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Report on the closing of the Department's Residential Mortgage Revenue Bonds 2024 Series A (Tax-Exempt) and Series B (Taxable)
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BACKGROUND
On September 7, 2023, the Board approved the issuance of Mortgage Revenue Bonds for Fiscal Year 2024, in an amount not to exceed $1.1 billion.
On March 7, 2024, the Department provided a report informing the Board of intent to issue Residential Mortgage Revenue Bonds Series 2024 Series A (Tax-Exempt) in the amount of $150,000,000 and B (Taxable) in the amount of $100,000,000. The Preliminary Official Statement (POS) was published March 5, 2024. The Retail and Institutional Order Periods were initiated and completed on March 12, 2024. The deal was closed on April 10, 2024
The financing team included Bracewell LLP, Bond Counsel; McCall, Parkhurst & Horton, L.L.P., Disclosure Counsel; Stifel, Nicolaus & Co., Inc., Financial Advisor; and an underwriting team led by RBC as Book Running Senior Manager, Jefferies and Morgan Stanley as co-senior managers, with Ramirez & Co., Inc., Piper Sandler & Co. Wells Fargo Securities and Loop Capital Markets LLC, as co-managers.
The 2024 AB Bonds were issued for the primary purpose of providing funds for the purchase of mortgage-backed, pass-through certificates, funding loans for down payment and closing cost assistance, and paying lender compensation related to the Mortgage Loans.
The 2024 A Bonds were structured to maximize premium received while keeping mortgage rates as low as possible. Fixed rate and tax-exempt, the bond structure included par and premium serial bonds, par and premium term bonds, and a premium PAC (Planned Amortization Class) bond.
The 2024 B bonds were structured to be front-loaded to reduce cost of funds. Fixed rate and taxable, the structure included par serial bonds, par term bonds, and a modest premium $102.775 PAC (Planned Amortization Class) Bond.
The par amount of 2024 A Bonds sold was $150,000,000, and the premium received was $9,503,894.95 for total 2024 A Bond proceeds of $159,503,894.95. The premium will fund down payment and closing cost assistance for loans originated through this bond issuance, as well as a portion of the lender compensation. Issuer Contribution was $795,213.72
The par amount of the 2024 b Bonds sold was $100,000,000 and the premium received was $1,195,886.25 for 2024 B Bond proceeds of $101,195,886.25. Issuer Contribution was $2,441,189.03.
The RMRB 2024 AB series made $175,000,000 available for assisted loans, providing 2 and 3 points of down payment assistance (DPA) and closing cost assistance in the form of 30-year, non-amortizing, 0% interest second lien loans that are due on sale or refinance of the first mortgage. This series also provided up to $75,000,000 available for unassisted loans, providing Zero Points in DPA at a lower rate than the assisted loans. Eligible loan types are FHA, VA, and USDA-RD loans. Mortgage rates offered on these funds in Non-Targeted Area were 5.625% for unassisted loans, 6.125% for 2 point repayable DPA and 6.625% for 3-point repayable DPA. The Department made Targeted Area Loans available at 5.375% for unassisted loans, 5.875% for 2-point repayable DPA and 6.375% for 3-point repayable DPA.
As of April 1, this issuance is around 52% reserved.
Attached is a detailed summary of the pricing that was prepared by RBC Capital Markets.