Monday, July 21, 2014

City of Portland Mortgage Credit Certificate Income Limits Could Increase by 20%+ , With Whole City at Target Area Income Limits.

I continue to work with OHCS to clarify their plans to keep or change the current income limits for their SF revenue bond program. My prior post HERE has information about purchase price limits that were recently implemented.

The City of Portland can use the same IRS guidance in setting their MCC program limits as OHCS; as with OHCS they can choose to adopt an income limit less than what the IRS would permit. 

For the MCC program the City is currently using a safe harbor limit of 115% of MFI for 3 and more persons and 100% of MFI for 1-2 person households. 

OHCS uses a different limit because Portland metro has a  high cost to income ratio under IRS regs. The City of Portland is free to use the same method to calculate income limits for their MCC program.

Using the current OHCS limits, the family of 3 + income limits for the Portland MCC program could increase from $79,810 to $97,160; income limits for a family of 2 or less can increase from $69,400 to $83,280. Those are increases of 20% and 22%.(As I indicated previously, OHCS is in process of reviewing income limits so there could be what I think may be some relatively minor tweaks to the PDX metro income limits).

At these levels these new income limits would mean that the entire city could have IRS compliant MCC income limits equivalent to target area maximums--140% (3 or more persons) or 120% MFI (2 or fewer persons). In effect the entire city would become a "target area" for income eligibility purposes for the MCC program--this is already the existing situation for the OHCS SF bond program, so the MCC program would be merely playing catch up.

Workforce Housing Progress; Cost to City-Zero.

If workforce housing is a goal, then raising the MCC income limit to IRS permitted levels would be attractive because it would NOT cost the city anything (and there is plenty of current state controlled bond cap to accommodate additional MCC allocations). 

The MCC program is particularly attractive to professional and managerial singles or couples who typically have significant federal tax liabilities. For other first time home buyers without federal tax liabilities the Oregon SF bond program, whose current interest rate is a difficult to believe 3.125%, is likely a better fit .

There are several other possible MCC tweaks worth noting, including adoption of a veterans exemption from the 1st time home buyer requirement and a program to offer reimbursement of any future rebate to the feds which is now being used in several other areas. (the latter would remove one of the big sales objections to using the MCC).
[I believe the 2014 Portland metro purchase price limit of $354,375 is already in effect, although the City website still shows $366,835].

Originally created and posted on the Oregon Housing Blog

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