State and local governments sell tax-exempt Housing Bonds, commonly known as Mortgage Revenue Bonds (MRBs) and Multifamily Housing Bonds, and use the proceeds to finance low-cost mortgages for lower income first-time homebuyers or the production of apartments at rents affordable to lower-income families. MRBs have made first-time homeownership possible for over 3 million lower-income families, approximately 100,000 every year. Multifamily Housing Bonds have provided financing to produce nearly 1 million apartments affordable to lower-income families.
Each state’s annual issuance of Housing Bonds is capped. The 2018 limit is $105 multiplied by the state population, with a state minimum of $ 310.71 million. MRB mortgages are restricted to first-time homebuyers who earn no more than the area median income (AMI). Larger families can earn up to 115 percent of AMI. In 2016, state HFAs provided MRB mortgages to families with an average income of $$45,466, just 79 percent of the national median income. The price of a home purchased with an MRB mortgage is limited to 90 percent of the average area purchase price.
HFAs also use their MRB authority to issue Mortgage Credit Certificates (MCCs), which provide a nonrefundable federal income tax credit for part of the mortgage interest qualified home buyers pay each year. State HFAs have used MCCs to provide critical tax relief to over 275,000 families
Multifamily housing bond developments must set aside at least 40 percent of their apartments for families with incomes of 60 percent of AMI or less, or 20 percent for families with incomes of 50 percent of AMI or less. In 2016 alone, HFAs financed the development of nearly 45,000 affordable apartments through bonds.
Housing Bonds and Tax Reform
At the end of 2017, President Trump signed into law the Tax Cuts and Jobs Act (P.L. 115-97) the most comprehensive reform the of the federal tax code in nearly 30 years. The original version of the legislation, which passed the U.S. House of Representatives, eliminated Housing Bonds and MCCs. However, thanks to the strong advocacy of NCSHA, the HFAs, and their affordable housing partners, the final bill preserved these programs in full.
Maintaining and strengthening the Housing Bond program is one of NCSHA’s Legislative Priorities. NCSHA is currently meeting with policymakers to ensure that housing bonds retain their tax exemption and to advance in Congress a series of reforms designed to streamline Housing Bonds and increase their effectiveness. These specific reforms are listed in the appendix of NCSHA’s 2018 Business, Legislative and Regulatory priorities.
- To find local housing assistance, please contact your state’s Housing Finance Agency (HFA).
- To learn more about NCSHA’s advocacy work in this area or to attend a related education event, complete the general inquiry form.
- Members of the media, please contact Lisa Bowman, Director of Marketing and Communications, at email@example.com.
- September 20, 2018Housing Bond Issuance Increased Again in 2017, CDFA Survey Says
Private activity bond (PAB) issuance increased at least nine percent from 2016 to 2017, according to the Council of Development Finance Agencies’ (CDFA) latest Annual Volume Cap Report for 2018.
- September 11, 2018House Tax Leaders Unveil Tax Reform 2.0 Legislation
The House Ways and Means Committee released a package of three bills, which together are the House’s follow-on to last year’s Tax Cuts and Jobs Act. The bills, collectively “Tax Reform 2.0,” would make permanent the tax cuts for individuals and small businesses that were established on a temporary basis in tax reform last year, encourage retirement savings, and support business innovation. The bills do not make any direct changes to affordable housing programs, such as the Low Income Housing Tax Credit or tax-exempt private activity Housing Bonds.
- August 31, 2018Federal Regulators Publish Rule to Classify Muni Bonds as High-Quality Liquid Assets
Federal banking regulators – the Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation, and the Federal Reserve – published earlier today an interim final rule changing how municipal bonds are treated under federal liquidity standards.
Housing Bonds - Resources
- September 6, 2018State Housing Finance Agencies: At the Center of the Affordable Housing System
Ten years after the Great Recession forced the federal government to make major changes to the nation’s housing system, state housing finance agencies have become more important than at any other time in their history to the system’s ability to make affordable housing available in America. This new report explains how.
- June 15, 2018NCSHA Comments on 2018-2019 Priority Guidance Plan
On June 15th, 2018, the National Council of State Housing Agencies (NCSHA) provided comments to the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) on their recommendations for items that should be included in the 2018-2019 Priority Guidance Plan, as requested in Notice 2018-43.
- April 30, 2018Treasury and IRS Request Topics for Priority Guidance Plan
The Department of the Treasury (Treasury) and Internal Revenue Service (IRS) published Notice 2018-43 soliciting public comment on recommendations for items that Treasury/IRS should include in its 2018-2019 Priority Guidance Plan. The Priority Guidance Plan identifies guidance projects that Treasury and IRS intend to work on during the period from July 1, 2018 to June 30, 2019.
- March 14, 2018LHC Board Approves $28.3 Million in Housing Bonds
The Louisiana Housing Corporation Board of Directors approved the issuance of $28.3 million in Multifamily Housing Revenue Bonds.
- 2018 NCSHA Annual Conference & Showplace | NCSHA Members Only | October 13 – 16, 2018