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There are many different uses for guarantees in the Affordable Housing industry. In our surety practice, we often work with contractors and developers on LIHTC deals – from performance and payment bonds for the contractor to closing or subdivision bonds for the LIHTC developer.
LIHTC Recapture Bond
After recently seeing the growing needs of Affordable Housing customers and executives, we decided to develop a LIHTC Recapture Bond program. Selling or buying a LIHTC property prior to the 15 year compliance period can be a significant challenge as many institutional tax credit investors are reluctant to allow a change of ownership during the tax credit compliance period. In the past, the IRS requested a loan; While this requirement no longer exists, many investors require a surety or other form of security. To recognize this need in the market, we partnered with an international guarantee company to develop a proprietary guarantee product.
The LIHTC Recapture Bond offers tax credit investors or limited partners the assurance that the property will remain in compliance with Section 42 of the IRS Code and will be protected from tax credit withdrawals and / or interest penalties. The aim of this security product is to provide flexibility for the sale of a LIHTC property within the 15 year compliance period.
About our guarantee
We worked with QBE guarantee to develop this exclusive LIHTC security product. The guarantee is rated “Excellent” by AM Best and has a financial size of “XV” (USD 2 billion or more). It is on the US Treasury Department’s list of certified companies.
Underwriting and pricing
The signing process for this guarantee is immediate, simple and straightforward. This product is ideal for those with a proven track record of LIHTC projects. Our LIHTC Recapture Bond offers affordable, flat-rate annual premium rates. Pricing depends on the buyer’s LIHTC experience, financial stability, and the size of the bond.
Please contact me if you would like to know more about our innovative new product for the Affordable Housing Industry.
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