David "Dave" Stevens, president and chief executive officer of the Mortgage Bankers Association (MBA), sits for a photograph following an interview in Washington, D.C., U.S., on Wednesday, May 1, 2013. Democratic and Republican lawmakers have been pushing for changes at the FHA since a November actuarial report said its reserve fund for bad loans may require a taxpayer subsidy of as much as $16.3 billion in fiscal-year 2013, the first time in its 79-year history that it wouldn't be self-supporting. Photographer: Andrew Harrer/Bloomberg *** Local Caption *** Dave Stevens
Andrew Harrer/Bloomberg
The Mortgage Bankers Association is "not religiously wed" to the mortgage interest deduction, so long as any change comes as part of a comprehensive tax reform proposal rather than a one-off change to the tax code, said President and CEO David Stevens.
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"If the entire tax code were to be looked at through a formal process and it was thorough and the mortgage interest deduction then became part of that dialogue, we certainly would support that," Stevens said in a television interview Wednesday.
Nearly 33.6 million taxpayers deducted $72.4 billion in mortgage interest from their 2014 taxes, and that figure could rise to as much as $96.4 billion by 2019, according to estimates by the Congressional Joint Committee on Taxation. That makes it one of the largest tax breaks taken by individuals.
Middle-class homebuyers benefit the most from the deduction. About 43% of taxpayers who took the deduction had adjusted gross incomes between $100,000 to $200,000, according to the committee's estimates, while another 40% of taxpayers who took the deduction made less than $100,000.
Stevens' statements are a departure from the MBA's previous opposition to any attempt to eliminate or even reduce the deduction.
The group opposed a November 2010 proposal on scaling back the deduction, citing the fragile state of the housing market. The group called the deduction "one of the pillars of our national housing policy, and limiting its use will have negative repercussions for consumers and home values up and down the housing chain."
At the start of 2013, the deduction survived contentious negotiations on a deficit reduction bill. But it has remained a target for those looking to increase revenue for the government.
So why the change in course?
"Entry-level homebuyers typically don't deduct, don't itemize, and wealthy borrowers won't really care," Stevens said, adding later, "You can't say, 'touch everybody else's pocketbooks, but not mine.' So I think it needs to be part of the discussion."
"I do think that everybody needs to recognize that the American that benefits from the mortgage interest deduction is a middle-class homebuyer and not on either end," Stevens said. "So ultimately, that impact needs to be understood so we can understand what that's going to mean to household demand and affordability. As long as that's considered in the overall dialogue, we're eager to participate."
Brad Finkelstein is the originations editor of National Mortgage News. While he covers the entire process, Brad's specialty is loan production and... Read full bio
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