Affordable Housing Bond Enhancement Act

This bill, titled the Affordable Housing Bond Enhancement Act, seeks to significantly expand and enhance housing investment through amendments to the Internal Revenue Code concerning mortgage revenue bonds and mortgage credit certificates . Its primary goal is to make these tools more accessible and flexible for state and local authorities, as well as more beneficial for homeowners. Key provisions include requiring the Secretary to submit annual reports to Congress on state bond usage, increasing transparency and oversight. It also provides greater flexibility for states and local authorities to utilize unused bond capacity by allowing the transfer and redesignation of carryforward bond authority for various housing purposes, including qualified mortgage bonds and mortgage credit certificates. The bill eliminates the refinancing limitation for mortgage revenue bonds, allowing eligible mortgagors to refinance their homes without it being treated as a new acquisition. Furthermore, it substantially increases the financing limit for qualified home improvement loans from $15,000 to $75,000, with an added inflation adjustment, making larger home renovation projects more feasible through bond financing. For homeowners, the bill revises the recapture tax for mortgage revenue bonds, shortening the holding period from nine years to five years, thereby reducing the financial burden for those who sell their homes sooner. It also modifies the calculation of the credit for interest paid on certified indebtedness under mortgage credit certificates, setting the credit rate between 1% and 5% and allowing for annual rate adjustments. Finally, the legislation streamlines administrative processes by extending the period for mortgage credit certificates to be in effect, allowing issuing authorities more time to revoke election to issue MCCs, and reducing the public notice requirement from 90 to 30 days. It also shifts the reporting requirement for MCCs from lenders to issuing authorities, simplifying compliance for financial institutions.