, once re-extended, will aid many loss mitigation efforts and provide borrowers with the certainty that they will not be faced with a large, unexpected tax bill.”

MBA, NAHB and NAR also called on the Committee to extend the tax deduction for mortgage insurance premiums paid by homeowners (Section 102 of the underlying bill). The deduction phases out for taxpayers with an Adjusted Gross Income over $100,000 ($50,000 if married and filing separately). For example, on a $200,000 home, many homeowners were previously able to deduct between $600 and $1,000 from their taxes when this provision was in effect.

“Re-extending this deduction through the end of calendar year 2020 will greatly benefit the large number of homeowners, particularly first time home buyers, who cannot afford a 20% or greater down payment and who use mortgage insurance in order to purchase a home,” the letter said. “[We] urge the Committee–and both the full House and Senate–to pass “tax extenders” legislation including these critical provisions as quickly as possible in order to provide much-needed certainty to our nation’s real estate markets.”