Proposals to extend and expand the federal home buyer tax credit received much support in a Senate Banking Committee hearing Tuesday, including a strong endorsement from Committee Chair Chris Dodd, D-Conn.
Despite the pro-extension sentiment on display, Department of Housing and Urban Development Secretary Shaun Donovan told lawmakers that the administration needs more time to decide its stance on the issue, saying better cost estimates are required.
‘To truly understand the costs, we will not know that until Americans have filed their tax returns,’ Donovan said. ‘We believe it's critical to have the information necessary to make a fully informed decision about the costs.’
The administration should have enough data to finalize its decision on a tax credit extension in "the next few weeks," he said.
The tax credit, which, in its current form, is set to expire at the end of November, may get a second life via legislation introduced by Sen. Johnny Isakson, R-Ga., in June. Isakson's S.1230 seeks to extend the credit through June of next year, as well as expand it to 10% of a home's purchase price, up to $15,000. Dodd, a co-sponsor on S.1230, stressed the bill's urgency.
"The credit is set to expire in five weeks. But the work of stabilizing the housing market won't be done," he stated in prepared testimony. "We still need to use every tool at our disposal to try and fix this problem."
The Mortgage Bankers Association's (MBA) chief economist, Jay Brinkmann, also spoke in favor of the extension, suggesting that any associated legislation include a repayment requirement of borrowers in particular situations (such as instances where a borrower moves from the property within two years, excluding employment-related moves).
In his testimony, Brinkmann additionally addressed loan limits for Federal Housing Administration and conforming loans. The MBA is lobbying for temporary loan limits ($625,500 and up to $729,500 in high-cost areas) to be made permanent. Doing so would encourage investor activity, he said. Raising FHA multifamily loan limits for elevator buildings, meanwhile, could give a meaningful boost to rental housing.