The Internal Revenue Service (IRS) last week released Revenue Procedure 2017-27, which establishes the nationwide average purchase price limits and average area purchase price safe harbors for the Mortgage Revenue Bond (MRB) and Mortgage Credit Certificate (MCC) programs.
The Revenue Procedure sets the national average purchase price at $276,100, an increase of around 3.5 percent from last year’s limit of $266,400. HFAs and other MRB and MCC issuers must use the national purchase price figure when computing the housing cost/income ratio, which provides for an upward adjustment to the percentage limitation in high housing cost areas.
The average area purchase price safe harbors are based on the Federal Housing Administration’s (FHA) program loan limits for each metropolitan statistical area (MSA) as of December 1, 2016. If FHA adjusts the loan limit for an MSA, housing bond issuers can calculate a new safe harbor by dividing the new limit by .9775.
The new nationwide average purchase price limits and the average area purchase price safe harbors take effect for all loans and MCCs originated as of March 17. An exception is allowed for those loans and certificates which the HFA commits to finance on or before May 16 and that are financed by bond sales that occur on or before April.
The Revenue Procedure will be published in Internal Revenue Bulletin 2017-14 on April 3.