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Presentation, discussion, and possible action regarding Resolution No. 26-003 authorizing the implementation of Texas Department of Housing and Community Affairs Mortgage Credit Certificate Program 113, approving the form and substance of the program manual and the program summary, authorizing the execution of documents and instruments necessary or convenient to carry out Mortgage Credit Certificate Program 113, and containing other provisions relating to the subject
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RECOMMENDED ACTION
recommendation
Adopt attached Resolution.
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BACKGROUND
Mortgage Credit Certificates are a homebuyer assistance program designed to help low-to-moderate income families afford homeownership. The program allows homebuyers to claim a dollar-for-dollar tax credit equal to the annual mortgage loan interest paid times the MCC credit rate (established by the Department and described herein), subject to an annual maximum of $2,000 if the MCC Credit Rate exceeds 20%. Remaining mortgage interest paid may still be taken as an itemized deduction.
Because the MCC reduces the homebuyer's federal income tax liability, the credit amount may be used to effectively increase the homebuyer's net income for loan qualification purposes. Mortgage loan interest paid by the homebuyer that exceeds the credit claimed may be included as an itemized deduction on the homebuyer's annual federal income tax return.
To be eligible for an MCC, homebuyers must meet Internal Revenue Service (IRS) requirements for mortgage revenue bonds. With few exceptions, MCC recipients must be first-time homebuyers (cannot have had an ownership interest in a primary residence within the last three years), must be within IRS income and purchase price limits, and must occupy the residence as their primary residence. MCCs cannot be issued for mortgage loans that are funded with tax-exempt bond proceeds.
MCCs require an allocation volume cap. The Department can exchange $1 of single-family mortgage revenue bond ...
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