Posturing for Progress

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cover story cap on the size of the mortgage deduction for high-income households. However, the negative impact of the cap is offset by higher-income tax rates that came out of the budget deal, since the higher rates increase the value of a mortgage deduction. In any case, it certainly does not look like the higher end of the housing market has been hurt, Chen notes. While housing policy remains very much an issue, with the housing crisis over and the monthly housing data pointing to a sustainable recovery, it's become less urgent, particularly in light of more pressing federal budget issues, she adds, noting these issues simply aren't at the forefront of policymakers' minds. For her part, though, Chen says she believes reform of the housing finance system is vital and that the government should reduce its role in housing finance considerably. "The private market for mortgage securities needs to come back to sustain a healthy housing market," she said. An owner-occupied home, he on second homes or on home explains, provides a return in the equity loans, Viard explains. form of housing services, the value By replacing the reduction with of which can be measured as the a credit, the proposal follows an cost of obtaining the same services approach embraced by many Proposing a Change from a rental property. To maineconomists that has appeared in tain full neutrality with respect to several reform plans, he continues. n any event, as part of the the current taxation of business Reducing the deficit will require Hamilton Project's 15 Ways capital, the tax system would need action on many fronts. Replacing to Rethink the Federal Budget, to tax homeowners on this return, the mortgage interest deduction which appears on the Brookoften called imputed rent, while with a refundable credit and reducing's Institute website, Viard allowing a deduction for the asing the size of the mortgage eligible proposes replacing the mortsociated costs, including mortgage for tax relief can be an efficient gage interest deduction with a Receive a free subscription to MReport! taxing and progressive solution and an interest payments. Because refundable credit as a way to the rental value is impractical, approach that would preserve the reduce the "artificial" incentive Viard instead proposes changes to tax incentive for homeownership for the construction of high-end the mortgage deduction. while targeting it more effectively homes by better targeting the Under his proposal, starting in and equitably, he explains. tax breaks for housing. He also For more information on your free subscription, contact Jason Myers at 214.525.6700 2015, the MID would be conAny retrenchment of the MID proposes reducing the size of the verted to a is likely to reduce the value of mortgage eligible for the credit, 15 percent refundable tax credit available to all existing homes, compounding while providing transition relief. homeowners, including those the recent declines in home valAlthough he acknowledges the who claim the standard deducues. The proposal offers transiproposal might not be ideal on tion and those with no income tion relief to cushion the blow to every level, Viard says it offers tax liability. The credit would be an effective way to scale back current homeowners. Moreover, limited to interest on $300,000 of and better target the tax system's the price impact is likely to be housing tax breaks while promortgage debt (in 2013 dollars), more modest than some observers gressively raising revenue. with no tax relief for mortgages have suggested, Viard notes. I news and strategies for the evolving mortgage market June 2013 On Your Side: Mortgage Banking News, Done Better 63 43 O r i g i n at i O n a n a ly t i c S Fear Not, LeNDers evoLutioN oF risk maNagemeNt Leaders have to tow a fine line in order to remain ahead of the competition, and are resorting to new strategies and tools to ensure they are successful in their efforts. Although it may seem a herculean task, complying with the CFPB's new rules and regs shouldn't be cause for alarm. 53 76 Servicing gobbLiNg uP tHe getaways SecOn dary market moviNg Past coDePeNDeNcy With prices for vacation homes finally starting to rally, would-be buyers are packing up their bags after packing in the deals. Building a Better The GSEs once counted on the Treasury for their survival, but now that the roles have been reversed is it prudent to use them as the Treasury's shoulder to lean on? Community Homebuyers Look to Piece togetHer tHeir Dream LocaLes as tHe recovery takes sHaPe Originations | Servicing | Analytics | Secondary Market Experts you trust. People you know. News you want. MReport brings today's housing finance headlines into focus. You know mortgage banking, and we know you, which is why you can count on MReport to provide insight into the latest industry innovations. Committed to giving originators, servicers, and all lending professionals access to smarter perspectives, MReport believes it's time to think differently about the mortgage marketplace. Because the American Dream is evolving . . . are you? Subscribe now! Call 800.856.8060 or connect with us online at The M Report | 19

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