Congress gets high marks from housing industry

The housing industry got a helpful boost from Congress this year, even though some long-sought legislation fell by the wayside and at least one familiar bogey man reappeared to spook the industry.

Lenders attending the recent Mortgage Bankers Association of America convention in San Francisco were mostly pleased with the industry's legislative score card for the year.


Housing legislation approved by Congress included:

* Reinstatement of 100 percent financing of closing costs on Federal Housing Administration-insured mortgages. Previously, buyers were limited to financing 57 percent of those costs. The mortgage bankers' group had estimated that more than 100,000 prospective FHA buyers were pushed out of the market in the past year because of that limitation.


* The interest rate for Veterans Administration-guaranteed home loans will now be set by the marketplace. Previously, the agency set the rate. The housing industry said the bureaucracy frequently was slow to change rates to stay in step with market fluctuations, and that hampered VA loan activity.

* Eligibility for VA-guaranteed loans has been extended to reservists with at least six years of service.

* A three-year test program for a VA adjustable rate mortgage was authorized under the Veterans Home Loan Amendments Act of 1992. Housing lenders have said a VA ARM could greatly expand the VA's presence in the mortgage market. The FHA already has an adjustable rate loan.

Legislation containing the FHA loan program changes was signed by President Bush at the end of October. The VA loan program changes are expected to get the president's signature.

Congress approved penalty-free withdrawals from individual retirement accounts for a down payment on a home, but the legislation's future is in doubt.

Long sought by the housing industry, the measure is part of tax legislation that President Bush is likely to veto because other segments would raise taxes.

If the bill were to be vetoed, real estate interests also would lose the permanent extension of two other favored provisions: the mortgage revenue bond program and the low-income housing tax-credit program.

In the bond program, bonds exempt from federal income tax are sold to finance housing for first-time home buyers and low- to moderate-income renters.


Another measure promoted by the housing industry -- tax credits to help first-time buyers purchase a home -- fell by the wayside in this session of Congress.

It likely will surface again next year. President Bush has proposed a $5,000 tax credit for first-time buyers, and for a time there was considerable congressional sentiment for a $2,500 tax break.