The residential finance industry—including its premier trade group—is concerned that politicians may clip the mortgage interest deduction to solve the "fiscal cliff" crisis, but there is also hope that when Washington finally acts it will cap the dollar amount of all deductions and not necessarily the MID.
According to interviews conducted by National Mortgage News this week, mortgage bankers are well aware that the MID is in play, but their lobbying efforts are focused on the damage to housing that might occur if the deduction were reduced to, say, $500,000 from the current $1 million.
“Cleary everything should be debated,” MBA chief David Stevens told NMN, “but this decision will have long tentacles deep into the U.S. economy.”
Stevens and MBA chief economist Jay Brinkmann believe that if the MID is reduced it will hurt home sales in certain key segments of the housing market. “Can we live with that?” asked Stevens.
One lobbyist, requesting that his name not be used, said he’s hopeful the White House and Congress will work out a deal where all deductions—not just the MID—will be capped at $25,000 to $50,000 per year per filer.
“If you go after deductions line-by-line it can get really difficult,” this source said. “And nothing will get done.”