House Passes GSE and FHA Loan Limit Increases, Senate to Consider This Week
On January 29, 2008, the House of Representatives passed H.R. 5140, the economic stimulus package. This bill, agreed to by the Administration includes several important housing provisions. These include increases in the loan limits for Fannie Mae and Freddie Mac and also FHA. The bipartisan vote of 385-35 demonstrates the overwhelming support for this proposal. The House and the administration view strengthening the housing market as key to improving the national economy.
Here is what was included in the package:
- The FHA limit will increase to as much as $729,750 in high cost areas (to 125% of local median home prices). This is a one year increase, pending final passage of FHA reform (which passed the House and Senate last year).
- The GSE limit will be increased up to $729,750 for one year. Currently Fannie Mae and Freddie Mac are capped at $417,000. It appears that there will be a formula similar to that of FHA, with GSE loan limits increasing to 125% of the local median home price, but not to exceed $729,750.
In addition, the package includes a bonus depreciation provision for leasehold improvements. This will allow 50% of the cost of a leasehold improvement placed into service in 2008 to be deducted in 2008. The remainder of the cost of the asset will be amortized over the remaining 38 years of the structure's life.
The Senate is expected to consider HR 5140 early this week. Contrary to some media reports, we believe that the GSE and FHA loan limits will both be included in the Senate package.
NAR is currently conducting a Call For Action to the Senate, asking for their support of these provisions. If you have not yet responded, please visit www.realtoractioncenter.com to contact your Senators.
Megan Booth 202-383-1222, Lynn King 202-383-1156
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Federal Tax Report
Economic Stimulus Legislation Dominates Agenda
In a burst of speedy initiative, the House has crafted and passed a stimulus package intended to ward off recession. The Senate Finance Committee also has reported a more extensive package that will be debated during the week of February. Both chambers anticipate that the package will reach President Bush by no later than February 15. The vote on the House package was 385 - 25.
The centerpiece of each package is a rebate that will be sent to most Americans. Under the House bill the rebate would be $600 per individual ($1200 on a joint return). The Senate rebate would be $500 ($1000 on a joint return). A $300 rebate would be available for each child, without restriction on the number of eligible children. The rebate would phase out for upper income taxpayers. The Senate version of the rebate would include retirees and veterans not covered in the House bill.
The Senate Finance Committee created controversy by adding provisions not found in the House bill. Both packages would allow a deduction for 50% bonus depreciation that would apply to leasehold improvements. Both packages also increase from $128,000 to $250,000 the maximum amount that a small business could expense (or deduct immediately) rather than depreciating. The Senate includes a provision that homebuilders and others industries have aggressively sought that would allow taxpayers to carry back any operating losses generated in 2006, 2007 or 2008 for 5 years rather than just 2 years as under current law.
The Senate package also includes a provision intended to help homeowners stay in their homes. The provision allows state housing agencies to issue additional mortgage revenue bonds and to use the proceeds from those bonds to assist eligible homeowners refinance subprime mortgages.
Linda Goold 202-383-1083, Jeff Lischer 202-383-1117, Helen Devlin 202-383-7559
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Diversity and Fair Housing Report
Commemorate the 40th Anniversary of Fair Housing
This April marks the 40th Anniversary of the 1968 Fair Housing Act. Commemorate it by offering NAR's At Home with Diversity (AHWD) course. NAR will waive the course fee for any official sponsor of the course during Fair Housing Month. If you are not already signed up as a course sponsor, you can become one for $150. AHWD is an official NAR Certification course, and credit can also be earned toward the CIPS, CRS, and PMN designations. Most courses qualify for state continuing education credit.
How to become a course sponsor>
Kyle Lambert London 202-383-1203, Ted Wright 202-383-1206
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NAR Comments on EPA's Wetlands Guidance Document
The EPA and the U.S. Corps of Engineers released draft guidance related to the recent decision of the US Supreme Court in Rapanos v. United States. The question presented to the Supreme Court in the Rapanos case involved the scope of the federal government's jurisdiction over wetlands and certain other non-navigable water bodies. NAR submitted comments on this guidance to ensure the real estate perspective was included in their decision-making. The focus of NAR's comments addressed the ways in which the Guidance misinterpreted the Supreme Court decision in Rapano,expressed concern that this Guidance would only serve to further confuse the scope of the federal government's authority to regulate wetlands and which waters should be regulated. NAR suggested that EPA and the Corps should institute a rulemaking that would clarify these issues and help to develop a streamlined and effective wetlands regulatory program.
Russell Riggs 202-383-1259, Mark Washko 202-383-7526, Ken Wingert 202-383-1196
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Last Updated: 02/01/2008 Bira de Aquino