Amid industry opposition, commission endorses MID change

A majority of the members of the National Commission on Fiscal Responsibility and Reform voted to support the group's proposed deficit reduction plan, one that would have rolled back an important tax break that typically incentivizes consumers into moving to a new home.

While the 11 supportive votes did not meet the 14 required to send the proposal to a vote before Congress, it was still a significant step toward plans that are designed to help reduce the national debt but might have adverse effects on those moving into new homes. The members of a number of trade groups, including the Mortgage Bankers Association, National Association of Home Builders and the National Association of Realtors, have all bashed the parts of the plan that would scale back the mortgage interest deduction.

That instrument allows taxpayers to deduct the interest they pay for the mortgage on their home from their income tax return. The reform commissions' plan would restrict that benefit only to primary homes, excluding second homes, home equity loans and mortgages worth more than $500,000.

"It would immediately stop in its tracks any stabilization we are seeing in the housing market and would effectively increase the cost of homeownership for millions upon millions of people," said Michael Berman, chairman of the MBA.

Bob Jones, chairman of the NAHB, said a rollback would put more homeowners behind on their mortgages and induce a "new wave of foreclosures," while the NAR's Ron Phipps said such a move could depress home prices an additional 15 percent.
 

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