Mortgage Interest Reform: One Step Closer to Reality

Minnesota Rep. Keith Ellison recently introduced a bill to reform the Mortgage Interest Deduction to make it more equitable for middle and lower income homeowners and to use the billions saved from this reform to fund affordable housing programs.

We recently reported on a poll that surveyed America’s attitudes toward the Mortgage Interest Deduction (MID).  The results showed that a majority supported the MID, but also support MID reform and using the savings from MID reform to fund affordable housing.  Rep. Keith Ellison’s new bill, the Common Sense Housing Investment Act of 2012, H.R. 6677, proposes just that.  Read below to find out more about this bill and how to show your support.

More equitable tax benefits

The poll shows that Americans support the MID, yet less than half of homeowners claim the MID on their tax returns.  To enable more moderate and lower income homeowners to take advantage of MID’s benefits, Rep. Ellison proposes replacing the MID with a flat 20% tax credit. This would allow 60 million homeowners owners to benefit, rather than the current 43 million homeowners.

Billions in savings

Rep. Ellison proposes lowering the cap on mortgage debt eligible for tax benefits from $1.1 million to $500,000.  This means, if passed, the government will reduce its subsidy for million dollar homes.  $27 billion annually will be saved by modifying the MID in the manner proposed by Rep. Keith Ellison.

More affordable housing

Rep. Ellison proposes using this expected $27 billion to fund affordable housing programs, including:

  • Putting 60% of dollars saved (about $15.4 billion) toward the National Affordable Housing Trust Fund (NHTF).  Once it is capitalized, NHTF will provide communities with funds to build, preserve, and rehabilitate rental homes that are affordable for extremely and very low income households.
  • Putting 30% of dollars saved (about $7.7 billion) toward Section 8 rental assistance, both project and tenant based.
  • Putting 10% of dollars saved (about $2.5 billion) toward Public Housing Capital Funds.
  • Raising the Low Income Housing Tax Credit (LIHTC) allocation from $2.10 per capita to $2.70 per capita (an increase of $1.38 billion a year).  LIHTC is an indirect federal subsidy that is used to develop affordable housing. 

There is a shortage of nearly 7 million homes affordable to families in the bottom twenty percent of income.   In Minnesota, 1/2 of renters pay more than 30% of their income on housing.  This bill, if passed, will ensure affordable housing for more low income families. 

How to get involved

If your organization – or your local affiliates or partners – wish to be listed as supporters of the bill, please send an email listing your support and contact information to Mitch Dowd at

Contact Brandon Gil at for more details regarding the bill or for information on how to get involved.