We're only a few days away now from knowing whether President Clinton will make good on his pledge to veto the big Republican-engineered tax-cut bill that cleared Congress early last month. But we can be certain that at least two proposed "taxes" on home buyers won't be enacted into law, at least not this time around.

That's because the members of the House Appropriations Committee have rejected little- known requests by the Federal Emergency Management Agency and the Department of Veterans Affairs to make future borrowers pay for updating their systems. FEMA was looking to hit up borrowers for $15 each; the DVA, $25.

FEMA, an independent agency created in 1979 to reduce loss of life and property and protect the nation's infrastructure from all types of hazards, wanted to use the money to modernize the flood mapping technologies it uses to determine the risk of floods and set rates on flood insurance throughout the country. While acknowledging the need, lenders, as you might expect, opposed the proposal.

The agency's plans call for updating flood data for all communities which have inadequate floodplain maps or no maps at all. It also wants to digitize paper maps so flood hazard determinations could be retrieved over the Internet or by CD-ROM.

The update, FEMA says, is crucial to avoiding construction in high-risk areas and preparing local communities and home owners for floods. The maps the agency is currently using are not only outdated, they also do not include more that 1,000 new communities that have been built since the maps were drawn.

The VA sought the surcharge to upgrade it's information technology. It wanted to collect the money for four years or until it amassed $50 million, which ever came first.

Keith Pedigo, director of the VA's Loan Guaranty Service, conceded that his agency "has been slow" to upgrade its computer systems to take advantage of the latest technology. Only one of five loans guaranteed by the agency are underwritten electronically, whereas perhaps as many as half of all other loans are processed automatically.

But Pedigo said the VA is "on the verge" of rolling out some new programs that will provide better service, not only to borrowers but also to lenders. Besides automated underwriting, the VA intends to develop software that would allow lenders to find out instantaneously if applicants are eligible for GI loans and to submit loan packages electronically.

Again, though, lenders asked lawmakers to nix the idea, which they did.

FEMA hoped to raise $75 million a year by charging $15 on all federally regulated mortgage transactions, but the House panel said the fee "would impose an inequitable tax on home owners and an administrative burden" on lenders.

However, appropriators, recognizing the "dire need" to redo maps that are 30 years old in some cases, didn't send the agency away empty handed. Rather, it patted FEMA on the head with $5 million in start-up funds for a Flood Map Modernization Fund and sent it away to find other ways to finance the effort.

The full House is scheduled to take up the VA-HUD appropriations bill soon. The Senate has yet to move a funding bill of its own. But President Clinton, at the urging of Housing Sec. Andrew Cuomo, has threatened to veto any measure that is too far below his budget request.

Even if the House has to reconsider, though, it's doubtful either the FEMA or VA tax would be resurrected. But then, there's always next year.

Published: September 6, 1999

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