reminder: tax reform legislation could affect mortgage credit certificates
As a follow-up to our eNews published on November 14, 2017, regarding proposed tax reform legislation, please be aware that should the final legislation passed by Congress retain the House of Representatives’ provision eliminating Mortgage Credit Certificates (MCCs), all loans using an MCC
must close on or prior to December 31, 2017.
The House-passed bill eliminates the tax exemption for Private Activity Bonds (PABs) issued after December 31, 2017, which would prohibit the issuance of Mortgage Credit Certificates for loans closed after that date. The Senate-passed bill preserves tax exemption provisions related to PABs, including for single family bonds and MCCs.
Although the exact terms and timing of the finalized tax reform legislation are not yet known, we wanted to remind you of the potential restriction on issuing MCCs on loans closed after year end as you work with borrowers who may be looking to utilize an MCC for a purchase in 2018. Additionally, please note that should the House-passed language regarding PABs be included in the final legislation, loans using an MCC to qualify must close by December 31, 2017, or CHFA will not be able to issue the MCC which could affect loan insurability and/or CHFA’s ability to purchase the loan.
This is a cautionary notice. CHFA will continue to keep you apprised of any changes.
Please contact us with any questions or for more information.