Congress is shuttered till the end of the month, but a bipartisan cadre in the House introduced The First-Time Homebuyer Affordability Act on Monday much to the delight of affordable housing advocates.
"The bill would provide lower-interest home mortgage loans to hundreds of thousands of working households who are ready to become homeowners but for today's relatively high-rate environment," said National Council of State Housing Agencies executive director, Stockton Williams.
The act would increase the capacity of state and local housing finance agencies to issue tax-free municipal housing bonds for affordable homeownership and awaits approval by the House Ways and Means Committee.
Mortgage revenue bonds are a type of private activity bonds, which are capped each year based on population. The Senate has already passed a bill that would
The new legislation proposed on Monday would change the tax code and exempt qualified mortgage bonds from the volume cap.
The bill's introduction caught the attention of public finance attorneys with clients working in the affordable housing space.
"Currently, mortgage revenue bond issuance competes with other private activity bond categories for scarce volume cap allocation," said Kutak Rock via a client alert.
"In a rare "win-win" situation, in states where volume cap demand exceeds supply, issuers of multifamily housing bonds would benefit from the increased availability of cap previously allocated to mortgage bond programs," said Kutak Rock.
"This would be particularly meaningful in the affordable housing space, where volume cap scarcity has been a persistent constraint on 4% Low Income Housing Tax Credit production."
Sponsors of the new legislation include Representatives Darin LaHood, R-Ill., Jimmy Panetta D-Calif., Blake Moore R-Utah, and Tom Suozzi D-N.Y. All four sponsors sit on the Ways and Means Committee.
"Our bipartisan First-Time Homebuyer Affordability Act would remove mortgage revenue bonds from the private activity bond cap, allowing California to offer qualified homebuyers lower-interest mortgages while preserving resources for affordable rental housing, said Rep. Panetta.
The legislation is supported by the Mortgage Bankers Association, the National Association of Home Builders, the National Housing Conference, the Council of Development Finance Agencies, and RBC Capital Markets.
Despite a lack of support at the White House, housing affordability remains an area of interest on Capitol Hill. So far there is no companion bill in the Senate.
"It is important to note that the bill has been introduced as a standalone measure," said Kutak Rock.
"Its ultimate path to enactment remains uncertain at this early stage. Alternatively, its provisions could be incorporated into broader tax or housing legislation moving through Congress.
Last month the 21st Century ROAD to Housing Act became law even though President Trump refused to sign it.
The bill represents the first major housing bill to pass Congress in three decades and will put much of the impetus for its success on states and municipality's ability to
