A closer look at Biden’s first-time homebuyer tax credit

In today’s HousingWire Daily episode, HW+ Managing Editor Brena Nath joins HousingWire Editor in Chief Sarah Wheeler to discuss the hottest topics coming across HousingWire’s news desk. In this episode, the pair review President Joe Biden’s proposed stimulus package and the potential impact of his $15,000 first-time homebuyer tax credit.

For some background on the interview, here’s a brief summary of HousingWire’s coverage of Biden’s proposed $15,000 homebuyer tax credit:

The housing industry is keeping a close eye on the Biden administration’s proposal of a $15,000 first-time homebuyer tax credit. If passed, the funds could be accessed immediately by the buyer at the closing table. Biden’s tax credit is more of a possibility now that both Senate races in Georgia went to Democrats.

Ralph DiBugnara, president of Home Qualified and senior vice president at Cardinal Financial, sees an obvious positive impact of the tax credit, but is still wary of parts of the bill, which includes an increased rate on long term capital gains.

“The real estate market is so hot that hurting investors now may not have a big effect, but long term it could cause major issues,” DiBugnara said. “Real estate Investors tend to buy more real estate in even in bad markets as a long-term strategy. If it becomes more expensive for them to do so, because of taxes, I believe some will shift strategies long term so when market cools there will be a lot less of them to support home buying.”

Lawrence Yun, chief economist at the National Association of Realtors, thinks Biden’s homebuyer tax credit will need to get support from 60 senators — a filibuster-proof majority in the Senate — if Democrats choose not to use budget reconciliation. And, the possibility certainly exists that Republicans will ask for a smaller credit number.

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Biden’s housing policy and minority homeownership

Tune into HousingWire Daily every Wednesday to listen to our new miniseries, Honest Conversations, a show that will examine the state of minority homeownership. In this episode, we interview New American Funding’s Charles Lowery and Frank Fuentes on how Biden’s housing policy impacts minority homeownership.

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HousingWire Daily examines the most compelling articles reported from the HousingWire newsroom. Each afternoon, we provide our listeners with a deeper look into the stories coming across our newsroom that are helping Move Markets Forward. Hosted by the HW team and produced by Alcynna Lloyd and Victoria Wickham.

HousingWire articles related to this episode:

• Biden stimulus could worsen affordable housing crisis
• Potential impact of Biden’s $15,000 homebuyer tax credit

Below is the transcription of the interview. These transcriptions, powered by Speechpad, have been lightly edited and may contain small errors from reproduction:

Brena Nath: Hey. Happy Monday, Sarah.

Sarah Wheeler: Thank you. It’s kind of a sad Monday after yesterday.

Brena Nath: I coincidentally was watching the Super Bowl with a friend who is in the mortgage industry. He’s in a training program. So, he’s been an underwriter now. He’s in loan processing. And he made the joke that he was surprised that the mortgage industry doesn’t have a holiday today at this point, especially I know in a lot of our newsletters, we have a lot of references to sports. So, I’m sure there’s quite a few people in this industry petitioning for one of those floating holidays being the Monday after Super Bowl.

Sarah Wheeler: Tell her I would be up for that. Let’s do it. Let’s start it right here.

Brena Nath: Well, sign our petition. We’ll start one. Well, I’m kind of jumping right into…I know we had, obviously, a very eventful weekend watching the Super Bowl. Kind of nice to watch TV and have events seem like kind of normal. But going back into busy news week, which we continue to have. I don’t know if I’ll ever stop saying that. We just got off our morning huddle. What’s a piece of news that you feel like our listeners should be paying attention to right now?

Sarah Wheeler: Well, actually, it really ties into the Super Bowl. So, at this year’s Super Bowl, we had three different companies run four different ads. So, you had Rocket Mortgage who was the OG of Super Bowl ads for the mortgage industry run two different ads. And then you had United Wholesale Mortgage, and you had Guaranteed Rate. And the really interesting thing about that is the fact that those three are locked in a pretty amazing competition, especially if you look at Rocket and UWM, number one and number two in the country as far as origination volume. So, this morning we have a feature article. So, for our premium content for our HW Plus members, inside United Wholesale Mortgage’s plan to topple Rocket.

Mat Ishbia’s firm has a plan to capture 50% of the wholesale market when the refis and their competitors fade. And one of the things that was so striking to me about Rocket Mortgage is it had one commercial that was pretty… I thought they were both great with Tracy Morgan. And it was really aimed at the consumer like, “Hey,” you know, that whole, like, push button, get mortgage. The other one was really aimed at supporting the mortgage broker channel and really informing consumers about, “Hey, this is why this is important,” which is a huge… I mean, a 180, right? So, they’re the direct-to-consumer and here they are talking about mortgage. That’s very intentional on their part. They have Rocket Pro TPO as their new branding. They are really going after that market share. And you can see why. Because, you know, this next year, instead of refi, we’re going to see the purchase market take over…the purchase originations take over that mix. And so, the brokers are pretty key to that. They see that.

So, it was interesting to see United Wholesale Mortgage really, you know, informing consumers about, “This is what a mortgage broker is. This is how you find your great house. This is how you know you can afford it.” And then to have Rocket having a similar advert was, like, “This is why they’re important.” And actually showing, like, a mortgage company in the background that wasn’t Rocket. It was pretty striking to me. And it really does show there’s just this ongoing war between those two.

Brena Nath: That also ties back to, I think, that educational element that I know we’ve been talking for both sides from B2B to B2C and the need for just educating consumers on, you know, what is a mortgage broker, where do you start the process, how do you get preapproved, and bringing everything back to not…I mean, we are in the thick of it. So, there’s a lot of things we assume we know…or we know…not really take for granted, but isn’t really common knowledge or common information or terms to everyday consumers. So, being able to switch that angle to, like, that educational element is huge and something I know…I mean, for our girlfriend’s podcast, I still have friends reaching out to me talking about, like, “I didn’t know that or I didn’t know this part of real estate process.” So, it’s cool to see that angle shift, especially with the people.

Sarah Wheeler: Absolutely. And for mortgage, you know, your general person has no idea what a mortgage broker is versus, you know, going, “Should I just go to Chase? Should I go to Rocket? Should I go to this?” And so, really interesting. And United Mortgage product, their FindAMortgageBroker.com, which is…so, that’s a direct-to-consumer. The consumer can go on there, find their person. So, we will say this is a huge story for us. Just the shift to the broker channel, the growth in the broker channel, what that looks like over the next year is going to be super interesting.

Brena Nath: And I know you already mentioned this. I know we did just publish our article that dives into UWM especially their fight against Rocket. What’s been fascinating following that story is that’s a conversation that Mat has been pushing for, is about the shift to the broker model and why a lot of brokers left the retail banking industry and shifted into brokers. So, there’s a lot of past coverage that you can find on our site and then even current thoughts in the war, if you want to sign up for James’ “LendingLife” which I constantly encourage. Because he has amazing quotes in there that really give you an inside look at everything that’s happening.

Well, going from kind of this weekend, what’s something that you feel like people should be paying attention to maybe? Obviously, we’re all paying attention to Super Bowl. So, it’s not probably something we need to tune people into. But what’s something that they’re probably not paying attention to that they should be paying attention to right now?

Sarah Wheeler: So, I think we have continued talks on the stimulus and how that affects housing. And then, really, some very important tax things that are bubbling within the Biden administration. So, on Thursday, you had senate leaders calling on Biden to, by executive order or by executive action, have a $50,000 loan forgiveness for student loans. I mean, that’s pretty big. Fifty thousand…I think in his campaign, some of the things that he talked about, Biden talked about was a $10,000 student loan forgiveness. So, you know, you have to wonder… It’s interesting that the Senate leaders, instead of saying, “Hey, we’re going to pass this legislation,” called on the president to say, “Hey, you should just do this by executive action.” It seems to me highly unlikely that $50,000 would be the way he goes there, but maybe that gives him cover to do the $10,000 that he wanted to do anyway. Pretty big deal if that goes through, obviously. That, combined with the first-time homebuyers tax credit, could be a game-changer for some people.

But, you know, we’ve written a lot about the home buyer tax credit because…first of all, so, that’s a $15,000 tax credit that is proposed, that would be available, like, at the closing table. So, you wouldn’t have to wait until April to get it of the year. Like, it would basically be like down payment assistance is what it would look like. But the question has been, does that actually hurt the housing market in the long run? Does that hurt affordable housing in the long run? Just because it doesn’t do anything to the underlying fundamentals of the underwriting. It doesn’t change someone’s credit score. It doesn’t change their ability to repay. It just gives them more money for a down payment. In our current environment, is that just going to fuel the home price inquiries and further put it out of reach?

But if you think about that, combined with potentially the…you know, a student loan forgiveness, that would change someone’s debt-to-income ratio ability to repay credit score. And so, these two things together could be a game-changer. But, you know, we’re still unsure. Like, every day we’re checking. Has it passed? Where are we in the process? Is there any more movement there? But our audience is very interested in those. Both of those stories are trending huge.

Brena Nath: I know we have a lot of extensive coverage on that right now and we’re…there’s more to come. But some, like, similar but related a little different. But there’s two apps right now that are taking over my phone: Clubhouse and TikTok. Those two… I know I saw your tweet on Friday night, talking about how you were on Clubhouse on a Friday night. And at the same time, I’ll go from Clubhouse where we’re all talking about real estate and then…I know we have a coverage actually coming out on this new growth of TikTok. So, two cents, I guess, for this podcast and for anyone who’s even to know, like, what is the consumer thinking about it.

Right now, TikTok trends around… They’re hard to explain kind of in words. It’s a video thing. But someone’s sitting there, like, “Oh, when you realize that Biden might be coming out with a $15,000 home buyer tax credit,” and the guy, like, shuts his computer and storms out of his house in a march because he just bought a home. And, like, these things are reaching the end consumer. And they’re going viral and they’re seeing these stories. And they’re just as interested. So, if our industry is ever wondering, I’m sure they’re very much on Clubhouse. But even the TikTok world is starting to get these trickle down and this waterfall of what’s going on in the industry. So, if you ever need content ideas, there’s definitely room there for education just as much as there is Clubhouse or LinkedIn and everything else. But I [inaudible 00:09:18] saw your tweet.

Sarah Wheeler: Yeah. I almost think that you could look at TikTok as the litmus test of what has to go down to that consumer. Right? Because, yeah, Clubhouse is just…I’m just amazed at the quality of people on Clubhouse. On a Friday night…we have our own Thursday night fintech discussion HousingWire does. Everyone should join us. Ask for an invite. But yeah, I mean, I’ve…all weekend long, I kept checking into stuff. It’s pretty addicting actually.

Brena Nath: Very addicting. And most notifications on my phone. It makes me feel cooler than I am and then I look and it’s just Clubhouse. Well, [inaudible 00:09:51] I know February is already flying by, which is not shocking but also shocking at the same time. Is there anything else that you think our listeners should know or anything that we might have not touched on that you would like to add?

Sarah Wheeler: Absolutely. So, regulation is coming back in force. And I feel like every couple of days we have a new story on, really, Biden’s administration. You can really see they’re taking this seriously. Their acting director of the CFPB, the person is going to take over once he’s confirmed at the CFPB. There’s a huge emphasis on regulation that we just haven’t had in the last four years. Servicers, especially, we read about that last week. Servicers, as you have all these borrowers coming out of forbearance, what does that look like? There’s going to be a really close look at that.

The interesting thing is, you know, in the middle of the pandemic, CFPB and others said, “Hey,” to servicers, “If you make a good faith effort, you know, we’ll know. You’re trying to do your best. You have all these things. You know, borrowers are even harder to reach right now than ever. You’ve got all these things.” But no one knows what that really looks like. No one knows, like, what does that look like a year from now when they’re doing a look back and saying, “How did you serve borrowers?” And we know that…I mean, that could be 10 years from now they’re doing a look back and saying that. And are they still going to have that…you know, remember that that was the…the gist of it was, like, “If you’re making a good faith effort…” and, of course, that’s a very subjective thing. What does making a good faith effort look like? So, we’re continuing to look at the regulation.

I think that is a story that, you know, this time last year was…I mean, how often did we write about regulation this time last year? Very, very little. And then it feels like every other day now, because there’s so much going on and we want to keep people informed. So, I would say, regulation is the thing, especially if you’re a servicer, but even… There were some redlining action this weekend that I’m going to writing about. So, it’s just…it’s bubbling up everywhere. And I think that that’s going to continue to be a topic that we’re going to cover for people who are really interested in.

Brena Nath: I would highly encourage people to…Kelsey Ramirez wrote an article, I think it was last week, on the Cordray-era CFPB. There was a…I was rereading that over the weekend. And there was a line in there talking about how Cordray kind of like when he was in charge of the CFPB, if you don’t define the line, people are less likely to cross it. And going back to that…I think, regulation by enforcement is the right terminology there, and how… So, kind of that article touches on that. And looking from someone who was in charge of the CFPB during that time, there’s a lot of insights there that you could…I would highly encourage reading.

But also, up until this point when Biden became president, we were also heavily talking about, what is the balance between state enforcement regulation and the balance of, you know, the government level. And so, a different…not a lot. I don’t want to use that word. But different states were starting to look into that, a ramp-up effort. And we have passed the bridge on that into now what does it look like going forward. So, I would encourage people to kind of go read that article. It’s a great, you know, source from somebody who’s been in the industry inside of that, the home of the CFPB. It’s something that we’re going to be closely watching, as Sarah just mentioned, especially when it comes to not just servicing but redlining and other topics that are coming out.

Sarah Wheeler: Well, I mean, just last week, we had 33 states go after Ocwen/PHH Mortgage over servicing fees. And those were…you know, those are not looking back 10 years. And those are 33 states that are taking coordinated action. And they even say within that article that it’s okay if the CFPB is going to be strict, too. That doesn’t mean they’re going to back down on their enforcement. So, again, we’re back in a situation where people have to deal with potentially more than 50 different, you know, people looking at them and looking at them in different ways and for different things. And so, it is going to be challenging.

Brena Nath: Well, yeah. I guess, my last thought that I don’t really…just something I think is worth noting is, if you look at our new vice president, she was a huge force right after the financial crisis. I know I keep saying we have past coverage. I’m going to selfishly keep saying we have past coverage on stuff. But if you go back and look, back when Biden was picking out his presidential candidates, we did a whole write-up on different actions that she took leading in to go right after the Great Recession and how she helped [inaudible 00:14:14]. And so, just knowing that is something with history in the administration right now is just something interesting to watch or just something to note about as we move forward with this new era. So, thought I would just note that as well.

Sarah Wheeler: Love that. And it’s so true. I think that people, you know, they were…all their eyes were in our industry on Elizabeth Warren. But Kamala Harris definitely had some really…you know, she was a prosecutor and she had a favorite to go after big banks as well after the financial crisis. So, I think you’re spot-on there.

Brena Nath: Well, I guess, we’ll keep those big words. We’ll keep Super Bowl, regulation, servicing, at the top of our minds as we head into this new week. As always, Sarah…those who don’t know, she’s our editor-in-chief. You can email her at [email protected] if you have any questions or tips for stuff going forward. There’s a lot of things moving in the industry. So, I want to thank you, Sarah, for your time today.

Sarah Wheeler: Absolutely. My pleasure. Thanks, Brena.