New York Governor Andrew Cuomo recently signed legislation that allows New York State Housing Finance Agencies (HFAs) including the New York City Housing Development Corporation (HDC) and the New York State Housing Finance Agency (HFA) to issue unrated bonds for private placement in order to finance affordable housing developments. Prior to passage of this legislation, tax-exempt bond financing required long term credit enhancement and variable rate bond liquidity, which was generally offered by the State of New York Mortgage Agency (SONYMA), Fannie Mae or Freddie Mac, or other financial institutions. Given the recent uncertainty surrounding these organizations, this new legislation allows financial institutions that purchase tax-exempt bonds to fully assume the real estate credit risk which reduces transaction costs and shifts the responsibility of underwriting to the purchaser rather than the credit enhancer or rating agency.
To view the legislation, click here.
