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NAMB calls for relief effort in gulf coast region

National Mortgage Professional
Sep 17, 2008

Economic stabilization package passes House by a 263-171 voteMortgagePress.comHR 1424, Emergency Economic Stabilization Act of 2008, FDIC, NCUA The United States House of Representatives has announced the passage of HR 1424, the Emergency Economic Stabilization Act of 2008. The bill passed the House by a vote of 263-171. It passed the Senate on Oct. 1 and will head to President George W. Bush for his signature. HR 1424, which establishes a program at the Treasury Department to purchase distressed mortgage-related assets, also includes the extension of several tax provisions that will help steady the American economy. "There were moments this week when some thought that the federal government could not rise to the challenge," said U.S. President Bush. "But thanks to the hard work of members of both parties, in both houses, and the spirit of cooperation between Capitol Hill and my administration, we completed this bill in a timely manner." HR 1424 will allow the Treasury to purchase up to $700 billion in distressed mortgage related assets from financial institutions in an effort to increase liquidity and restart the seized credit markets. The true long term cost of the program may be far less than $700 billion as the Treasury has the discretion to redeem or sell the assets, sometimes at a profit, when the market recovers. The bill would also temporarily increase the amount of deposit insurance provided for individuals by the Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA) to $250,000. "The ongoing credit crunch has severely impacted the ability of individuals and businesses of all sizes to borrow, and has threatened to slow down the entire U.S. economy," said John A. Courson, chief operating officer of the Mortgage Bankers Association. "We very much appreciate the hard work and long hours that Congressional and Administration negotiators have put in over the last several weeks and look forward to the quick implementation of the program. This will enable financial institutions to offer credit so individuals can purchase homes and other items and businesses can continue to operate and grow." The bill also extends a number of tax provisions that were due to expire. Among them are: • Deductibility of forgiven mortgage debt; • $1,000 property tax deduction for non-itemizing couples; • Deductions for energy-efficient commercial buildings; • Allowance for expensing of brownfields environmental remediation costs; and • Accelerated cost recovery for qualified leasehold improvements. "I know some Americans have concerns about this legislation, especially about the government's role and the bill's cost," Bush said. "As a strong supporter of free enterprise, I believe government intervention should occur only when necessary. In this situation, action is clearly necessary." "These tax provisions are important to residential, multifamily and commercial borrowers and lenders and will encourage expansion in the real estate sector which can be the engine to drive economic growth in this country," said Courson. "A number of them are items that MBA has fought for over a number of years and we are pleased that Congress passed them before they expired." For the latest information on this bill, click here.
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