AUGUSTA – After a week of selling bonds exclusively to individual Maine investors, MaineHousing has surpassed its goal of earning $23 million to finance its homebuyer program.

At the close of the sale Wednesday afternoon, investors snapped up $38.7 million in tax-exempt bonds.

“It’s being widely successful,” MaineHousing Executive Director Dale McCormick said. “We’re up to $38.7 million in bonds sold retail so far today and that is wonderful. It will allow our first-time homebuyers program to continue, which will benefit the economy of the state of Maine and its people. It will be helping the economy by bolstering the real-estate sector and helping Maine people buy their first home.”

McCormick said the bonds are exempt from state and federal income taxes, and from the alternative minimum tax, an extra tax some people have to pay on top of the regular income tax.

Why so many invested in these bonds has to do with people wanting a safe place for their money, according to Tom Hastings, financial adviser with Raymond James Financial Services Inc. in Augusta.

“I think right now, with the bond market the way it has been, people perceive Maine municipal bonds as being a secure place to put their money,” Hastings said. “And also they have the advantage of being tax-free.”

Dan Simpson of MaineHousing said the interest rate on the bonds depends on the rate of maturity – from 3.5 percent on a two-year bond to a 6.25 percent on a 15-year bond.

MaineHousing Treasurer Tom Cary said the rate was set Tuesday. He said rates are based on what other bonds are selling for in the current market.

The goal, he said, is to set a rate high enough to attract Maine buyers but no higher, so MaineHousing can pass along a low mortgage rate to first-time homebuyers.

Cary said the state housing authority has always offered bonds to Maine investors exclusively – at least a day, sometimes two – before they are sold to institutional investors on Wall Street.

“This is the first half of the retail sale,” McCormick said. “In three or four weeks, we’re hoping to do an institutional sale with longer-maturing bonds to insurance companies and national money market funds.”

McCormick said she also learned Wednesday that MaineHousing will receive $3 million from the Department of Housing and Urban Development to eliminate lead hazards in homes. Lead is a toxin that can impair children’s development and may even cause death.

She said her agency must come up with a $1 million match over the next three years.

“Our match for the lead grant is from the money MaineHousing receives from the state’s real estate transfer tax,” she said. “We get a share of it according to statute.”

“We have the oldest housing stock in the nation. Lead paint was used in pre-1970 so the mass is daunting. We need to keep at it. It’s an important health issue.”


Only subscribers are eligible to post comments. Please subscribe or to participate in the conversation. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.