NAMB Opposes Senate Tax Reform Bill
Sent Date: 12/01/17

The email reflected below was sent to the U.S. Senate earlier today expressing NAMB's opposition to the Senate Tax Reform Bill which was released earlier today.  NAMB’s Government Affairs team continues to fight for the interests of consumers and mortgage professionals by exhausting every possible avenue to make improvements to rules and regulations that are negatively impacting our industry and our customers.  Please click here to help us by donating to the NAMB Legislative Action Fund today...

Dear U.S. Senator,

NAMB is opposing the Senate Tax Reform  bill released today.  NAMB believes several of these changes will cause an immediate negative impact on consumers wishing to purchase a home.  This will affect housing prices and could immediately impact home values.   

Two areas of the Senate Tax bill need amending – 1.) The provision excluding state and local taxes (SALT) and 2.) A provision harming companies dealing with mortgage servicing - monthly payments and tax payments.

First, NAMB believes any tax reform should be revenue neutral. Adding trillions of dollars to the national debt on the hope that business activity will make up the lost revenue is misguided.  

Next, NAMB opposes doubling the standard deductions.  Consumers do not merely purchase a house, they purchase a place they seek to make their community.  Doubling of the standard deduction takes away any incentive to purchase a home and make a community connection. Doubling the standard deduction, in lieu of the mortgage interest deduction, dis-incentivizes homeownership.      

Homeownership is one of the main, if not the principal driver of building wealth for middle class Americans.  By removing financial incentives to invest in homeownership, these tax reforms may have the perverse effect of increasing the wealth gap between middle class Americans by destroying one of the most universal and reliable avenues for building wealth in America.

Finally, NAMB opposes limiting state and local taxes (SALT) deduction.   The SALT deductionis a useful subsidy for local government. It makes high state and local income taxes for wealthy home owners more politically palatable. Without it, there would be pressure to lower those taxes, ultimately leading to a revenue crisis for local government. 

The Senate Tax Reform bill as reported by the Senate Finance Committee contains a provision that will harm consumers by increasing the cost of offering a mortgage by smaller lenders.  It also tilts the competitive landscape toward large national banks decreasing competition and additional harm to consumers.  

Section 13221 of the tax bill reported out by the Senate Finance Committee (the Tax Cuts and Jobs Act) requires that any item of income that an accrual taxpayer recognizes for accounting purposes must also be recognized for tax purposes. This impacts mortgage service rights (MSR). MSR refer to a contractual agreement where the right to service an existing mortgage are sold by the original lender to another party who specializes in the various functions of servicing mortgages.

Small independent lenders would have to borrow money to pay for taxes on income they have not yet received.  This would force them out of this sector of the mortgage business or require them to find a funding source or borrow to pay the tax.  Either method would increase the costs of their mortgage operations and translate to increase costs to borrowers.  
The SALT deductions should remain as present provisions.  Section 13221  should be amended to correct this unintended consequence prior to moving to the Senate Floor for a vote.  
For more information regarding NAMB's position, please feel free to contact us at (202) 434-8250.


John G. Stevens, CRMS