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Obscure provision in Senate tax bill seen costing banks billions

Joe Light, Bloomberg News on

Published in Home and Consumer News

Glen Corso, who heads the Community Mortgage Lenders of America, said his small-lender trade group didn't find out about the provision until Tuesday morning. Corso said he's worried that there might be other unnoticed negative provisions in the bills racing through Congress "especially based on this experience."

"Something could come to light when it's too late to do anything about it," Corso said. "We could have a law of unintended consequences."

Cowen & Co. analyst Jaret Seiberg said in a research note on Wednesday that the bill's impact on mortgage servicing appeared unintentional. "We just don't see why any senator would look to intentionally use tax policy to drive up the cost of mortgages or make housing finance less available," wrote Seiberg, who added that if the provision stayed, the firm's views would get "much more negative" on the housing and mortgage markets.

Both Corso and Stevens said their members were reaching out to members of Congress to get the issue addressed, making the case that the hit would flow through to mortgage borrowers in the form of higher mortgage costs.

Some housing industry groups had already slammed the tax bills in Congress for lessening the value of mortgage-related tax breaks for homeowners, which could reduce their leverage to change the provision.

 

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