Nation

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Nation

PROPOSED MID CHANGES FACE UPHILL CLIMB IN CONGRESS
Reaction on Capitol Hill to changing the mortgage interest deduction (MID) and to making other tax changes that could affect real estate has been muted, according to NAR. No member of the U.S. House or Senate has come forward to embrace any of the real estate recommendations, which the President’s Advisory Panel on Federal Tax Reform released a few weeks ago. Lawmakers willing to make their views known are coming out in opposition to the proposals, with some members writing to the President and The Treasury Secretary expressing their dissatisfaction with aspects of the report, including those relating to the proposed MID and property tax changes. Some House members have also introduced a resolution opposing some of the recommendations. Whether the resolution will be voted on is unclear at this time. The Treasury will evaluate the tax panel’s report and provide its views to the President. The Treasury’s recommendations will be delivered in late January or early February 2006.
NEW LIMITS FOR FANNIE MAE AND FREDDIE MAC PUSH FHA FLOOR
On November 29, 2005, Fannie Mae and Freddie Mac increased conforming loan limits on single family properties from $359,650 to $417,000, effective January 1, 2006. This loan limit increase reflects the October-to-October changes in average house prices, as published by the Federal Housing Finance Board, and complies with the Supervisory Guidance issued by the Office of Federal Housing Enterprise Oversight (OFHEO). Loan limits will also increase on other properties as follows:
· $533,850 for mortgages on two-family properties (up from $460,400)
· $645,300 for mortgages on three-family properties (up from $556,500)
· $801,950 for mortgages on four-family properties (up from $691,600)
Under the Fannie Mae and Freddie Mac charters loan limits in states and territories designated high-cost areas – Alaska, Hawaii, Guam and the U.S. Virgin Islands – are 50 percent higher than the amounts above. As a result of the increase in the conforming loan limit announced by the GSEs, the FHA floor limit will automatically increase for those loans insured on or after January 1, 2006. The new FHA limit will be $200,160 that is 48 percent of the new conforming limit (i.e. $417,000). The high cost limit will be increased to as high as $362,790. That is 87 percent of the new conforming loan limit. However, since under the FHA program there is no nationwide limit, HUD will have to compute the individual limits for over 3200 US counties. HUD is expected to publish a new mortgagee letter announcing the areas that will be affected before the end of December.