title
Report on the closing of the Department's Residential Mortgage Revenue Bonds 2025 Series B (Non-AMT) and Series C (Taxable)
end
BACKGROUND
On October 10, 2024, the Board approved the issuance of Mortgage Revenue Bonds for Fiscal Year 2025, in an amount not to exceed $1.1 billion.
On April 10, 2025, the Department provided a report informing the Board of intent to issue Residential Mortgage Revenue Bonds Series 2025 Series B (Tax-Exempt) in the amount of $187,500,000 and Series C $62,500,000. The Preliminary Official Statement (POS) was published April 28, 2025. The Retail and the Institutional Order Period was on May 6, 2025. The Bond Purchase Agreement (BPA) was signed on
May 6, 2025, and the deal was closed on June 10, 2025.
Financing Team The financing team consisted of Bracewell LLP, Bond Counsel; McCall, Parkhurst & Horton, L.L.P., Disclosure Counsel; CSG Advisors, 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, J.P. Morgan, and Loop Capital Markets LLC, as co-managers.
Use of Proceeds The Series 2025B/C Bonds were issued for the primary purpose of providing funds for the purchase of mortgage-backed, pass-through certificates, including providing down payment and closing cost assistance for Assisted Mortgage Loans. The Mortgage Certificates purchased with the proceeds of the Series 2025B/C Bonds will be guaranteed as to timely payment of principal and interest by Government National Mortgage Association.
Bond Structure The 2025B Non-AMT bonds are structured with semi-annual par serial bonds from 7/1/2026 through 7/1/2037, par term bonds due in 2040, 2045, 2050 and 2055, and a 6.0 year average life Premium PAC bond structured pro rata @ 75% - 400% PSA to yield 4.06%.
The 2025C Taxable Bonds are structured with semi-annual par serial bonds from 7/1/2026 through 7/1/2032, par term bonds due in 2037, 2040, 2045 and 2050 and a back-ended structured Premium PAC bond with a 5.0 year average life @ 75% - 400% PSA to yield 5.029%.
Ratings Moody’s: Aa1 (Moody’s reduced the rating from Aaa to Aa1 after bond pricing) S&P: AA+
Borrowing Costs Bond Arbitrage Yield:
Series 2025B 4.6287%
Series 2025C 5.5449%
Combined 2025 BC 4.8246%
The par amount of 2025 B Bonds sold was $187,500,000 and the premium received was $5,995,815 for total 2025 B Bond proceeds of $193,495,815. 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 $4,145,141.46.
The par amount of the 2025 C Bonds sold was $62,500,000 and the premium received was $1,116,558 for 2025 C Bond proceeds of $63,616,558. Issuer Contribution was $710,358.80.
The RMRB 2025 BC Bonds made $110,625,000 available for assisted loans, providing 3 and 4 points of repayable 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 $76,875,000 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 are currently 6.00% for unassisted loans, 6.250% for 3-point repayable DPA and 6.500% for 4-point repayable DPA. The Department has Targeted Area Loans available at 5.875% for unassisted loans, 6.125% for 3-point repayable DPA and 6.375% for 4-point repayable DPA.
As of June 18, these funds are 75% reserved.
Attached is a detailed summary of the pricing that was prepared by RBC.