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Panel hears proposal to raise Maine Housing's bond cap to $4 billion
Summary
Senators and witnesses heard LD 2127, which would increase the Maine State Housing Authority's moral obligation bond cap from $3 billion to $4 billion to meet higher construction costs, reduced prepayments, and an expanded project pipeline. Maine Housing, the Treasury and multiple housing advocates testified in support and agreed to supply additional financial details for a work session.
Senator Chip Curry introduced LD 2127, a department bill asking the Legislature to raise the Maine State Housing Authority's moral obligation bond cap from $3,000,000,000 to $4,000,000,000 to reflect current market conditions and the agency's growing loan pipeline.
Eric Jorgensen, senior director of government relations at Maine State Housing, described five factors driving the request: sharply lower single‑family loan prepayments that previously helped retire outstanding bonds; an unprecedented production pipeline and higher lending activity; rising construction costs; larger project sizes; and higher average first‑time homebuyer loan amounts. Jorgensen provided the agency's prepayment figures and lending totals, noting a decline in single‑family loan prepayments from about $160 million in 2021 to $46 million in 2024 and lending activity growing from roughly $167 million in 2021 to just over $500 million in 2025. He stressed the agency's bonds are repaid from borrower payments, not state general‑fund taxation: "Our bonds are paid back solely from the monthly mortgage premiums we receive from our borrowers, so no state funds are used to repay Maine Housing bonds."
Witnesses from AARP Maine, Genesis Community Loan Fund and the Maine Real Estate and Development Association urged support, saying the higher cap will let Maine Housing continue financing affordable rental and first‑time buyer loans. Greg Payne from the Governor's office reiterated executive support.
State Treasurer Joe Perry testified that, in his view, the change would not have a negative material effect on the state's credit rating or fiscal position. Perry explained the practical difference between moral obligation and general obligation bonds and described the constitutional and procedural protections tied to full‑faith obligations.
Committee members requested more granular bond data, including default rates in percent and dollars over recent years, the precise market rate differences between Maine Housing bonds and general obligation bonds, and past performance during economic downturns. Maine Housing and the Treasurer's office agreed to provide those figures and additional audit and governance documentation for the committee's work session.
The public hearing was closed; committee staff will coordinate the requested data for the next consideration of LD 2127.
