THE ENVIRONMENTAL PROTECTION AND GROWTH MANAGEMENT DEPARTMENT AND THE HOUSING FINANCE AND COMMUNITY DEVELOPMENT DIVISION RECOMMEND APPROVAL OF THE ABOVE MOTION.
The 1986 Tax Reform Act allows the Housing Finance Authority of Broward County (the “HFA”) to exchange the Single Family Revenue Bond (SFMRB) allocation for Mortgage Credit Certificates (MCC) to provide housing purchase assistance through federal income tax credits. The MCC is a federal income tax credit that is used in conjunction with first mortgage loans from a lender, excluding loans funded via mortgage revenue bonds or qualified veteran’s mortgage bond loans. With an MCC, the borrower is eligible to receive a tax credit (a dollar-for-dollar federal income tax reduction) for a portion of the annual interest paid on the mortgage, not to exceed $2,000 (if the MCC rate exceeds 20%), during each year that the borrower occupies the home as their principal residence. As an example, a 30-year mortgage loan $150,000 originated on January 1, with an interest of 4.5% will accrue $6,700 of mortgage interest in the first year. The MCC will allow the borrower a federal income tax credit of $2,000. If a borrower’s annual federal income tax is $2,000 or more after all credits and deductions have been subtracted, the borrower receives the total benefit of the MCC. The balance of the interest paid, or $4,700 still qualifies as an itemized deduction in addition to real estate taxes paid. The benefit from the MCC tax credit equates to of a reduction in the first-year interest cost from 4.5% to approximately 3.20%.
The Public Notice of the HFA to establish a MCC program was published in the Sun-Sentinel, on January 23, 2014 pursuant to Section 25 (e) (5) of the Internal Revenue Code.
At its regular Board meeting on March 12, 2014, the HFA approved Resolution No 2014-004 (Exhibit 2) authorizing the exchange $164,849,172 of single family bond allocation to issue its Mortgage Credit Certificates, Series 2014 with a maximum aggregate total proceeds of $41,212,293. The Resolution was approved as to form by the Office of the County Attorney. |