1. Empowering First Time Homebuyers Texas Mortgage Credit Program

2. What is a Mortgage Credit Certificate (MCC)?
A MCC is a federal income TAX CREDIT.
Based on the mortgage interest paid each year.
Amount of tax credit is established by HFA and can range from 10% - 50% of the annual mortgage interest paid – not to exceed $2,000 per year.
This credit reduces the federal income taxes of the buyer and has the potential of saving the MCC holder thousands of dollars over the life of the loan.
TDHCA -Texas Homeownership Division

3. MCC EXAMPLE:
____________________________________________________________
Home Loan Amount: $130,000
Annual Interest Rate (30-year, fixed) %
Approx. Total Mortgage Interest Paid (one year) $5,850
Mortgage Credit Certificate Rate %
Annual MCC Amount (Line 3 x Line 4) $2,340 $2,000
(subject to $2,000/year max)
Remaining $3,850 ($5,850 - $2,000 MCC credit) can be used as a mortgage interest tax deduction, which will reduce the homeowners taxable income therefore reducing their tax liability.
A “tax deduction” is subtracted from the adjusted gross income before federal income taxes are computed. Only a percentage of the amount deducted is realized in savings.
TDHCA -Texas Homeownership Division

4. How a Homebuyer Uses the MCC
The borrower claims the credit with their annual tax return using IRS Form 8396.
The credit may be claimed for the life of the loan as long as the home is their principal residence.
The borrowers may, if they choose, adjust their W-4s to reflect the anticipated credit.
Anticipated credit may be used to help qualify the borrower for a loan. If the tax credit is $2,000, the monthly adjustment is $ per month.
TDHCA -Texas Homeownership Division

5. TDHCA -Texas Homeownership Division
TDHCA MCC HISTORY
TDHCA Launched its MCC Program in 2003
Program Size $60 - $525 Million
Fees Assessed:
1% of Mortgage Amount
Next Program Release
May $799 Million
TDHCA -Texas Homeownership Division

6. Underwriting/Loan Terms
Underwriting Options:
FHA – VA – USDA/RHS – Conventional
Eligible Loan Terms:
All loan types must be 15 or 30 year fixed rate
-No ARMs Allowed
Homebuyer Education Required:
Face to Face or On-Line Counseling Allowed
Loan Closing:
Must close within 90 days of reservation date
TDHCA -Texas Homeownership Division

7. TDHCA -Texas Homeownership Division
TDHCA MCC Process
How a Homebuyer Applies
Homebuyer Applies For The MCC Through a Participating Lender – Currently Over 100 Lending Institutions - At The Same Time He or She Makes a Formal Mortgage Loan Application.
Lender Determines Program Eligibility and Reserves MCC in Loan Reservation System. All Program Documents are Form-Fillable, Auto Populated and Sent to Closing for Signature.
Lender Proceeds With Closing Mortgage Loan and Submits MCC Closing Package Within 30 days Following Closing Date
MCC Issuance Fee (paid at closing)
TDHCA Staff Reviews Closing Package/Issues Certificate
On an Annual Basis, (during January) Staff Mails Reminder Notice to Borrower Along With IRS Form 8396 and Copy of Certificate
TDHCA -Texas Homeownership Division

8. TDHCA -Texas Homeownership Division
PROGRAM STATISTICS
Calendar Year 2014
MCC’s Issued – 1,513 on Loans Totaling $219M
Stand Alone 1,084 – Combos 429 (39% of Production)
Average Annual Income - $50,695
Average Loan Amount - $146,691
66% of Borrower’s Earn 80% AMFI or Below
New Construction 48% - Existing 52%
Revenue Generated- $1.5 Million
TDHCA -Texas Homeownership Division

9. TDHCA -Texas Homeownership Division
CREDIT RATE & FEES
Calendar Year 2014
MCC Credit Rate 40%
Fees Assessed
1% of Mortgage Amount
If Combined With TDHCA Mortgage Loan/Issuance Fee Waived
TDHCA -Texas Homeownership Division

10. MARKET - MARKET - MARKET
Target Existing Lender Network/Builder Partners
Utilize Training Materials with Sample Tax Returns
Conduct Webinar and Office Trainings as Requested
Identify Areas of State, Based on Income, Where MCC is Most Beneficial to Borrowers
Develop Marketing Materials for Realtors and Lenders with MCC Example
Partner with State Realtor Association to Develop Affordable Housing Continuing Education Course
Google Ad Campaign
Participate in Realtor and Mortgage Industry Events
Online MCC Course
TDHCA -Texas Homeownership Division

11. MARKET - MARKET - MARKET
Top Lending Partners
DHI Mortgage Company, Ltd.
Cornerstone Home Lending, Inc.
Premier Nationwide Lending
Pulte Mortgage LLC
Guild Mortgage Company
Network Funding, L.P.
TDHCA -Texas Homeownership Division

12. TDHCA -Texas Homeownership Division
THANK YOU
Eric Pike
TDHCA -Texas Homeownership Division