Washington Hotline - November 6, 2009

Major Victory for Home Buyer Tax Credit and NOLs

In a major victory for NAHB that will boost the fledgling housing recovery and help struggling business owners nationwide, on Nov. 5 Congress approved legislation that will extend the first-time home buyer tax credit beyond its Nov. 30 deadline and will allow all business with operating losses in 2008 or 2009 to claim refunds on taxes paid up to five years ago.

The proposal that was signed into law today by President Obama will allow businesses to offset 100% of taxable income with NOLs carried back in years one through four and offset 50% of income in year five.

Small businesses with less than $15 million in gross receipts would be able to claim a five-year carryback for 2008 losses under the American Recovery and Reinvestment Act and for 2009 losses under the new law. 

In a memo from NAHB Chairman Joe Robson to the federation about this legislation, he writes,  "The new net operating loss provisions will throw a lifeline to struggling businesses, allowing them to continue making payrolls, paying business loans and otherwise keep their doors open until the economic recovery takes hold."

Tax Credit and NOL SNAPSHOT:

Homebuyer Tax Credit

• Extends the $8,000 tax credit until April 30 for first-time buyers of single family homes and condos. 
• Creates a new $6,500 tax credit for move-up buyers for the same period.
• Both would have an additional 60 days (June 30^th) to close on the home.
• Income limits for both groups would be $125,000 for individuals and $225,000 for   couples.
• For step up buyers, they must have been residing in their primary residence for 5 consecutive years out of the last 8.  (Meaning you could have sold less than 3 yrs ago (thus not be a first-time buyer), but qualify as a move-up buyer if you had 5 years before you sold.)
• Eligible purchases under the credit are limited to homes that cost less than $800,000.

Net Operating Loss Carryback

• Five year carryback for NOLs in either 2008 OR 2009, not both.
• Years 1-4 allow for 100% use of NOLs, year 5 is limited to 50% of a company’s taxable income in that year.
• No size limitation or other cap.
• Unused NOLs in year 5 are still eligible for 20-year carry forward.

NAHB’s consumer-oriented Web site, www.federalhousingtaxcredit.com, is being updated right now, and will provide complete details on the enhanced home buyer tax credit after the bill is signed into law by the President.

NAHB will launch a set of resources to help you understand and promote the new tax credit over the next couple of days. Check www.nahb.org/taxcreditmaterials early next week. 

Read a memo from NAHB Chairman Joe Robson to the federation about NAHB’s role in getting this legislation passed here.

View the press release here.

If you have questions about the tax credit resources, please contact NAHB Public Affairs or call 800-368-5242 x8447.

Higher Conforming Loan Limits Extended Through 2010

In a victory for NAHB, the House and Senate on Oct. 29 approved a Continuing Resolution (CR) to fund the government through Dec. 18, 2009 that includes a provision that will extend the loan limits for mortgages insured by the Federal Housing Administration and those purchased by Fannie Mae and Freddie Mac through the end of next year. The loan limits will continue to be capped at $729,750 in high-cost markets. Those caps were due to expire on Dec. 31 if Congress had not taken action. 

Tthe joint statement issued by the Treasury Secretary Geithner and HUD Secretary Donovan on the extension of the home buyer tax credit (see story above) also called on Congress to extend the expiration period for the higher conforming loan limits and to identify a financing source for the Housing Trust Fund.

NAHB, along with the National Association of Realtors and Mortgage Bankers Association, sent a letter to House and Senate leaders urging Congress to act soon to extend the current higher loan limits for Fannie Mae, Freddie Mac and the FHA that are due to expire at year-end. The letter noted that borrowers have unnecessarily been denied financing because of uncertainty about expiring loan limits and consumers cannot lock in current interest rates beyond 60 days for loans over $625,500.

For more information, e-mail Scott Meyer  or call him at 800-368-5242 x8144.

Read the full story in NAHB's Washington Update.

NAHB Submits Comments on Ending HUD's "Hold Harmless" Policy

In a recent Notice, HUD requested public comments on whether HUD should discontinue its "hold harmless" practice with respect to Section 8 income limits. The hold harmless policy freezes income limits at current levels in cases where the underlying data indicate that incomes have declined. 

NAHB and other industry groups submitted comments to HUD on Nov. 5 in opposition of the removal of the "hold harmless" policy noting that doing so would be premature and is not likely to have an effect on 2010 income limits. Additionally removal of the program would produce large declines in 2011 that the industry may not be prepared for, thus doing more harm than good.

The hold harmless policy was adopted to ensure that LIHTC projects would not be subject to year-over-year income-limit or rent reductions. However, the Housing and Economic Recovery Act of 2008 codified the hold harmless policy for LIHTC projects, giving HUD the freedom  to discontinue its hold harmless policy for Section 8.

View the letter to the Office of the General Counsel here.

For more information, e-mail Carmel McGuire or call her at 800-368-5242 x8207.

New Guidance Issued for Commercial Real Estate Loan Workouts

The federal banking regulators have issued new guidance with the objective of encouraging institutions to pursue workouts on troubled commercial real estate (CRE) loans, a category that includes residential land acquisition, development and construction (AD&C) loans. The stated intent of the guidance is to ensure that supervisory policies and actions do not impair the flow of credit to viable borrowers and projects. 

The statement says that financial institutions that implement prudent CRE workouts will not be subject to criticism for engaging in such efforts and loans should not be subject to adverse classification solely because the value of the underlying collateral has declined.  

The policy statement is a positive step in encouraging workouts as a preferred course of action and in directing examiners to make balanced assessments of institutions’ workout efforts.  he direction provided on allowing institutions to avoid using liquidation values when assessing collateral and on bifurcation of loans should be helpful to builders and developers. 

In general, however, the criteria specified for prudent loan workouts will allow institutions fairly limited ability to structure workouts for AD&C borrowers. Since AD&C loans are collateral-dependent with no internal cash flows to service principal and interest, borrowers on these loans will have to demonstrate other sources of loan repayment, provide additional collateral and/or make principal repayments in order to satisfy the criteria for prudent workouts. 

Many AD&C borrowers are not in a position to meet such requirements. In addition, the higher likelihood of a reclassification of a restructured AD&C loan as a troubled debt restructuring likely will discourage institutions from pursuing workouts on AD&C loans.

A more detailed summary and analysis of the new guidance is attached, along with the regulators’ joint policy statement. 

View the Press Release here.
View the Statement on Prudent Commercial Workouts
View the Summary and Analysis of  CRE Workout Guidance

For more information, please contact David Ledford at dledford@nahb.com or Claudia Kedda at ckedda@nahb.com.

Start Planning for Multifamily Activities at IBS 2010

Networking Opportunities, Plan and Ad Reviews Offered at The Apartment and Condo Meeting Place at IBS...

The Apartment and Condo Meeting Place is the place to be during the 2010 International Builders’ Show in Las Vegas. When not attending multifamily education sessions at IBS, visit The Meeting Place – the official headquarters for NAHB Multifamily – to network and socialize with your peers, learn more about the multifamily industry at exciting, interactive events, or just relax.

Don’t miss these activities!

Meet the Multifamily Experts

Don’t miss the chance to spend some one-on-one time with industry experts.  Ask questions and share ideas in a small group setting with leading industry professionals on topics addressing all aspects of the multifamily housing industry.

Apartment and Condo Architectural Plan Reviews

Here’s your opportunity to have your multifamily design plans reviewed and critiqued one-on-one by a nationally recognized architect. Or, just stop by to get some great design tips and ideas. Either way, you’ll get invaluable feedback you can take away with you!

Marketing Plan and Ad Reviews

In today’s challenging economy, on-point marketing is more important than ever. Meet with one of our marketing masters for an in-depth review and evaluation of your apartment or condo community’s marketing plan and/or advertising campaign.  You’ll receive useful advice that will help you fine-tune your marketing approach to reach your target audience.

Multifamily Peer-to-Peer Topic Tables

Topic roundtables are interactive group discussions facilitated by multifamily industry leaders to spark idea sharing with your colleagues that will lead to helpful insight and strategy building.  You’ll then be able to follow up with your peers and seek out others who share the same multifamily interests as you.

Visit www.buildersshow.org to register or for more information on the 2010 International Builders’ Show. Search Multifamily for a complete list of multifamily activities, including scheduled events at The Apartment and Condo Meeting Place.

Resource: Multifamily Education at Its Best For the New Year

Economic Forecast, Capital Markets Overview Highlight Multifamily Education at 2010 International Builders’ Show

The 2010 International Builders’ Show in Las Vegas is the place to be for education and information on apartments and condominiums.

Don’t miss the following multifamily education sessions at IBS:

• Economic Forecast & State of the Industry for Apartments and Condos
  Tuesday, Jan. 19, 1:30 – 3:00 p.m.

This session may be the closest you'll ever get to having a crystal ball. An NAHB economist will explain the economic conditions impacting the apartment rental and condo markets, and also provide forecasts for the short and long-term, including likely trends in starts, rents and prices. Then, executives from the nation's leading development companies will share their perspectives on the current state of the industry, how they're addressing challenges and positioning themselves to take advantage of opportunities that lie ahead. Have your questions answered by the most experienced developers in the industry.

• Apartment Marketing 2010 - What's Working in the Here and Now
  Tuesday, Jan. 19, 3:30 – 5:00 p.m.

What are today's multifamily renters looking for? In this timely session, you'll peer inside the minds of consumers as they search, find and procure apartment homes. Not only will you learn what they're looking for and which features they most desire, but you'll also learn how to make them zero in on you. Rounding out the session, you'll learn what will inspire them to stay with you.

• The Capital Markets: Financing Outlook for Apartments and Condos
  Wednesday, Jan. 20, 1:30 – 3:00 p.m.

The changes in the nation's capital markets have made it substantially more difficult to attract debt and equity for your deal – but there are still some sources available. This session will examine who those capital providers are, their terms and pricing, and what types of deals they're most interested in.

Back by popular demand is the How to Get Started in Developing Apartments and Condos series. Individual sessions include feasibility, finance, design/build and marketing/management.

Click here to view all education sessions in the Multifamily track at IBS. To view all multifamily activities, search for Multifamily.

Visit www.buildersshow.com to register for this year’s IBS and to make your hotel and travel plans.

Calendar: Multifamily Economic Forecast This Month, Condo and Renters Survey Results Next Month

November 

2010 Multifamily Economic Forecast Tuesday, November 17, 2009 3:00 - 4:00 pm EST Register Now! Find out where the multifamily industry is headed in 2010 and beyond. NAHB Chief Economist David Crowe will look at a variety of factors to help you and your company prepare for the future. This program is a must for all multifamily builders and developers. For more information about this webinar, contact Jeff Jenkins at jjenkins@nahb.org or  call him at 800-368-5242 x8292.

December

Survey Says: Results from NAHB's Multifamily Condo and Renters Surveys Wednesday, December 9, 2:00 - 3:00 p.m. EST Register Now! Get the latest results from NAHB's Multifamily Condo and Renters Surveys completed in 2009. Discover what consumers are looking for in a condominium or their next apartment. NAHB Chief Economist David Crowe will release the findings and analyze what they mean to multifamily builders, developers, architects and other housing professionals. Participants may receive one hour of continuing education credit for all NAHB professional designations.  For more information about this webinar, contact Jeff Jenkins at jjenkins@nahb.org or  call him at 800-368-5242 x8292.

January

Registration is open for the 2010 International Builders Show Jan.19-22 For a limited time, NAHB members can receive a complimentary 4-day exhibit registration, giving them access to the hottest exhibit floor in the building industry for absolutely no charge!   Purchase a one or two day education pass, giving you access to education on the days you select and 4-day pass to the exhibit floor. And remember, education sessions are FREE on Friday! The Apartment and Condo Meeting Place is the place to be during the 2010 International Builders’ Show in Las Vegas. When not attending multifamily education sessions at IBS, visit The Meeting Place – the official headquarters for NAHB Multifamily – to network and socialize with your peers, learn more about the multifamily industry at exciting, interactive events, or just relax.