DALLAS — The Louisiana State Bond Commission yesterday agreed to the issuance of up to $350 million of 42-year mortgage revenue bonds under a new federal program for low- and medium-income families.

The commission approved two requests by the Louisiana Housing Finance Agency for a total of $300 million of the bonds and two requests by the East Baton Rouge Mortgage Finance Authority for $50 million of the bonds under the New Issue Bond Program.

Commission director Whitman Kling Jr. said the bonds are authorized by the federal Housing and Economic Recovery Act of 2008 in an effort to support new lending by providing financing to local and state agencies for single-family home loans.

Kling said the U.S. Treasury Department will purchase 60% of the bonds, at a variable-rate mode. The proceeds are to be held in escrow by the Treasury and released only when the agencies can sell the remaining 40% of bonds to private investors.

“This program came about because there was no liquidity and no insurance in the housing bond market,” he said. “With this program, the Treasury Department has become the liquidity provider and the guarantor.”

The variable-rate bonds must be sold by Dec. 31. There will be three dates in 2010 when the housing agencies can sell the remaining bonds and receive the money held in escrow, Kling said.

The LHFA would issue $180 million of bonds in 2009 for purchase by the Treasury Department, and issue another $120 million of bonds in 2010 in the conventional market. The East Baton Rouge Parish authority would issue $30 million of bonds for purchase by the Treasury this year and $20 million in 2010.

Both agencies said the 2010 bonds may be issued in multiple tranches.

In an update on the Gulf Opportunity Zone private-activity bond program, Kling said $5.4 billion of bonds have been sold from the $7.9 billion of GO zone debt allocated to Louisiana, with another $3.6 billion of authorized but unissued bonds.

The remaining bond allocation is divided into two pools, one reserved for the 13 parishes most affected by hurricanes Katrina and Rita in 2005 and one for another 18 parishes damaged by the storms.

The pools will collapse on Jan. 1, Kling said, with the remaining bonds available to any applicant in the 31 parishes with approval from the bond commission. Kling said there currently are no pending applications for GO Zone bonds.

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