Home Ownership: Mortgage Bonds Are Costly and Provide Little Assistance to Those in Need
RCED-88-111
Published: Mar 28, 1988. Publicly Released: Mar 28, 1988.
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Highlights
In response to a congressional request, GAO provided information on the role of qualified mortgage bonds in providing financing for first-time home buyers, specifically: (1) the extent to which they assisted low- and moderate-income buyers; and (2) how states are allocating issuance authority under the mandated cap.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| If issuance authority is extended, Congress should consider including in the Internal Renvenue Code four requirements: (1) those being assisted cannot qualify to purchase the house under conventional requirements; (2) all or a portion of the subsidy should be recaptured at time of sale (based on the extent of appreciation of house price); (3) income eligibility requirements should be adjusted for the purchaser's household size; and (4) bond issuers and participating mortgage lenders should not be allowed to set aside mortgage funds for specific developers. | Congress enacted three provisions as a result of a report (P.L. 100-647, sec. 4005(i)). These are: (1) tighter qualifying standards for smaller households; (2) an adjustment of the income qualifying standard for high and low cost areas; and (3) a subsidy recapture. |
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Bonds (securities)Homeowners loansHousing programsMortgage loansMortgage programsTax expendituresBond marketInterest ratesMortgagesMortgage market