Several legislative changes need to be made to the Mortgage Revenue Bond (MRB) and Low Income Housing Tax Credit (LIHTC) programs to increase their effectiveness and maximize their value to provide affordable housing for renters and potential homeowners.
The LIHTC is the only incentive in the tax code specifically designed to promote the production of low-income rental housing. The LIHTC creates an incentive for private investors to provide equity for rental housing developments targeted at low- and moderate-income households by granting tax credits to these investors.
In addition, the law currently requires states to use MRB payments received after ten years to retire the bonds rather than use the money to make new loans. This rule deprives states of billions of dollars in mortgage authority otherwise available to qualified borrowers. The law also limits the price of homes purchased with MRB-financed mortgages to 90% of the average area home price as determined by the IRS, which has not issued this data since 1994.
The LIHTC should be preserved and revised to eliminate the bias toward non-profit sponsors, to encourage mixed-income developments, and to facilitate the use of FHA financing and federal, state and local programs with the tax credit program. In addition, the MRB program should be revised to eliminate the restrictions on use of repayments and to amend the method for setting home price limits.
Enactment of legislation dealing with these issues will continue to be an MBA goal.