Realtors oppose tax proposal in Obama budget

WASHINGTON - Feb. 27, 2009 - The National Association of Realtors® (NAR), which generally supports the Obama administration's housing and stimulus plans, announced opposition to one budget proposal that would water down the mortgage interest tax deduction (MID) for thousands of higher-income families.

In a letter sent to President Obama, NAR President Charles McMillan said, "There is never a good time to propose something that undermines the basic foundation of homeownership, but given our current housing crisis, this has to be the worst possible time."

NAR says that any changes to the current mortgage deduction would have repercussions far beyond the homeowners directly impacted. "The tax deduction of interest paid on mortgages is both a powerful incentive for homeownership and one of the simplest provisions in the tax code. It should not be targeted for change," McMillan said.

According to an NAR analysis, changing the mortgage interest deduction will impact more than the 2 percent of higher-income families targeted by the proposal - it will also impact home prices and values across the board. The middle class would see their home values reduced even further by such action, and NAR told the Obama administration that further pressure on home prices will hamper the economic recovery, raise foreclosures and hurt banks' abilities to lend.

"Bank balance sheets will bleed as collateral value of their mortgage-backed securities falls even farther," said McMillan. "We can't afford another credit crisis before we resolve the current one." He also stated that, with the current problems in the economy and the housing market, economic stability must be the focus. Changes that affect the housing industry and the financial arena have to be carefully thought out and balanced.

"NAR and our members look forward to working with the president to once again bring stability, prosperity and community to America's families," McMillan said.

© 2009 FLORIDA ASSOCIATION OF REALTORS®