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Advocacy
Issues for 2005
During the 109th Congress
the Action Alliance and MBA's government affairs staff will focus
on:
- GSE oversight reform;
- Reauthorization of the Terrorism Risk Insurance Act;
- Enactment of a uniform national standard to combat abusive-lending;
- FHA modernization; and
- Tax reform issues such as REMICs and protection of the mortgage
interest deduction.
- RESPA reform
Click
here to find detailed analysis on each of these issues.
Click
here to view MBA's 2004 legislative and regulatory progress
report.
Legislative
and Regulatory Update:
Flood Insurance
On November 22, President Bush signed legislation to boost the federal
flood insurance program's borrowing authority to $18.5 billion.
The National Flood Insurance Program announced on November
14 that it had run out of funds to pay claims. The Federal Emergency
Management Agency, which administers the program, indicated that
the additional borrowing authority should last through January 1,
2006.
Terrorism
Risk Insurance
During the week of November
14, both the House and Senate made steps toward extending the Terrorism
Risk Insurance Act (TRIA), which is set to expire on December 31.
The Senate has passed S. 467, the Terrorism Risk Insurance Extension
Act of 2005. During the week, the House Financial Services
Committee passed H.R. 4314, the Terrorism Risk Insurance Revision
Act of 2005, by a vote of 64-3.
Both bills would raise the
deductibles on all lines of insurance from their current level of
15 percent, increase the co-shares for smaller events while decreasing
them for more significant events, increase the amount
of insured losses that would trigger the federal backstop, and build
up long-term capital to stabilize the marketplace by allowing insurers
to treat a portion of their terrorism premiums as dedicated terrorism
capital.
While the Senate passed legislation,
the House will not act until after its upcoming Thanksgiving recess.
Congress will then work to reconcile the differences in the House
and Senate bills in an effort to send final legislation to the President
before expiration of the existing program on December 31.
GSE Reform
During the week of November
7, Senators Robert Bennett (R-UT) and Charles Schumer (D-NY), both
members of the Senate Banking Committee, commented that the Senate
will likely adjourn for 2005 without voting on legislation to reform
oversight of the GSEs. It appears unlikely that Democrats and Republicans
will be able to reach a consensus on the bill's more controversial
provisions, such as portfolio caps, before the Senate recesses for
the year.
GSE oversight reform remains
a priority for Banking Committee Chairman Shelby (R-AL). Unless
a compromise is reached prior to adjournment, negotiations will
continue when the Senate returns to session in February.
On October 27, the House of Representatives passed MBA-backed GSE
oversight reform legislation, H.R. 1461, by a vote of 331-90.
The bill includes MBA-supported "bright line" language. MBA
has long supported the creation of a strong and effective regulator
for the GSEs and believes that H.R. 1461 will improve the GSEs'
ability to fulfill their important role of supporting the secondary
residential mortgage market, while improving the availability of
financing for affordable housing.
The House Financial
Services Committee passed a GSE-reform bill in May and the Senate
Banking Committee passed a significantly different reform bill in
July. Despite their differences, both bills contain a number of
MBA-supported provisions. Both are aimed at improving GSE safety
and soundness regulation and both would improve the regulator's
ability to ensure the GSEs' charter compliance. The bills represent
a major step toward GSE oversight reform but their fate remains
unclear.
Mortgage Interest
Deduction
On November 1, the President's
Bipartisan Advisory Panel on Tax Reform released its long anticipated
report
to reform the nation's tax code. The Panel suggests
converting the current mortgage interest deduction to a Home Credit
equal to 15 percent of mortgage interest paid up to a cap, which
the Panel recommends lowering from the current $1 million to a limit
based on average area home prices as determined by the Federal Housing
Administration. The Panel also recommends eliminating the deduction
for interest on mortgages on second homes and interest on home equity
loans.
For
the last several weeks, MBA has been working to prevent this plan
from gaining support among policymakers. On Novemeber 2, MBA
launched a Call
to Action urging members to write their legislators in opposition
to the Panel's proposals. MBA participated in a conference
call with Treasury Secretary John Snow, who informed participants
that Treasury will consider the Panel's recommendations carefully
before making a final recommendation to the President and that the
Department looks forward to hearing comments from stakeholders such
as MBA. MBA is currently working with our industry and trade association
partners to forge a broad coalition in opposition to this proposal,
and has begun work with Members of Congress and other policymakers
to ensure that the arguments against lowering the cap on mortgage
interest deduction are heard clearly both on Capitol Hill and at
the Treasury Department.
Other Tax Issues
On October 6, MBA sent a letter to U.S. Senate Finance Committee
Chairman Charles Grassley and Ranking Member Max Baucus that recommended
specific tax policy changes to aid in the rebuilding of homes and
businesses in the Gulf Region affected by hurricanes Katrina and
Rita.
In mid-March, Senators
Kent Conrad (D-ND) and Jon Kyl (R-AZ) introduced MBA-backed legislation,
S. 621, which would permanently extend the 15-year recovery period
for the depreciation of leasehold improvements. The 15-year period
was due to expire at the end of 2005.
Predatory Lending
and Licensing
On September 29, Teresa
Bryce, senior vice president for Nexstar Financial Corporation and
co-chair of the Mortgage Bankers Association's (MBA) State Licensing
Task Force testified before the House Financial Services Subcommittee
on Housing and Community Opportunity on Title V of H.R. 1295, The
Responsible Lending Act of 2005. For more information, please
click
here.
In mid-March, Reps. Bob Ney (R-OH) and Paul Kanjorski (D-PA) introduced
H.R. 1295, The Responsible Lending Act of 2005, which would establish
a uniform national standard to eliminate abusive lending practices.
FHA
and Zero Downpayment
In June, Reps. Michael Fitzpatrick (R-PA) and Jim Matheson (D-UT)
introduced H.R. 2892, a bill that would eliminate the cap on FHA's
Home Equity Conversion Mortgage (HECM) program. Also in June, Reps.
Patrick Tiberi (R-OH) and David Scott (D-GA) introduced H.R. 3043,
the Zero Downpayment Pilot Program Act of 2005.
Other Issues
In July, President Bush signed into law the Junk Fax Prevention
Act of 2005, which restores the "established business relationship"
exception to the ban on unsolicited commercial faxes.
In April, President Bush signed S. 256, an MBA-supported bankruptcy
reform bill, which removes the $4 million cap on single asset bankruptcies,
a long-standing MBA priority.
In mid-June, Senator Larry Craig (R-ID) introduced S. 1235, which
would authorize the VA Secretary to determine the annual interest
rate cap adjustment for VA Hybrid ARM products. This change will
enable VA Hybrid ARMs to be put in Ginnie Mae pools on an equal
basis with FHA ARMs. On Thursday, July 28th, the Senate Veterans
Affairs Committee reported out S. 1235. Senate floor action is expected
after the Congressional August recess.
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