Presentation, discussion, and possible action on Resolution No. 24-022 authorizing the filing of one or more applications for reservation to the Texas Bond Review Board with respect to Qualified Mortgage Bonds and containing other provisions relating to the subject
RECOMMENDED ACTION
Adopt attached resolution.
BACKGROUND
An allocation of private activity bond authority, also known as volume cap, is required for the issuance of tax-exempt, single family mortgage revenue bonds (SFMRBs) and for the issuance of mortgage credit certificates (MCCs). In 2024, the State of Texas received approximately $3.813 billion in volume cap for all private activity purposes. Pursuant to Chapter 1372, Texas Government Code (the Allocation Act), 32.25% of the State’s volume cap is available exclusively for single family activity through August 14, 2023. The Allocation Act creates the following set-asides for Mortgage Revenue Bonds (MRB) aka single family volume cap, which remain in effect through August 6, 2024:
Texas Department of Housing and Community Affairs $409,970,085
Texas State Affordable Housing Corporation (TSAHC) $122,966,432
Local Housing Finance Corporations (HFCs) $696,727,805
Total Single Family Volume Cap Set-Asides $1,229,664,322
On Wednesday, August 7, these set-asides collapse and the remaining aggregate balance is available for reservation by any of the above-described entities for single family activity on a first-come, first-served basis through August 14, 2024. Single family volume cap that remains available on August 15, 2024, is collapsed and made available for reservation by any eligible issuer for all private activity purposes beginning on Thursday, August 15, 2024.
The demand for affordable financing options for low and moderate income homebuyers in Texas remains very strong, particularly in light or rising interest rates and the scarcity of affordable home inventory. Market conditions remain conducive to the issuance of tax-exempt, single family mortgage revenue bonds (SFMRBs) to finance mortgage loans. The Department, as a statewide issuer, leverages economies of scale and uses single family volume cap to provide an assortment of financing options to low and moderate income homebuyers throughout the state, allowing potential homeowners to compete in an increasingly competitive market.
It has been difficult for Housing Finance Corporations (HFCs) to successfully issue SFMRBs or to implement MCC programs due to the combination of the up-front investment, financial risk management, administrative costs, compliance requirements, and other factors. As a result, TDHCA has developed partnerships and works cooperatively with several local HFCs to increase homeownership. An assignment of volume cap to TDHCA from 14 local HFCs is being considered by the Board under Item 24-023
During the past four calendar years, the Department has used single family volume cap to serve 26,250 households through the origination of $2.05 billion in bond funded first mortgages and $1.18 billion first mortgages receiving MCCs. In order to continue to meet the needs of low and moderate income homebuyers throughout the state, staff is requesting authorization to submit applications for reservation of volume cap, to include one or more of the following, up to the aggregate amounts below:
|
TDHCA’s 2023 Single Family Set-Aside prior to August 7 |
$ 409,970,085 |
|
Unused Single Family Set-Aside between August 8 and August 14 |
$ 610,029,915 |
|
Total Single Family Volume Cap Reservations |
$1,020,000,000 |
|
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Staff will return to the Board at a later date with requests for approval to use awarded volume cap in connection with additional bond or MCC transactions.