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37 » VISIT US ONLINE @ DSNEWS.COM NAHB EMBRACING IDEA OF MID ALTERNATIVES In an article released in October by Ginger Gibson from Reuters, it was reported that the National Association of Homebuilders (NAHB) has decided against demanding a new version of the tax code that includes the mortgage interest deduction. ough the NAHB has raised concerns in the past about the current proposals for tax reform which eliminate benefits such as the state and local tax deduction, nullifying the benefits of the mortgage interest deduction and caps to the MID, it is now considering other homeownership boosting alternatives—as long as it offers a homeowner tax credit. "Now our policy is much more flexible," Reuters reported Jerry Howard, President of NAHB, saying. "It gives us a unique opportunity to help craft a unique tax policy as it is related to housing," Howard stated. President Donald Trump said that a tax code overhaul would be completed his first year in office, but according to the article, there currently is not a written proposal to create a homeownership tax credit to replace the mortgage interest deduction. e plan, or lack thereof, is generating much opposition in the housing industry. "[e National Association of Realtors] supports the goals of simplification and structural improvements for the tax system, and individual tax rates should be as low as possible, while still providing for a balanced fiscal policy," Iona Harrison, Chair of NAR's Federal Taxation Committee said in a statement during a Senate Finance Committee hearing. "We simply believe that to achieve these goals, Congress should commit first to doing no harm to the common interest that homeownership provides." NAHB's Howard, however, sees the plan as an opportunity to embrace creative alternatives and said that members of the tax code-writing House of Representatives Ways and Means and Senate Finance committees have expressed interest in creating a homeownership credit. FREDDIE MAC SECURING SEASONED LOANS On October 4, Freddie Mac sold $817 million worth of seasoned loans, which completed its third Seasoned Loan Structured Transaction (SLST) of seasoned reperforming loans (RPL) and moderately delinquent loans serviced by Mr. Cooper. According to Freddie Mac, the SLST securitization program auctioned 3,514 seasoned RPLs. In addition, the report notes that the GSE's program is a key factor to seasoned loan-offering initiatives, which were designed to "reduce less liquid assets in its mortgage-related investments portfolio, and shed credit and market risk via economically reasonable transactions." Essentially, the transaction involves a two-step process. First, the sale of the loans via a "competitive bidding process subject to a securitization term sheet." According to Freddie Mac, the sale will be implemented on the basis of economics, subject to meeting its internal reserve levels. Second, the transaction requires the purchaser of the loans to securitize the loans. e major requirement of Freddie Mac's SLST transaction is that the buyer of the loans be an investor with extensive experience in managing both performing and moderately delinquent mortgage loans, as well as in securitizing mortgage loans. e servicing of the loans is in accordance with RPL protocol and similar to FHFA requirements. Freddie Mac's RPL requires servicers to apply a waterfall of resolution tactics, with foreclosure as the last option in the waterfall. e FHFA nonperforming loan (NPL) requirements draw from experiences of sales of NPLs over the past year. According to the FHFA, as of the end of February 2016, the GSE had sold over 29,000 mortgages with a total unpaid principal balance of $5.8 billion. In total, Freddie Mac has sold $7 billion in NPLs and securitized $31 billion in RPLs by October 4, when this report was released. e transaction is expected to settle in November 2017. HOUSEHOLD DEBT DWINDLES AS HOME PRICES INCREASE According to a United States Federal Reserve report, overall national net worth of households rose by 1.7 percent, to $1.7 trillion in the second quarter of 2017 which has been attributed to continued growth in both the stock market and the housing market. In 2007, household net worth stood at $66,738 billion and dropped over $10,000 billion in 2008 when the housing crisis occurred. Current net worth stands at $96.2 trillion. Equity value increased by $1.1 trillion, and the worth of real estate rose by nearly $600 billion, mostly due to constrained inventory and continually rising home prices. Of the $47.9 trillion of total domestic nonfinancial debt outstanding, $14.9 trillion of that was household debt and $13.9 billion was nonfinancial business debt. e remaining $19.1 trillion was government debt. Seasonally adjusted, domestic nonfinancial debt rose by 3.8 percent, which is an increase of 1.7 percent from the first quarter of this year. Household debt also increased by 3.7 percent, and mortgage debt—minus charge- offs—increased at an annual rate of 2.8 percent. e federal level debt increased at a seasonal, annual-adjusted rate of 3.6 percent, which is an increase from the first quarter's rate of 2.6 percent. State and local government debt continued to decline this quarter at a rate of 1.0 percent, which was less than the 3.4 percent decline in Q1 2017.

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