Dear Ranking Member Neal:
The undersigned organizations, representing a diverse coalition of stakeholders in the housing finance system of lenders, affordable housing advocates, civil rights organizations, homebuilders, mortgage insurers, and real estate professionals, are writing regarding the tax treatment of mortgage insurance premiums. We appreciate the opportunity to provide our collective perspective on this important tax provision as policymakers consider potential tax reforms in 2025 that support American families, communities, and small businesses. As tax writers assess the expiring and permanent provisions of the Tax Cuts and Jobs Act (TCJA), we encourage congressional action to support existing homeowners and prospective homebuyers by reinstating, making permanent, and expanding eligibility for the mortgage insurance premium tax deduction, which was available to eligible taxpayers from 2007 through 2021. The tax deduction for mortgage insurance premiums has long enjoyed bipartisan support and our organizations firmly believe this targeted deduction for the benefit of low down payment borrowers is both good tax and housing policy. We urge Congress to include the bipartisan, bicameral Middle Class Mortgage Insurance Premium Act (HR 4212, S 1938) in any end of year tax package or 2025 tax reform legislation.
Affordability remains a persistent barrier to homeownership across the country due to high homes prices, elevated interest rates, strong home price appreciation (HPA), and limited housing supply. The national median home sales price currently stands at $416,700 and, while HPA has slowed, nationwide prices are still up 5.70% from one year ago and 58.36% from five years ago. Further, while housing inventory has improved from a historical low point, the current level of 4.2 months of supply is still well below pre-pandemic and long-term historical levels. Industry research and polling underscores that Americans feel it has gotten harder to buy a home over the past few years and the largest barrier is consistently identified as saving for a down payment.
Despite these challenges, each year mortgage insurance helps bridge the down payment gap for millions of borrowers who lack the resources for a 20% down payment or have less than perfect credit.
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