Representatives Yakym and Moore Introduce Affordable Housing Bond Enhancement Act in House

Representatives Rudy Yakym (R-IN) and Gwen Moore (D-WI) last night introduced the Affordable Housing Bond Enhancement Act (H.R. 7414). This legislation, which NCSHA has worked on closely with the representatives’ offices, would expand state housing finance agencies’ access to private activity bond volume cap and strengthen the Mortgage Revenue Bond (MRB) and Mortgage Credit Certificate (MCC) programs.

The bill would increase the bond resources available for affordable housing by permitting states to re-designate any carryforward authority and use it for either single-family or multifamily housing during the carryforward period, freeing up millions in bond authority that would otherwise expire.

Under current law, if a state does not use all its bond authority in the initial year in which it was received, it may carry forward unused bond authority for up to three years. To do so, the state must designate to the Internal Revenue Service how it will use bond cap it carries forward. The designation, once made, is irrevocable; if the carryforward authority is not used for the designated purpose within three years, it expires. Thus, if a state designates it will use a set portion of its carryforward authority for a specific project and that project does not move forward, the state is unable to re-designate that carryforward authority for any other purpose, and eventually the authority expires.

H.R. 7414 enacts a series of simple, commonsense reforms to the MRB and MCC programs that will allow HFAs to better stretch their bond resources and help more underserved households. The bill contains many of NCSHA’s long-standing priorities for improving housing bonds. These include:

• Increasing the MRB home improvement loan limit from $15,000 to $75,000 and indexing it for inflation;
• Allowing MRBs to be used for refinancing loans;
• Providing HFAs additional flexibility in how they utilize housing bond authority;
• Simplifying how a borrower’s MCC benefit is calculated;
• Reducing the time period for the MRB and MCC recapture tax from nine years to five;
• Extending the amount of time HFAs can use converted MCC authority from two years to four;
• Allowing HFAs to reconvert MCC authority back into MRBs two years after the conversion, rather than one;
• Eliminating lenders’ MCC reporting requirements;
• Reducing the required MCC public comment period; and
• Requiring the Internal Revenue Service to report to Congress annually on states’ use of private activity bond authority.

MRBs and MCCs have served as HFAs’ primary means of financing their affordable homeownership programs, having helped nearly four million home buyers combined since they were established.

This is the first bipartisan version of the Affordable Housing Bond Enhancement Act introduced in the House (Moore introduced a nearly identical bill on her own last Congress). Senators Catherine Cortez Masto (D-NV) and Bill Cassidy (R-LA) introduced identical legislation last April (S. 1511).

NCSHA has written a section-by-section analysis of the bill that describes each of the provisions in more detail, as well as a one-page summary.

In a press release announcing the bill, Yakym said updating MRBs and MCCs “will help reduce interest costs and make it easier for hardworking Hoosiers to achieve that dream” of homeownership. Moore noted the important role MRBs and MCCs play in the homeownership lending market and declared H.R. 7414 “makes important enhancements to these long-standing programs, so they can better serve Americans and their families.”

In addition to NCSHA, the bill is supported by the National Association of REALTORS®, Mortgage Bankers Association, National Association of Home Builders, LISC, Community Home Lenders of America, and Prosperity Now.

NCSHA thanks Representatives Yakym and Moore for their continued leadership on this effort to increase bond resources for affordable housing and expand homeownership opportunities for working families. We look forward to working with them, Senators Cortez Masto and Cassidy, HFAs, and industry partners to advance the legislation.