Magazine article American Banker

Fannie, Freddie Hit for Ads Defending Writeoff

Magazine article American Banker

Fannie, Freddie Hit for Ads Defending Writeoff

Article excerpt

Fannie Mae and Freddie Mac, the housing finance giants, are taking political heat for sponsoring ads in Iowa and New Hampshire opposing elimination of the mortgage interest deduction.

Eliminating the homeowner tax break is part of the flat tax proposal of Republican presidential candidate Steve Forbes

In radio spots, newspaper ads, and direct mailings, the government sponsored agencies, which invest in home loans, have made the case that Mr. Forbes' plan to eliminate the deduction would depress home prices, increase foreclosures, and wipe out the savings of many Americans.

Protecting the mortgage interest deduction is a time-honored tradition among housing lobbyists. But this time the involvement of the agencies has drawn fire from a prominent advocate of the flat tax in Washington.

Rep. Richard K. Armey, the Texas Republican and House majority leader, told The Washington Post: "Here you have government-sponsored enterprises that enjoy extensive tax concessions from the government that are lobbying for a special provision in the tax code. I don't consider that appropriate."

"There is a partisan flavor to it," Mr. Armey added. "There is nobody in the presidential sweepstakes that advocates a flat tax except Republican candidates."

Fannie and Freddie are part of an informal coalition that includes the National Association of Realtors and the National Association of Home Builders. The group, called the Coalition to Preserve Home Ownership, has spent $270,000 on the campaign. …

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