Housing and mortgage groups were unusually active last week on Capitol Hill, pushing hard for a better tax credit to spur home purchases.

In coordinated lobbying efforts, homebuilders, Realtors, bankers and mortgage companies focused on the Senate, where final details of a nine hundred billion dollar economic stimulus package were being hammered out all week.

Four trade groups sent a joint letter to the Senate Finance Committee, which has responsibility for all tax-related aspects of the stimulus, applauding the committee's decision to make the existing seven thousand five hundred dollar tax credit nonrepayable as the House Ways and Means Committee voted to do the prior week.

But the amended credit could be improved even more, the groups said, if the Senate makes several additional changes.

Tops on the list: Extend the eligibility period for using the credit from the current deadline of June thirtieth through the end of December.

“If the stimulus bill is signed sometime in February, as anticipated,“ said the groups, “only about four months will remain for the credit to have a meaningful impact. The spring, summer and early fall months are historically the most active seasons for home purchases. Allowing the credit to expire June thirtieth could undermine” the ability of the credit to stimulate potentially hundreds of thousands of sales this year .

The four trade groups, the National Association of Realtors, the National Association of Homebuilders, the Independent Bankers of America and the Mortgage Bankers Association, asked the Senate to take two more steps: expand eligibility to ALL buyers of homes this year --- not simply first time purchasers- and authorize a mechanism whereby the seven thousand five hundred dollar credit could be made available as downpayment cash at settlement.

Eliminating the first time buyer restriction would be a huge change. Under the current tax code and the House Democratic stimulus package, only taxpayers who have not owned a home during the previous three years are eligible for the credit. Opening that up to all purchasers -whether moveup buyers, downsizers or first timers would stimulate sales far more -- perhaps half a million additional sales -- according to some estimates.

Though the four trade groups joined to push for an improved tax credit, they don't necessarily agree on all aspects of the plan. For example, the National Association of Homebuilders continues to lobby Congress and the Obama administration for a ten percent credit up to twenty-two thousand dollars available to all 2009 purchasers.

Published: February 2, 2009

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.