Tax Reform, Fixing Mortgage Rules High on 2013 Obama Agenda

Coverage of the 2013 State of the Union speech:

President Barack Obama in his first State of the Union speech since winning election to a second term said the federal government needs to streamline rules that are making home purchases and mortgage refinances too hard for creditworthy households. He also urged Congress to tackle tax reform, despite all the other priorities on its agenda, and he said homes and commercial buildings must be part of the country’s effort to improve energy efficiency.

The President also touted his initiative to help rebuild communities hard hit by the economic slowdown by incubating new businesses and working with public and private partners to rebuild vacant homes.

“Our housing market is healing . . . and homeowners enjoy stronger protections than ever before,” the President said at the beginning of his speech. But among the country’s unfinished business, he said, is the continuing difficulty among households to get mortgage credit.

“Even with mortgage rates near a 50-year low, too many families with solid credit who want to buy a home are being rejected,” the President said. “Too many families who have never missed a payment and want to refinance are being told no. That’s holding our entire economy back, and we need to fix it.”

Obama pointed to legislation pending in Congress to encourage refinancing by underwater and other struggling borrowers who’ve remained current on their mortgage. The legislation “would give every responsible homeowner in America the chance to save $3,000 a year by refinancing at today’s rates,” Obama said. “Democrats and Republicans have supported it before. What are we waiting for? Take a vote, and send me that bill.”

There are a number of mortgage refinance bills pending in Congress, including the “Responsible Homeowners Refinancing Act” by Sens. Robert Menendez (D-N.J.) and Barbara Boxer (D-Calif.) to streamline refis of Fannie Mae and Freddie Mac loans, and a bill to let struggling borrowers refinance into FHA loans, among others.

Obama also echoed real estate industry concerns over the qualified mortgage (QM) and qualified residential mortgage (QRM) rules, which federal banking regulators have been working on since passage of the big Wall Street reform law that was enacted two years ago. QM was issued earlier this year and lays out broad-based lender requirements to ensure loans are made only to borrowers who can reasonably be expected to meet repayment obligations. QRM is still to be released. It sets additional restrictions on lenders for loans that would be packaged into mortgage backed securities and sold to investors. NAR and other industry and consumer groups back broad-based, flexible standards and remain concerned that QRM restrictions that go beyond QM could keep the availability of mortgage credit too tight.

“Right now, overlapping regulations keep responsible young families from buying their first home,” Obama said. “What’s holding us back? Let’s streamline the process, and help our economy grow.”

The tax reform agenda the President laid out included no specifics, but on individual taxes, he called for eliminating “tax loopholes and deductions for the well off and well-connected.” He also called for simplifying taxes for small businesses. On corporate taxes, he called for “a tax code that lowers incentives to move jobs overseas and lowers tax rates for businesses and manufacturers that create jobs right here in America.”

More detail on what he has in mind for tax reform will likely be included in his Administration’s 2014 budget request, which he’s expected to submit to Congress in mid-March.

Obama said his goal for home and commercial property energy efficiency is a 50 percent reduction in energy waste. “Let’s cut in half the energy wasted by our homes and businesses over the next twenty years,” he said. “The states with the best ideas to create jobs and lower energy bills by constructing more efficient buildings will receive federal support to help make it happen.”

Obama’s initiative to help economically hard-hit areas by rebuilding vacant homes isn’t new; he’s touted what he calls “Project Rebuild” before. In last night’s speech he talked about his plan to ramp it up a bit by partnering with “twenty of the hardest-hit towns. . . . We’ll work with local leaders to target resources at public safety, education, and housing. We’ll give new tax credits to businesses that hire and invest.”

All of these and other domestic initiatives the President referenced, including a public-private effort for rebuilding the country’s aging bridges, ports, and other infrastructure, are intended to help boost the economy and the middle class, which he said has been disproportionately hard hit for the past decade. “It is our generation’s task . . . to reignite the true engine of America’s economic growth—a rising, thriving middle class,” he said.

Access text of the President’s speech.

Robert Freedman

Robert Freedman is director of multimedia communications for the NATIONAL ASSOCIATION OF REALTORS®. He can be reached at

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  1. Nancy Weber


    A realtor friend of mine told me that the of $200,000 AGI for individuals is or has changed to $400,000. What say you

  2. This is a great article exemplifying what is going on in this economy, thanks for sharing this great information with us.

  3. If Obama cut guidelines and allowed home owners who defaulted to purchase sooner we may end up with a higher interest rate due to the high amount of risk. The current guidelines are strict, but that’s whats made mortgage backed securities desirable in the past few years. When things loosen up investors need higher rates to leverage the risk.

  4. Very good article! We will be linking to this great article on our website.
    Keep up the great writing.