Program Effectiveness of Mortgage Revenue Bonds in a Changing Economic Environment
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In a 1988 study, the U.S. General Accounting Office (GAO) reported that mortgage revenue bonds (MRBs) had not been, in recent years, effective instruments for providing interest rate subsidies that issuers felt would be required to make the program effective. In addition, GAO reported that two factors might hinder improvement of MRB effectiveness: (1) the Tax Reform Act of 1986, which might increase the yield of MRBs relative to tax-exempt bonds; and (2) the trend away from the high nominal interest rates that made the bonds so successful in the early 1980s (GAO 1988).
KeywordsInterest Rate Yield Ratio Bond Yield Mortgage Rate General Account Office
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