IRS Publishes New MRB and MCC Purchase Price Limits and Safe Harbors
The Internal Revenue Service yesterday published Revenue Procedure 2019-14, which revises the nationwide average purchase price limits and the average area purchase price safe harbors for the Mortgage Revenue Bond (MRB) and Mortgage Credit Certificate (MCC) programs.
The Revenue Procedure establishes the new MRB and MCC purchase price limitations by taking the Federal Housing Administration (FHA) single-family loan limits for 2019 and adjusting each by a factor of .9999. The adjustment factor is increased from 2018, when it was .9775
The specific price limits listed in the Revenue Procedure account for the .9999 adjustment but do not account for the actual MRB and MCC purchase price limit of 90 percent of average area purchase price (110 percent for federally targeted areas). HFAs will have to make the calculations themselves, for both targeted and non-targeted areas, using the information provided in the Revenue Procedure.
The Revenue Procedure also sets the national average purchase price at $298,000 for computing the housing cost/income ratio, which provides for an upward adjustment to the percentage limitation in high housing cost areas. This is a nearly $9,000 increase from the average purchase price for 2018.
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 20, 2019. An exception is allowed for those loans and certificates the HFA commits to finance before May 19, 2019, and that are financed by bond sales occurring before April 19.