Could popular deductions for mortgage insurance premiums and energy-efficient home improvements abruptly vanish? That’s the way things are shaping up in the closing weeks of the post-election lame duck congressional session. Republicans controlling the tax-writing committees in the House and Senate say they have no plans to extend expiring tax code provisions such as mortgage debt forgiveness for financially troubled owners, mortgage insurance write-offs used by moderate-income first-time buyers, and deductions for purchases of energy-saving windows, insulation and other improvements. All three benefits terminate Dec. 31. Unlike previous years, when Congress extended them, this year is different. There is strong sentiment, especially in the House, that a comprehensive overhaul and simplification of the tax code should be the priority, rather than piecemeal, end-of-the-year extensions of special interest provisions that complicate that objective.
The Federal Housing Finance Agency (FHFA) announced that the maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac in 2017 will increase. In most of the country, the 2017 maximum loan limit for one-unit properties will be $424,100, an increase from $417,000. This will be the first increase in the baseline loan limit since 2006. In higher-cost areas, higher loan limits will be in effect. The Housing and Economic Recovery Act of 2008 (HERA) established the baseline loan limit of $417,000 and requires this limit to be adjusted each year to reflect the changes in the national average home price. However, after a period of declining home prices, HERA also made clear that the baseline loan limit could not rise again until the average U.S. home price returned to its pre-decline level. Until this year, the average U.S. home price remained below the level achieved in the third quarter of 2007 and thus the baseline loan limit had not been increased.
Community bankers can learn more about grant and mortgage loan programs offered nationwide with the help of The Affordable Mortgage Lending Guide, Part II: State Housing Finance Agencies, recently published by the Federal Deposit Insurance Corporation (FDIC). This publication is focused on first-lien mortgage products, downpayment and closing assistance, mortgage tax credit certificates, and homeownership education and counseling programs that can facilitate mortgage lending by insured depository institutions. It includes individual summaries of each state housing finance agency, complete with a listing of programs offered and web links for easy reference by bankers operating in that state or territory.
Could popular deductions for mortgage insurance premiums and energy-efficient home improvements abruptly vanish? That’s the way things are shaping up in the closing weeks of the post-election lame duck congressional session. Republicans controlling the tax-writing committees in the House and Senate say they have no plans to extend expiring tax code provisions such as mortgage debt forgiveness for financially troubled owners, mortgage insurance write-offs used by moderate-income first-time buyers, and deductions for purchases of energy-saving windows, insulation and other improvements. All three benefits terminate Dec. 31. Unlike previous years, when Congress extended them, this year is different. There is strong sentiment, especially in the House, that a comprehensive overhaul and simplification of the tax code should be the priority, rather than piecemeal, end-of-the-year extensions of special interest provisions that complicate that objective.
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