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Qualifying first-time homebuyers could realize some savings through an old resurrected program offered through the Michigan State Housing Development Authority.

The Mortgage Credit Certificate Program was reactivated and opened on July 13. The program was first authorized by Congress in the 1984 Tax Reform Act to provide housing assistance by allowing a federal tax to new and qualified homebuyers. The program is made available through participating lenders on a first come, first served basis in targeted areas throughout Michigan.

MSHDA first offered the program from when it was authorized until December 2006. Around the time it was discontinued, MSHDA's single-family loan program had become very active. Because the volume had become so high, the department decided to allocate more money to the single loan program and temporarily discontinue the credit certificate program with the knowledge it would eventually be brought back, said Mary Townley, MSHDA director of homeownership.

According to MSHDA, homeowners taking advantage of the program may qualify for 20 percent of their annual mortgage interest paid to be credited against their year-end tax liability. The program is not a one-time tax credit, but can be taken advantage of each year until the original mortgage is paid in full as long as the property remains the home buyer's primary residence. An eligible borrower must meet MSHDA income and sales price limits and in some cases, prior homeownership restrictions.

"This is a tax benefit so at the the time they apply for their loan for their mortgage, they would have to work through a lender that participates in the program. That lender would provide information to us with the buyer's authority to do that," Townley said. "We would issue a commitment that says this potential homeowner meets this criteria. The lender would close that loan with the homeowner. They go to the title company and then we would issue a certificate to that homeowner that they would keep."

Townley said borrowers have to apply for a lender loan transaction. The mortgage cannot be through MSHDA but through an approved financial institution or lender that offers the program. Borrowers cannot have owned a home within the last three years or they must buy in one of the targeted areas. The home being purchased must be a single-family dwelling.

Alpena, Alcona, Montmorency and Presque Isle counties are within the listed target areas for the program. The income and buying limits vary and are dependent on the county and community. Within the City of Alpena income limit for one to two people or three or more people is $74,750. The sales price limit in the city is $224,250.

"Those limits have gone up dramatically. It was very limited now it's expanded enough to where it will touch more households," Townley said. "Better data was collected to warrant those calculations going up."

Home buyers should be aware that because a tax credit is considered to be a subsidy, they may be subject to a federal recapture tax if the home is sold within nine years with a gain on the sale. MSHDA created the Recapture Tax Program to reimburse borrowers for any recapture tax paid to the Internal Revenue Service.

"We've had very few households that were subject to recapture in the past," Townley said.

Area approved lenders have been working on getting the word out about the credit certificate program's reactivation.

Carin Andersson, a home loan consultant with AmeriFirst Home Mortgage, said she handled a lot of buyers going through the program, when it was first offered by MSHDA. So far she hasn't gotten a response to it, likely because people don't know it's been brought back. The company had not yet done a marketing piece on it.

"When people did know about it, a lot of people came to AmeriFirst, to me," she said.

Independent Bank has been trying to inform area realtors of the program's reactivation because buyers often find out about the credits through them. The bank recently has retrained all of its loan officers. In the past, the program was one the bank used effectively and was popular with buyers, said Russ Daniel, senior vice president of lending.

"I would never recommend to someone that they buy a house based upon this program. I would certainly think it's something that if they qualify ... they should consider it," he said.

People who could qualify should consult their tax professional to see if the program would benefit them. With it being a federal program, people need to pay close attention to what their lenders tell them, Andersson said.

For more information call 517-373-6840 or visit http://www.michigan.gov/mshda

Patty Ramus can be reached via e-mail at pramus@thealpenanews.com or by phone at 358-5687.