Tuesday, June 24, 2014

DRAFT : Oregon SF Bond Program Max Sales Prices Will See Some Big Drops in Metro Areas; Rural Areas Willl Get Boost.

I am in the processing of trying to understand and make more transparent a number of calculations used by OHCS to determine maximum incomes and purchase prices for the Oregon SF Bond program. (My prior May 11th post about the publication of IRS data used to make those determinations is HERE; my later May post HERE has information about the drop off in Oregon Bond loan originations in recent years). 

Last week OHCS SF staff clarified for me they must adopt 2014 purchase price limits if they are lower than 2013 purchase price limits and they plan to publish revised limits on Wednesday.

This is my current understanding of the rules for determining maximum purchase prices under the bond (AND MCC) program. 
  1. IRS rules require bond program loans to be at 90% or below of the average purchase price for the area. For targeted areas price limits are 110% of the average purchase price.
  2. IRS publishes average purchase prices annually; issuers also have the option of using more current FHA mortgage limits divided by 92%
  3. Issuers can adopt limits lower than IRS rules would allow.

In the DRAFT PDF table HERE and embedded I have made a start on showing the current limits and what they new ones MAY be, and what the change would be if OHCS adopts a limit based on the IRS published 90% of average purchase price. 
  • I have excluded Clatsop and Josephine counties the entire counties are targeted areas.
  • My 2013 OHCS limits in the table may be off a dollar because of rounding differences. 
  • AND if any of my understandings are incorrect that could change the table also--so DO consider this a DRAFT which I will fine tune later in the week.

If my draft IS accurate RURAL counties purchase price limits could increase by up to $18,000 [7.3%], while other METRO purchase price limits could decrease by nearly $112,000 [29%] (Jackson) or $109,000 (Deschutes) [26.6%]  The Portland metro could decrease by more than $27,000.[7.1%].

The actual changes will only become known tomorrow when OHCS changes the purchase price limits on their web page HERE.  

Next, Income Limit Calculations
I am hopeful that this first time transparent publication of the data used to determine maximum purchase price limits will be soon followed by publication of details about how the maximum income limits are calculated and whether OHCS elects to "haircut" those income limits also. 

Portland MCC Program: Decrease in 2014 Home Purchase Price Limit Could be Less than in Bond Program.
Note that the Portland's Mortgage Credit Certificate  program uses the same IRS guidance in setting maximum purchase price and income limits--Portland is free to adopt standards that are different than OHCS, so long as they do not exceed IRS maximums. 

Since Portland had adopted a 2013 MCC purchase price limit of only $366,835 vs the OHCS adopted limit of $381,644, the maximum MCC purchase price in non targeted areas could (at the discretion of the City) decrease by less than the bond program, reducing by only roughly $12,500 to $354,375.

Originally created and posted on the Oregon Housing Blog

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