Over the last year and a half, the housing and mortgage home loan arena has transitioned to a new phase, the home buying market. Currently, most home buyers have been on the sidelines, awaiting further home price drops. The housing supply in the nation has outstripped demand, which means that home builders are having a challenging time finding buyers. Even though mortgage rates and home loan interest rates are low, home buyers are circumspect about purchasing a home in the present economic environment.
The economic atmosphere has affected everyone including, mortgage lenders, mortgage brokers, and home builders. The existing housing situation is the result of builder activities during the residential real estate boom. Herein, they are now the casualty of their own financial edacity. The home builders are looking for a parachute and are hoping that the Congress will provide one to them, at the taxpayers’ expense.
Hundreds of builders, big and small are lobbying Capitol Hill, asking legislatures for help, a S.O.S. rescue plan. They would like a special tax provision inserted in the mortgage bill that would permit them to carry back net operating losses (NOLs) to profitable years. Herein, the builders will have an influx of cash from Uncle Sam, taxpayer money.
Supporters of home builders think the tax breaks will help them maintain their businesses and save construction jobs. Many builders are looking to Washington to help them get out of their current financial morass.
The provision is extremely contentious and was removed from the Economic Stimulus Package that passed in the beginning of the year. But somehow, the provision found its way back into the freshly passed Foreclosure Prevention Act of 2008.
Opponents of the bailout for builders don’t want it at the expense of taxpayer money. Also, they believe that builders should face the consequences of their past business activities. Meanwhile, the National Association of Home Builders (NAHB), the home builders’ main lobbying group is still attempting to influence legislation to its benefit.
Fortunately, the provision hasn’t been inserted in the House legislation yet. Many members of Congress don’t see any benefits of the provision being accrued to the general public. It will be surprising in these uncertain times that lawmakers would antagonize the American people with another bailout of big business. The average American doesn’t want to see builders being rewarded for their follies, follies that have resulted in aiding our economy fall off the precipice into the unknown.