President Obama’s budget proposal was released today this morning. A small section of the sweeping budget plan has the potential to become a major impediment to a recovery in real estate markets across the nation. I just received an email from the National Association of Realtors. NAR is 100% opposed to a provision that modifies the Mortgage Interest Deduction and is prepared to use its formidable array of resources against its enactment.
As currently drafted, the plan changes this deduction by reducing the amount of mortgage detectability on families earning over $250,000. This proposed change in the Mortgage Interest Deduction will result in further erosion of home prices and home values....especially in expensive areas such as ours. If this proposal is enacted it will lead to a new round of price depreciation, and will cause greater distress on the balance sheets of banks as the collateral value of mortgage backed securities declines. A second credit crisis could emerge before the first one is resolved.
NAR is launching a multiphase plan of action to eliminate this provision from the budget plan. In the next 24 hours, it will be expressing our concerns directly to President Obama, to all members of the House of Representatives and the Senate, and placing advertisements in the publications read by Washington, DC decision makers. Additionally, NAR will be forming a coalition with other groups affected by this proposal.
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