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The Housing and Economic Recovery Act of 2008 took several steps to patch up the housing market after the subprime meltdown, one of which was the authorization of states and municipalities to issue mortgage revenue bonds (MRBs) which they could then use to help local lending institutions fund mortgages for lower-income Americans.

Housing bonds are issued by state and local governments as a way to raise revenue that can help local banks and lending institutions fund mortgage loans to the community.

This practice was authorized by the Housing and Economic Recovery Act of 2008, and the bonds are sometimes called mortgage revenue bonds (MRBs). If they are called housing authority bonds it may mean they are being used to fund multi-family housing units, and the revenue from any rent collected will help to pay the bond’s coupon.

Housing bonds are exempt from the Federal capital gains and income taxes, like other muni bonds, and this makes their modest yield more attractive. These are also exempt from the alternative minimum tax (AMT), while some other types of muni bonds are not.

Each state has its own version of a Housing Finance Agency (HFA) whose goals are aligned with HERA ideals of affordable housing, and this agency coordinates with lenders to help finance mortgage loans to those who qualify.