Housing Affordability Bill Introduced in the US Senate

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On September 26, 2018, Senator Elizabeth Warren (D-MA) introduced S. 3503, the American Housing and Economic Mobility Act, which seeks to “help bring down costs for renters and buyers and level the playing field so working families everywhere can find a decent place to live at a decent price." The bill would invest $445 billion in several existing programs including the National Housing Trust Fund, the Capital Magnet Fund, the Indian Housing Block Grant, and in rural housing programs, as well as create a new “Middle Class Housing Emergency Fund.” 


Of particular note, the bill contains a provision that could potentially address a key MHI priority by empowering the housing industry to push back against exclusionary local zoning ordinances that discriminate against manufactured housing. Specifically, the bill would establish a new $10 billion competitive grant program that communities could use to build infrastructure, parks, road, or schools. To be eligible, local governments would need to reform land use rules that restrict construction of new affordable housing. 


MHI continues to advocate to the Administration and Congress that manufactured homes are the most affordable homeownership option available in the U.S. and will seek all opportunities through both legislative and regulatory efforts to ensure homeowners have access to this safe, affordable housing options.


In addition to the affordability bill, MHI submitted comments to the Treasury Department and the IRS asking that they provide additional clarification to ensure that passthrough entities that engage in the lending and financing of residential property, including chattel financing of manufactured homes, qualify for the IRS’s Section 199A deduction, which is part of the Tax Cuts and Jobs Act of 2017. MHI submitted comments in response to proposed rulemaking recently published by the Treasury Department and IRS.


In its letter, MHI argued that manufactured housing manufacturers, retailers, and suppliers are fully eligible for the 20 percent small business passthrough deduction and there is no basis for characterizing them as a Specified Service Trade of Business (SSTB) because their income is business income, derived from the manufacture and sale of manufactured homes, and the supply of products and services to the manufactured housing industry. Similarly, MHI stated that park owners are also eligible for this deduction, as their core activity is leasing the land on which a manufactured home is sited. Finally, MHI argued that while non-depository financial institutions (i.e. mortgage banks) are not explicitly mentioned in the statute or proposed rule as being eligible for passthrough treatment, a detailed analysis of the statute and proposed rule indicates that mortgage banks should not be classified as SSTBs and are eligible for passthrough treatment because: the core activity of mortgage banking is loan origination, mortgage banks are not among the enumerated list of excluded categories, the principal asset of independent mortgage bankers is not the reputation or skill of its employees/owners, and mortgage banking as a consumer product is not a proxy for wage income.


MHI will continue to advocate to the Administration and Congress that manufactured homes are the most affordable homeownership option available in the U.S. today and that complex tax regulations and other overly burdensome requirements that even modestly increase the cost of a manufactured home will price many consumers out of homeownership. MHI will work with the Treasury Department and the IRS on tax policies that not only support small businesses, but also eliminate regulatory barriers that impede consumer access to safe, affordable manufactured housing.


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