What Can We Expect from Congress?
Legislation is impactful to the cyclical nature of this business. And today, there are critical issues on the horizon that will affect the next leg of this cycle. Here is our take on the current pressures facing housing and the economy:
We expect a lame-duck special session of Congress in November with the following outcome:
- A second consumer stimulus package in the $150-$300 billion range, mostly helping the most affected (the unemployed, etc.).
- An employment stimulus package, possibly in the form of tax breaks to businesses, an extension of the NOL look-back period to 4 years because it will help more than home builders at this point, and “Federally encouraged” lending by banks.
- Unfortunately, no tax credit for home buyers.
- A sustained low Fed Funds rate.
- The implementation of an unprecedented homeowner loan modification program.
Additional measures that may be postponed until next year:
- Additional regulatory powers that could make it more difficult and expensive for banks to make and securitize loans.
- A more formalized process for bank asset disposition.