Dec. 20, 2017


Editor’s Note: Happy holidays! Dateline Austin is signing off for the year on Wednesday, Dec. 20, but we’ll be back Wednesday, Jan. 3, bringing you the latest in title insurance news.
 

Tax News: House and Senate Pass Tax Reform Package

James E. Hyland, Esq. | The Pennsylvania Group and TLTA Federal Legislative Counsel | Dec 20, 2017
Late on Friday, Dec. 15 the House and Senate agreed to new a tax bill that will become the final bill sent to the President. The full U.S. House passed it 227-203 Tuesday afternoon (and again Wednesday morning with a 224-201 vote). The Senate passed the bill 51-48 in the early morning hours on Wednesday. The bill will now be enrolled and sent to the President in the next few days and become law when he signs it. The title industry has been carefully reviewing provisions impacting real estate and small businesses and is still assessing the full bill. 

On issues impacting housing, there will be some significant changes. As previously reported, the Senate bill preserved the home mortgage interest deduction as it stands today at $1 million, but the House bill reduced the deduction to $500,000. The final bill split the difference and retains the mortgage interest deduction at $750,000 for a home mortgage going forward. All current mortgages are grandfathered. The bill, however, will eliminate interest deductions for second mortgages. 

In a major victory for the title and real estate industry, proposed restrictions on a capital gain exclusion for a home sale were eliminated from both bills in the Conference report, thus keeping current law. The Senate and House had previously sought to eliminate a capital gains exclusion from a home sale, requiring homeowners to own a home for five years, rather than the current two years to permit the capital gains exclusion. TLTA, ALTA and other housing groups were working very aggressively to change this provision because of concern with mobility in the housing markets. It is estimated that 15 percent of homes in Texas would have fallen in the category of eliminating the capital gains exclusion. Eliminating this from BOTH the House and Senate bills was a major victory for our industry and we think very helpful to a robust housing industry.

Provisions of note:
  • Home mortgage interest deduction retained; set at $750,000 for a home mortgage going forward.
  • Capital gains exclusions remain unchanged.
  • The deduction for state and local income taxes is preserved, but capped at $10,000.
  • Like-kind (1031) exchanges for real property were preserved.
  • Owners of so-called "pass through" businesses can deduct 20 percent of earnings and then pay at their personal income tax rate on the remainder of earnings.

Read More »

Major IRS Glitch Could Delay Closings for Months

A change in the technology used by the Internal Revenue Service has created a glitch in a system used by home lenders that could end up delaying mortgage closings by months. Mortgage industry vendors are reporting that as of midday Thursday, Dec. 14, they have been unable to retrieve tax transcripts from the IRS at the pace needed to handle the daily volume of loans. One of the largest vendors reports that they might have to revert to manual downloads -- potentially cutting production levels from tens of thousands of transcripts per day to potentially hundreds. 
 
Read More From Mortgage Daily »
 
Top officials at the IRS met with mortgage industry groups this week to discuss possible fixes to the agency’s verification system. During a conference call late Monday, IRS officials told anxious industry group executives that they were working to address the problem, which many fear will significantly delay mortgage closings. 
 
Read More From American Banker »

TDI Adopts 2018 Maintenance Fees and Assessments for Underwriters

Texas Department of Insurance | Dec. 15, 2017
 The Texas Department of Insurance has adopted 2018 maintenance fees and assessments for underwriters. Both adoption orders are available on the TDI website:
  • Section 1.414 outlines the 2018 maintenance taxes and fees insurers pay on premiums or other assessment base. 
  • Section 7.1001 outlines the 2018 assessments to cover the expenses to examine domestic and foreign insurance companies and self-insurance groups providing workers’ compensation insurance.
TDI conducted a stakeholder meeting on Oct. 25 to get input on the rates, and the proposed rates were published in the Nov. 10 issue of the Texas Register.
 

CFPB News: State Insurance Regulators May Get to Outrank CFBP

Think Advisor | Dec. 11, 2017
 Some House members are fighting to give state insurance commissioners the final say when commissioners and the federal Consumer Financial Protection Bureau (CFPB) get into fights over jurisdiction.
 
ALTA joined other groups urging support for the bipartisan bill that would clarify and reinforce the bureau's ability to regulate the insurance industry.
 
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