Mortgage Revenue Bond Funds
Mortgage revenue bonds are
a way for first time home buyers
to receive financing when it
comes to buying their homes.
Mortgage revenue bonds are also
known as First Time home buyer
program and they are issued
by the
Housing Financing Agencies (HFA).
They however, originate from
the government. Mortgage revenue
bond programs offer mortgages
at below the usual interest
rate. This allows for families
to buy a house at more affordable
prices. As well as that, mortgage
revenue bonds are also tax-exempt.
The
payments from the mortgage
revenue bond fund (interest
payments and the principal on
the mortgage loan) are used
to finance the purchases of
homes by first time home buyers.
These bonds have already supported
nearly 100,000 home purchases
in the last 20 years.
In the U.S., there are many
institutions that offer mortgage
revenue bond funds. For example,
the Arizona Housing Finance
Authority Mortgage Revenue Bond
Program and the Los Angeles
Housing Department Mortgage
Revenue Bond Program.
There is also the Texas State
Affordable Housing Corporation
Professional Educators Single
Family Mortgage Revenue Bond
Program and the West Virginia
Housing Development Fund. There
are various other institutions
that offer these programs, however
the few mentioned above are
the most known.
Criteria
These programs have certain
criteria that have to be met
by prospective borrowers. Since
the bond is a 25 to 30 year
program fixed rate mortgage
loan, the criteria
is very strict. Firstly,
the prospective borrower’s
income can not surpass the income
limit of the town they live
in. This income limit differs
with each town and in each state.
Secondly, the prospective borrower
can not have owned a house in
the last 3 years from the time
they have applied for the program.
Last, the prospective borrower
choice of home’s price
can not exceed a certain pre-determined
limit. This limit is different
for each town and in each state.
The prospective borrower also
has to prove that they have
maintained an average credit
rating as well as having a stable
income. This is to ensure that
the prospective borrower can
keep to the terms of repayment.
The mortgage revenue bonds
program offers full financing
for houses which have already
been constructed rather than
houses in the middle of construction.
When the families have been
accepted into this program it
is a necessity that their houses
be insured. This can either
be done by VA, FHA, USDA. If
these three options are not
available then the insurance
can be done by a private mortgage
insurance company.
Current Market
America First Tax Exempt Investors
L.P, has recently created a
new business strategy where
they have looked into acquiring
more Mortgage Revenue Bond programs
in order to leverage their capital.
Their strategy consists of three
main points. Firstly, to reduce
risk by interest hedging and
asset diversification.
Secondly, to acquire economies
of scale. Lastly, to increase
the amount of mortgage revenue
bond programs available to their
investors. This strategy is
anticipated to result in a positive
effect for the mortgage revenue
bond programs available.
The following article has
explained what a mortgage revenue
bond fund is. This includes
its advantages
and exactly how it works.
As well as that, the current
market relating to mortgage
revenue bond funds.
http://www.lacity.org/lahd/MRB.htm
http://www.wvhdf.com/homebuyers/mrbp.cfm
http://www.answers.com/topic/mortgage-revenue-bond-loan?cat=biz-fin
http://www.answers.com/topic/mortgage-revenue-bond?cat=biz-fin
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Copyright
2008