COLUMBUS, OH - A state-sponsored housing assistance agency is expected to grow its capital power, aided by federal legislation aimed at helping struggling homeowners. The Ohio Housing Finance Agency, which provides tax credits for housing developments, mortgages and down-payment assistance to buyers, will be allowed to raise more money from bonds, offer millions of dollars more in tax credits and will have a chance to access funds it can distribute to counseling agencies, said Executive Director Doug Garver.
The increased funding for the agency and other agencies, allowed under the Housing and Economic Recovery Act of 2008, is seen as a critical step toward slowing the pace of foreclosures and stemming broader economic repercussions from housing market woes, Garver said. "The intent of the bill is twofold. One is to serve as a stimulus. And two, it's meant to bring some stability to the housing market," Garver said. "Lawmakers recognize how important housing is to the overall economy."
Foreclosures have been particularly prevalent in Ohio, where 82,671 foreclosure actions were recorded through July 31, 12 percent higher than a year earlier, according to Irvine, Calif.-based RealtyTrac, which compiles real estate data. "This is a very challenging time," Garver said. Indeed, many housing agencies are in need of more money to help bolster their assistance programs. "When this foreclosure crisis hit, a lot of counseling agencies were inundated almost overnight with calls," Garver said.
The Housing and Economic Recovery Act, signed into law July 30, contains many reforms in its 640 pages. Among the key measures for the Ohio Housing Finance Agency is a section that gives it and municipal governments in Ohio the ability to raise an additional $350 million in tax-exempt bonds through 2010.
The agency is typically authorized to raise $300 million for single-family home loans each year from the sale of tax-exempt bonds. The agency and municipal governments also can raise $120 million a year for multifamily projects, Garver said. The added capacity means more money is available for mortgage refinancings, multifamily projects and first-time home buyers. "This gives us the ability for the next couple of years to increase the size of our programs," Garver said.
The bonds are particularly important because their tax-exempt status usually means the savings can be passed on to create loans with better rates, Garver said. The agency also raises money with taxable bonds, selling roughly $2 billion worth of both types in 2006 and 2007, he said.
The federal legislation also provides the agency an additional $2.2 million in tax credits this year and in 2009. The credits are used as an incentive for developers to construct affordable rental housing. The $2.2 million distributed over two years will be in addition to $23.5 million the agency is authorized to offer each year, Garver said.
Another component of the bill is about $180 million to be disbursed nationally for housing counseling organizations, though it's unclear how much of it will come to Ohio, Garver said. The foreclosure crisis is a complex challenge and it's undetermined how much the growth at the agency would help stem foreclosures, said Bill Faith, executive director of the Coalition on Homelessness and Housing in Ohio.
Tax credits for rental units could create development in some areas, he said, but won't do much to slow foreclosures. Also, added bond authority may allow the agency to refinance more troubled homeowners out of mortgages, but that program has yielded little because many homeowners are in such dire financial shape that they don't qualify for the aid, Faith said.
The agency has refinanced 41 troubled home loans since beginning its refinancing program in April 2007, Garver said. The legislation for the first time allows tax-exempt bond funds to be used for the refinancing program, which will help to make the loans more affordable, he said. The agency is mulling some change to its refinancing program to make more useful to Ohioans, he said. "We do intend to roll out another generation of that product," he said.
Source: Business First of Columbus