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Abstract:
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Mortgage Revenue Bonds (MRBs) are tax-exempt debt securities issued by state and local governments' Housing Finance Agencies (HFAs) that facilitate subsidized interest rates for low- and moderate-income (LMI) individuals' mortgage loans. The capital raised through an HFA's issuance of MRB debt is used to fully underwrite qualifying homebuyers' mortgages, lowering their cost of borrowing. This thesis explores the factors which affect the price of a home purchased through MRB subsidies. The data set for the analysis uses state-level HFA statistics obtained from the National Council of State Housing Agencies (NCSHA) from 1996 thru 2003. Using Ordinary Least Squares regression analysis and controlling for fixed effects, this paper explores the statistical significance of a first time homebuyer's income level in relation to the price of the home purchased. The analysis finds a positive and statistically significant relationship between prices of homes purchased with MRB subsidies and a series of independent variables, including average borrower income, percentage of loans originated to minority borrowers, percentage of loans for existing homes, dummy variables representing various regions in the United States, and several years of those analyzed in the data set. As the data set is an aggregate of states' MRB programs over time, the analysis explores where these subsidies are being directed. The data analysis reveals that the Federal government ought to improve the extent to which MRB subsidies reach those who are at the lowest income levels - relative to AMI - and are in the greatest need for government assistance in purchasing homes. |