The measure, included in a short-term highway funding bill passed this week by both houses, is designed to reduce inaccurate reporting and root out fraud related to mortgage interest deductions. It would require banks and servicers to report the origination date of a mortgage, the property address for the collateral and outstanding balance of the loan at the beginning of the tax year.
President Obama is expected to sign the bill. If passed, it would go into effect for tax year 2017 and would raise an estimated $1.8 billion for the government over 10 years.
The bill did eliminate the use of “g-fees,” which are used by Fannie Mae and Freddie Mac to offset costs incurred when foreclosures occur – an omission praised by industry groups like the National Association of Federal Credit Unions.
“We’re gratified that lawmakers have kept g-fees out of highway funding for now, but we’ll be closely monitoring the long-term funding measure that lawmakers are expected to try to resolve in the fall,” said Carrie Hunt, NAFCU senior vice president of government affairs and general counsel.
Congress has included a measure that would create new mortgage reporting requirements in a highway funding bill.