September 02, 2010

On September 1, Treasury notified HFAs participating in the New Issue Bond Program (NIBP) that it has approved changes to the program NCSHA requested earlier this year.  These changes include allowing HFAs to reset the interest rates on their NIBP bonds to take advantage of lower interest rates; extending the deadline by which HFAs must use their NIBP funds from December 31, 2010 to December 31, 2011; and increasing the number of NIBP draws HFAs can make from three to six. 

These changes will allow HFAs to reduce the interest rates on single-family and multifamily mortgages they are financing under the NIBP.
 
To offset the program changes’ cost to the federal government, Treasury will charge HFAs that choose to take advantage of the changes a 1 basis point annual fee on their outstanding NIBP principal balances.  Treasury has also provided HFAs with revised reporting requirements after making adjustments to its previous proposal based on comments NCSHA submitted earlier this year.
 
Under the rate reset option, the interest rate on the NIBP funds will be the lower of the HFA’s originally locked rate from December 2009 and the lowest rate reported between the date an HFA notifies Treasury that it wants to reset the rate and the date eight days before the release of the NIBP bonds the HFA escrowed last December.  The maximum amount of time between an HFA reset notice and the related release date is 60 days for single-family transactions and 120 days for multifamily transactions.