The Mortgage Bankers Association was not among the real estate trade groups that took out a full-page advertisement July 22 in USA Today urging President Bush to sign the Revenue Act of 1992 (H.R. 11). In fact. the MBA has penned its own missive to President Bush, asking him to veto the bill.
"The PMSR provision was too much of a hit," explained Michael J. Ferrell, senior staff vice president and legislative counsel for the MBA. It was the inclusion of purchased mortgage servicing rights in a provision of the bill requiring the costs of their acquisition to be amortized over 14 years that caused the MBA to oppose H.R. 11. Servicers insist that the actual life of the average PMSR contract is seven-to-10 years and the tax bill treatment would as much as double the period over which they could deduct their costs.
While the PMSR industry thought the $1.2 billion revenue increase estimated by the Joint Committee from inclusions of PMSR was absurdly high, the lobbyists felt they had to oppose the bill because there would be some additional costs.
The American Bankers Association. on the other hand, found that the inclusion of the cost of acquiring good will in the intangibles provision more than out-weighed the cost to banks of the inclusion of PMSRs. Thus, the ABA was one of the signatories to the USA Today ad. The ABA, the MBA and many other real estate-related trade associations supported many other provisions of the bill, including one that would permit deduction of losses from real estate activities if a taxpayer materially takes part in the business. The National Association of Home Builders also opposed the bill because Congress dropped a first time home buyer tax credit from the measure.
Though White House sources said President Bush would veto the bill because of his pledge never to increase taxes, Congress appeared to be delaying sending H.R. 11 to the White House so that Bush could wait until after the Nov. 3 election to make up his mind. The bill contains many provisions favored by the president but it does contain some revenue-raising provisions.