Mortgage bankers open to rewrite of homeowner tax breaks

The Mortgage Bankers Association said it is open to a rewrite of homeowner tax breaks as part of a broader reform package, adding to the political momentum in support of a mortgage tax credit.

The MBA position comes days after the National Association of Home Builders broke ranks with the real estate industry to endorse changes to the mortgage interest deduction, a tax break that for decades has been considered untouchable.

"The mortgage interest deduction is important, but if there are other alternatives, we are open to them," MBA President David Stevens told POLITICO.

"In isolation, we would fight against modification to the mortgage interest deduction very hard," Stevens said. But in the context of broader reform, "we want to remain open-minded and involved in those proposals. If there’s a trade-off that gets you ultimately to the same outcome, we’re open to it."

In a letter to House and Senate leaders, Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn, the MBA said a White House tax framework released last month gives policymakers "a tangible opportunity to pursue alternative homeownership tax incentives — and perhaps target those benefits more efficiently to low- to moderate-income borrowers."

That reform outline would raise the standard tax deduction, making the mortgage interest deduction less valuable to low- and moderate-income homeowners. Fewer of those homeowners would have an incentive to itemize their returns, and more benefits of the tax break would flow to higher-income households.

With mortgage bankers and builders splitting off, the National Association of Realtors is the last big trade group fully committed to defending the $70 billion mortgage interest deduction. The group has 1.2 million members and the country's biggest political action committee, funneling nearly $4 million to candidates this election cycle.

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