Retooling Affordable Housing Strategies Part 7 of 19
Private Activity Bonds
State and local jurisdictions can raise revenue through the sale of tax-exempt private activity bonds (PABs), which can be used to finance affordable multifamily developments Online Trading for Financial Freedom or provide funds for low- and moderate-income homebuyer mortgage assistance. PAB funds can also be used for public programs, such as airports, sewers, industrial parks and student loans. States are allotted a debt limit for such bond issuances. The 2006 limit was $85 per state resident, a $5 increase over 2005. According to the Texas Bond Review Board, this raised Texas 2007 cap to just under $2 billion, an increase of almost $170 million from 2006. Half of the allocation goes to local and state multifamily and single-family mortgage programs and half to other public needs.
Public activity bonds have the capability to assist many residents but have been underused because of program complexities and changing market conditions. PABs are broken down into two types, mortgage revenue bonds and multifamily bonds, depending on what is being financed. Both types allow state and local governments to access private financing to support Stock & Commodity Trading affordable housing. By lowering the interest rate on mortgage loans, mortgage revenue bonds make homeownership affordable for families that cant meet payments on a conventional loan. Multifamily bonds give low-income families access to quality housing the market might not otherwise provide.
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