Georgia committee hears bill to raise GHFA bond cap from $3B to $12B to sustain first-time homebuyer loans

House Bill 159 (LC 33 9765) was presented at a hearing of the House Committee on Budget and Fiscal Oversight on a proposal to raise the GHFA aggregate bond cap from $3,000,000,000 to $12,000,000,000 to continue financing Georgia Dream and related first-time homebuyer loan programs.

The bill matters because GHFA uses private-activity bonds to buy and finance mortgages for lower-income and first-time buyers; those loans are largely insured by federal programs and are not backed by the state's full faith and credit. Wesley Brooks, deputy commissioner for homeownership at the Georgia Department of Community Affairs (DCA), which houses the Georgia Housing Finance Authority, told the committee GHFA issues private-activity bonds in the market and uses the proceeds to buy qualifying loans from local lenders and service them in-house. Brooks said the agency has serviced about 53,000 first-time homebuyer loans since inception and currently services roughly 14,000 mortgages representing about $1.8 billion in outstanding assets.

Brooks described the mechanics the agency uses to repay bond investors: monthly mortgage payments fund bond payments, and about 98% of the GHFA loans are backed by federal mortgage insurance (about 91% FHA, roughly 3% VA, and the remainder USDA or conventional). He said those insurance arrangements mean that, in most foreclosure cases, the federal insurer would cover losses on insured loans. Brooks also told members the authority currently holds a AAA rating and that servicing loans in-house contributes to lower delinquency and foreclosure rates than comparable FHA products.

Committee members asked about several topics: whether increasing the legal cap would affect bond ratings (Brooks said rating agencies have continued to rate GHFA AAA), whether the program applies only to single-family housing (Brooks said this specific bond program funds single-family loans; multifamily financing is managed through different DCA programs such as the Low-Income Housing Tax Credit), and how quickly the expanded cap would be used. Brooks said the $3 billion cap was set in 2017 and that the $12 billion figure is intended to provide a roughly 10-year planning horizon under projected housing price and program growth; actual annual issuances are set each year by GHFA's board and approved by the Georgia State Financing and Investment Commission (GSFIC). He said recent issuance authority was $350 million one year and $500 million another year, and that issuance levels can change with market demand.

Committee members also raised federal policy risk after recent Treasury-level pauses in related programs. Brooks said the private-market purchasers of tax-exempt municipal bonds (for example, institutional investors) provide the capital; the Treasury does not provide the bond proceeds. He added that while cuts to federal programs could affect tangential federal-funded services (such as housing counseling), the core bond-funded program itself is financed by private investors and backed primarily by mortgage insurance on the underlying loans.

Christopher Nunn, commissioner at DCA, clarified the state's role: "GHFA, which was merged into DCA in 1996, is the issuer. This is not we're not pledging the full faith and credit of the state against this bond portfolio. This is the Georgia Housing Finance Authority. These are secured assets." He and Brooks also explained that GHFA's board and GSFIC both approve annual issuance authority and that the board is involved with each issuance.

Stakeholder witnesses voiced support. Austin Hackney of the Home Builders Association of Georgia endorsed the bill, and Betsy Bradfield of the Georgia Association of Realtors said the group gave the bill its highest-level support and called the programs "vital" to addressing the state's housing shortage.

No vote was held; the committee labeled the session a hearing-only meeting and said it would decide later whether to schedule a vote. Chairman Scroggi closed by noting the committee would follow up with the presenters about next steps.

Ending: The hearing included extended discussion of the financing mechanics, program reach and safeguards, and federal insurance coverage for most loans; the committee did not take action and will determine scheduling for a future vote or committee consideration.