Ex-CEO of Trammell Crow Takes Aim at the Home Mortgage Interest Deduction

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June 7, 2015; Wall Street Journal

This Wall Street Journal article about the housing crisis catching families that can’t afford to buy homes but are hard-pressed to pay surging rents extensively quotes Ron Terwilliger, identified in the article as the retired national partner of Trammell Crow and as a Republican. It doesn’t identify Terwilliger through his nonprofit bona fides—as the chairman of the board of Enterprise Community Partners, a former vice chairman and current board member of Habitat for Humanity International, former chairman of the Atlanta Neighborhood Development Partnership, and chairman of the I Have a Dream Foundation. One would think that Terwilliger’s credentials with Enterprise, Habitat, and ANDP would be as important in an article about housing affordability as his experience with Trammell Crow, but WSJ make the connection.

In fact, the policy prescription offered by Terwilliger sounds more like his Enterprise/Habitat persona than his Trammell Crow identity. Assuming that the federal government isn’t going to be allocating increased dollars to the construction, rehabilitation, and preservation of affordable housing—though it obviously should—Terwilliger suggests that national political leaders should look at changing and reallocating the mortgage interest deduction. That tax break provides almost $100 billion annually to housing, but the wealthiest 20 percent of homeowners (earning over $160,000 a year) get three-fourths of the benefit. Terwilliger thinks, according to this article, that freeing up some portion of the mortgage interest deduction could allow the government to provide increased help through subsidies for young families trying to purchase homes or as additional financing for developers of affordable rental housing linked to housing tax credits.

Terwilliger’s concern about housing policies that would help induce homeownership and create more rental affordability isn’t new. In a speech for the Urban Land Institute, whose board he also once chaired and where he founded the ULI Terwilliger Center for Housing, he challenged the fear that tinkering with and reducing the mortgage interest deduction for homeowners would depress the nation’s homeownership rate. Other countries such as Canada and Australia, he noted, don’t have mortgage interest tax breaks but have higher rates of homeownership than the U.S., while the UK has phased out its mortgage interest deduction only to see homeownership rates rise significantly during the phase-out period. He added that not only do generally wealthy homeowners benefit the most from the mortgage interest deduction, but half of homeowners don’t get that tax break because they don’t itemize their federal taxes—and more than likely, the non-itemizers are middle- and lower-income families that might need the tax break more than the current recipients.

Another one of Terwilliger’s nonprofit lives was spent as co-chairman of the Bipartisan Policy Center’s Economic Policy Advisory Council. (Among past and current board members of the Bipartisan Policy Center are Paul Brest, the recently retired CEO of the Hewlett Foundation; Walter Isaacson, the president and CEO of the Aspen Institute; and a bevy of politicians from the right and the left.) Terwilliger has recruited Pamela Patenaude, a former HUD assistant secretary and until recently the director of housing policy at the Bipartisan Housing Center, to lead a new organization he established in 2014: the J. Ronald Terwilliger Foundation for Housing America’s Families, to “better align” national housing policy with the nation’s housing needs.

Terwilliger asks, as we have at the NPQ Newswire, when the last time was any of us heard a presidential candidate talk about affordable housing. Would any presidential candidate of either political party endorse Terwilliger’s notion of altering the home mortgage interest tax deduction? Trying to get politicians to talk about housing is like trying to get them to utter the word “poverty.” However, in 2012, the Republican Party’s platform drafters decided not to include the mortgage interest deduction as an element of tax policy they and their presidential candidate, Mitt Romney, would protect, although they did pledge to keep the other big deduction that skews to the rich, the deduction for charitable donations. President Obama’s proposed cap on the deductibility of mortgage interest, the local real estate tax deduction, and the charitable deduction would limit how much people of wealth might benefit from the mortgage interest tax break but wouldn’t fundamentally change the income mix of the beneficiaries nor reallocate the dollars saved to affordable housing.

As a major philanthropist, Terwilliger has made seven-figure donations in his time, including to ULI, Enterprise, and the U.S. Naval Academy, but his $100 million donation to Habitat in 2009 may still be the largest single donation that the organization has ever received and one of the largest ever given to an affordable housing nonprofit. He has the ability to put his money where his mouth is. If he really does go after the mortgage interest deduction, the issue won’t be whether he is able to convince people that it should be radically altered, if not done away with totally. That battle is already done. Most people who aren’t tied to a special interest real estate group have to admit that the mortgage interest deduction is not a linchpin for families deciding whether to buy a home and is clearly a regressive tax incentive. The issue is whether the Republican Terwilliger, with bipartisan credentials and a nonprofit track record, will be able to get any of the potentially two dozen Republican and Democratic presidential candidates to say something concrete and useful about the nation’s housing crisis and to commit to taking action to reducing and reallocating the mortgage interest deduction.—Rick Cohen

[Full Disclosure: Long before Terwilliger joined the Enterprise Community Partners board, the author was a vice president of the Enterprise Foundation]


  • Michael Brand

    The least disruptive way to eliminating this distortive deduction is by doing a 20 year phase out. So in 2016 you can deduct 100% of the interest, in 2017, 95%, 2018, 90 and so on until a complete end in 2035. This would give the housing market plenty of time to adjust.