Mortgage Credit Program to benefit low-income families

The seven-member House Committee on Commerce and Tourism have signified their support to a proposed initiative that is seen to boost low or moderate income families’ capacity to own their dream homes.

In a standing committee report submitted to House Speaker Benigno R. Fitial, committee members recommended for the legislation’s approval.

The proposed act which seeks to establish in the CNMI a Mortgage Credit Certificate Program for qualified applicants and first-time home-buyers was a concept derived from the US Congress’ 1984 Tax Reform Act.

Its purpose, according to lawmakers, is to provide housing assistance to families of low and moderate income.

The intent of the initiative is to reduce the amount of federal income tax paid by the homeowner, thereby giving them more available income to qualify for a mortgage loan and affordable homeowner house payment.

“It is intent of Legislature to create incentives for first time homeowners to purchase their dream homes aimed at enhancing the general welfare of our residence, while at the same time, give a much-needed boost to the construction industry,” said members of the committed chaired by Rep. Florencio T. Deleon Guerrero.

The legislation described the Mortgage Credit Certificate Program as a method of providing housing assistance to eligible first-time buyers authorized by Congress in the 1984 Tax Reform Act.

It is eyed to operate under the auspices of the Northern Marianas Housing Corporation.

According to the initiative, the expectation of the credit program is to provide assistance to qualified and eligible first-time homeowners in obtaining an income tax credit.

The credit program reduces the amount of taxes the holder of the certificate would pay, its primary objective being, to assist first time buyers qualify for a loan by allowing the lender to reduce the housing expense ration by the amount of tax savings.

The mortgage credit certificate gives the home buyer a federal tax credit each year the buyer keeps the same mortgage loan and lives in the same house.

The qualified home buyer who is awarded a mortgage credit certificate may take an annual credit against their federal income taxes. The credit is subtracted dollar for dollar from federal income taxes due.

Under the proposal, households that are 80 percent of the area’s median income and below the equal credit to 20 percent of the annual interest paid on the home buyer’s mortgage.

For households that are above 80 percent of the area’s median income not exceeding the Mortgage Credit Certificate income limits, the credit is equal to 15 percent of the annual interest paid on the home buyer’s mortgage.

The remainder of the mortgage will be taken as a deduction from the gross income on the home buyer’s income tax return in the usual manner which shall be paid directly to the financial institution as part of the down payment and/or closing cost, for the purpose of reducing the first-time homeowner’s financial requirement to secure a mortgage loan. (MM)