Under HERA, states are allowed to refinance subprime loans using what instrument?

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Multiple Choice

Under HERA, states are allowed to refinance subprime loans using what instrument?

Explanation:
Under HERA, the refinancing tool for subprime loans is mortgage revenue bonds. These are tax-exempt securities issued by state housing finance agencies to fund mortgage lending, including refinancing existing mortgages. The HOPE for Homeowners program specifically authorized states to issue mortgage revenue bonds to refinance subprime loans into more affordable loans, with the loan repayments supporting the bond debt service. The other instruments—government bonds, tax credit bonds, and general obligation bonds—are not the financing vehicle used in this program.

Under HERA, the refinancing tool for subprime loans is mortgage revenue bonds. These are tax-exempt securities issued by state housing finance agencies to fund mortgage lending, including refinancing existing mortgages. The HOPE for Homeowners program specifically authorized states to issue mortgage revenue bonds to refinance subprime loans into more affordable loans, with the loan repayments supporting the bond debt service. The other instruments—government bonds, tax credit bonds, and general obligation bonds—are not the financing vehicle used in this program.

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