The First Time Homebuyer Assistance Act of 1983

GAO discussed the merits of S. 1598, the First Time Homebuyer Assistance Act of 1983, and suggested additional provisions. GAO believes that the bill, which would allow States and localities to substitute tax credits for mortgage revenue bonds, would improve the cost effectiveness of subsidies for first-time homebuyers and would reach more potential homebuyers. Further, tax credits could provide State and local governments with more flexibility to select needy participants, achieve geographic targeting, and control the timing of assistance. GAO commented that the amount of tax-credit subsidy will probably approximate the aggregate amount of subsidy provided by revenue bonds and that some States may trade revenue bond authority for tax credits. Other advantages are that it can be used effectively regardless of the level and fluctations of interest rates and that it would be administratively simple to implement. To overcome shortcomings, GAO suggested that Congress consider: (1) providing explicit guidance on who should be eligible for homeownership assistance; (2) allowing households receiving assistance to shop the market for financing and housing; (3) incorporating a sunset provision which would require reauthorization to allow Congress to reevaluate the program; and (4) requiring oversight tax credit issuers to collect basic information on assisted homebuyers in a standardized format specified by the Department of the Treasury.