Thursday, October 16, 2008

IRS Guidance on Tax Exempt Bond Provisions in HR 3221, Including New Authority for Revenue Bonds for Home Refinancing.

On Sept.17th the IRS issued guidance, in Notice 2008-79, on various revenue bond provisions found in H.R. 3221, enacted into law this summer.

Included are state allocation amounts (Oregon received $117.341M in additional cap for housing) and a clarification that any 2008 carry forward must be used by end of calendar year 2010).

Revenue Bonds for Refinancing Guidance
H.R. 3221 permits for the first time that mortgage revenue bonds may be used for refinance loans. (Any ARM loan made during 6 year period [2002-2007] is eligible, borrower and home price must continue to be within mortgage revenue bond limits applicable to revenue bond program ).

The guidance clarifies a requirement in the legislation that for each loan made under this special authority that the "bond issuer determines would be reasonably likely to cause financial hardship to the borrower if not refinanced". IRS says in the new guidance that "For this purpose, issuers may base determinations with respect to likely financial hardship to borrowers on reasonable estimates made in good faith".[emphasis added].

The IRS guidance can be found HERE.

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