WASHINGTON — A bipartisan group of House members has introduced legislation aimed at expanding access to lower-interest mortgages for first-time and low- to moderate-income homebuyers by changing federal limits on mortgage revenue bonds.
Reps. Darin LaHood (R-IL), Jimmy Panetta (D-CA), Blake Moore (R-UT) and Tom Suozzi (D-NY) introduced the First-Time Homebuyer Affordability Act, which would exempt qualified mortgage bonds from annual federal Private Activity Bond volume caps.
Mortgage revenue bonds are issued by state and local housing agencies to finance below-market-rate mortgages, particularly for first-time and lower-income homebuyers.
Under current law, those bonds count against each state’s annual allocation of tax-exempt private activity bonds. Supporters of the legislation say increased housing demand and higher home prices have strained those limits in many states, restricting the amount of mortgage assistance housing agencies can provide.
What Legislation Would Also Do
According to the co-sponsors, the legislation would remove qualified mortgage bonds from the cap, allowing states to issue more bonds for homeownership programs without reducing financing available for other uses, including affordable rental housing.
“Too many working families and first-time homebuyers are locked out of homeownership by high mortgage rates and rising housing costs,” Panetta said. He said removing mortgage revenue bonds from the cap would allow states to provide more lower-interest mortgages while preserving resources for affordable rental housing.
LaHood said housing affordability is affecting rural, urban and suburban communities and called the proposal a “commonsense, bipartisan solution.”
Moore said removing the bonds from the cap would allow states to offer additional lower-interest mortgages to qualifying families.
‘Increasingly Out of Reach’
“Homeownership is becoming increasingly out of reach for young families,” Moore said.
Suozzi said the legislation would make it easier for state and local governments to issue additional mortgage revenue bonds, reducing borrowing costs for more first-time and low- and middle-income buyers.
The proposal has drawn support from several housing and financial industry organizations, including the Illinois Housing Development Authority, National Council of State Housing Agencies, Council of Development Finance Agencies, Mortgage Bankers Association, National Association of Home Builders and RBC Capital Markets.
‘Most Significant Legislation in Decades’
NCSHA Executive Director Stockton Williams called the proposal “the most significant bipartisan federal legislation to lower the cost of homeownership for first-time home buyers in decades.”
Williams said it could provide lower-interest mortgages to hundreds of thousands of working households that are prepared to purchase homes but face challenges from relatively high interest rates.
Illinois Housing Development Authority Executive Director Kristin Faust said her agency has helped more than 3,000 families purchase their first homes this year through down payment assistance programs. She said the legislation could allow IHDA to double the number of homebuyers it assists by providing enhanced assistance and lower rates.
