Do we need a new rehab loan program?

The Biden administration has unveiled yet another tax credit program that might be of interest to loan officers.

View in browser Good afternoon! Was this newsletter forwarded to you? Sign up here. Hello, LOs! We're still short on some details, but the Biden administration has unveiled yet another tax credit program that might be of interest to loan officers.    Basically, the administration hopes to close the racial equality gap by incentivizing investors to rehab outdated homes. As HousingWire's Georgia Kromrei reported, investors who acquire and renovate older homes could claim the credit on their federal tax returns so long as the home is sold to and occupied by an eligible buyer.    In order for investors to qualify for the credit, buyers cannot make more than 140% of the area median income. The credit would cover the difference between total development costs and the sales price. The final sales price could not exceed four times the area AMI.    Only homes in census tracts with higher-than-average poverty rates, lower-than-average median incomes and home values are eligible – about one in four census tracts in the U.S. State housing finance agencies would administer the tax credits, which developers, lenders or local governments could compete for. Local housing finance agencies would issue the tax credits.    It's clear that more needs to be done to raise the standard of housing in many parts of the country, especially poorer areas. So I'm curious to hear what you all think about this program. We already have a number of mortgage programs for rehabilitating homes in disrepair. And the two biggest, the FHA 203K and the Fannie Mae Homestyle, are already government backed.

For those who work with rehab loans, do you believe those programs offer enough of an incentive and flexibility? What would you like to see in a home rehab loan program?

 

You can share your thoughts anonymously by emailing me at jkleimann@housingwire.com.

 

James Kleimann

Managing Editor, HousingWire

Biden tax credit to rehab homes is finally unveiled   The Biden administration shed new details on a tax credit to rehab homes for low and moderate-income homebuyers as part of the trillion dollar infrastructure package.

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