MBA Advocacy Update Aug. 8 2022: Senate Passes Reconciliation Package
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The Senate on Sunday passed a $740 billion reconciliation package. And last Monday, the VA released Circular 26-22-13, implementing new appraisal procedures for VA purchase loans.
Senate Passes $740 Billion Reconciliation Package; House Expected to Follow Suit on Friday
After hours of procedural debate on Saturday afternoon, followed by a marathon overnight “vote-a-rama” (a series of amendment votes – none of which pertained directly to real estate finance), the full U.S. Senate today passed an amendment in the nature of a substitute to H.R. 5376, now known as the Inflation Reduction Act, by a 51-50 vote (Vice President Kamala Harris breaking the tie). This revised budget reconciliation and tax package (over 18 months in the making) is designed to address climate change, healthcare costs, and deficit reduction — principally through corporate tax increases. It is estimated to raise approximately $740 billion in revenue over 10 years by: (1) implementing a 15 percent corporate “minimum book tax” on GAAP income (for firms with declared net income over $1 billion); (2) increasing IRS tax enforcement funding; (3) allowing Medicare to negotiate lower prescription drug prices; and (4) imposing a 1 percent excise tax on stock buybacks.
- Why it matters: After months of persistent MBA advocacy, the Senate substitute to H.R. 5376 incorporates language to preserve the deferred tax treatment of MSRs and excludes mortgage servicing-derived income (both residential and multifamily) from the corporate minimum book tax’s coverage. The book tax language was also altered to exclude private equity subsidiary firms from its coverage, as offset by extending pass-through loss limitations (from the American Rescue Plan) for two additional years.
- The agreement does not include a host of harmful revenue raisers considered in prior reconciliation proposals, including: other broad changes to the tax treatment of pass-through entities, such as an expansion of the 3.8 percent Net Investment Income Tax (NIIT) or limits to the current Section 199(a) 20 percent deduction against Qualified Business Income; a cap on 1031 Like-Kind Exchanges; changes to capital gains treatment/”stepped-up” basis; broad changes to the deductibility of business interest; an enhanced FICA tax regime; altered treatment of the gain on sale from a home; and, changes to the capital gains treatment of “carried interest.”
- What’s next: MBA will also continue to push for targeted housing investments/credits (e.g., a workable Down Payment Assistance program, enhancing/expanding the Low Income Housing Tax Credit, a new single-family rehabilitation credit targeted at LMI census tracts, a new repurposing/refurbishment affordable housing credit, etc.) excluded by the Congress (and/or Senate Parliamentarian) from the Inflation Reduction Act.
For more information, please contact Ethan Saxon at (202) 557-2913 or Tallman Johnson at (202) 557-2866.
VA Releases Circular Establishing New Procedures for Appraisal Waterfall
On Monday, the Department of Veterans Affairs (VA) released Circular 26-22-13, implementing new appraisal procedures for VA purchase loans. In an attempt to alleviate the difficulties when completing VA appraisals, the VA has established its Appraisal Assignment Waterfall. This will allow exterior-only or desktop appraisals to be utilized for loans under conforming limits, in combination with a 20 percent down payment or if more than seven business days have gone by since a lender has requested an appraisal and the case remains unassigned in the VA system.
- Why it matters: The waterfall provides additional appraisal options for rural areas where appraisers on VA’s fee panel are not readily available.
- What’s next: MBA will continue to engage with the VA on additional appraisal flexibilities.
For more information, please contact Darnell Peterson at (202) 557-2922.
MBA’s Lisa J. Haynes Honored Among HousingWire’s 2022 Women of Influence
This week, MBA announced that Lisa J. Haynes, MBA Senior Vice President, Chief Financial Officer and Chief Diversity and Inclusion Officer, has been honored as one of HousingWire’s 2022 Women of Influence.
- Why it matters: With Haynes at the forefront of MBA’s DEI initiatives, the association has established several alliance agreements, strategic partnerships, and outreach efforts to promote an inclusive environment for mortgage industry professionals. This includes partnerships with the National Association of Minority Mortgage Bankers of America (NAMMBA), the National Association of Real Estate Brokers (NAREB), HomeFree USA, Fannie Mae’s Future Housing Leaders and others, allowing for collaboration on industry conferences and meetings, with a focus on professional development scholarship opportunities, and strong recruitment efforts.
- What’s next: To see the full list of winners, click here.
For more information, please contact Lisa Haynes at (202) 557-2835.
Upcoming MBA Education Webinars on Critical Industry Issues
MBA Education continues to deliver timely programming that covers the spectrum of challenges, obstacles and solutions pertaining to our industry. Below, please see a list of upcoming webinars – which are complimentary to MBA members:
- Commercial Real Estate Property Insights – Where are We Now? – August 11
- Vertical Sophistication: Meeting the Challenge of Today’s Market – August 23
- C-PACE Financing 101: A Commercial/Multifamily Lender’s Overview – August 23
- Risk and Compliance Management: Are You Covered? – August 24
- Climate Risk Management: Data & Analytics – September 7
MBA members can register for any of the above events and view recent webinar recordings. For more information, please contact David Upbin at (202) 557-2931.