Subject: Mortgage Insurance Comment: I respectfully submit the following comments for your consideration in relationship to your debate of homeownership tax deductions. I have read, heard and seen reports of your consideration of including a scale back of these deductions in your final recommendations. I ask that as you debate this, you take into account what your actions may do to home values, and in turn what those actions would do to middle class families who own homes, especially in high cost of living areas. My husband and I live in suburban Washington, D.C., specifically in Alexandria, VA. Nearly two years ago, we scrapped together every dime that we could and bought a modest townhome. As I'm sure you are aware, the housing values out here are quite high. While we have a sizeable mortgage on the townhouse that we bought for nearly $350,000, we have been disciplined in our spending, have not taped our equity for frivolous purchases and have made all of our payments on time. Because of this and the appreciation of our home, we have managed to keep ourselves in repectable financial condition. However, if a cap were place on the deductibility home mortgage interest, I am very concerned about its impact on housing prices. If a $350-400K cap is set on this deduction it will have a dramatic impact on the homes currently valued in the $400K to possibly $700K range. (You can make the arguments that the impact would be lessened the closer you get to $1 Million, but there is little doubt it will dramatically impact home prices close to but above that cap.) This will have a ripple effect that will devastate the value of homes all the way down the chain, and I do not believe “devastate” is too strong of a word. Surely, you can realize as homes once valued at $500K drop to $400K or $350K that homes currently valued at $350K will no longer retain that value. This will continue down the chain and will severely hard many middle income families. While I am not one to engage in class warfare, those that look to target one group over another for revenue raising can not believe that people in the middle class struggling to make a living in high cost of living areas are the group that should be targeted. Families in many urban areas would be severely harmed by this proposal. Some of on the panel may or may not agree with the policies that initially led to these tax preferences. However, these have been in place for some time now and people have made financial decisions in part because of these policies. Even the smallest adjustment could have a dramatic negative effect on millions of middle income Americans. I again ask you to please tread carefully into this very sensitive area. Thank you for your consideration. |