SRC-JXG S.B. 867 76(R)BILL ANALYSIS


Senate Research CenterS.B. 867
By: Lucio
Border Affairs - Special
6/29/1999
Enrolled


DIGEST 

Currently, Texas law does not provide a contract for deed conversion
programs. S.B. 867 will create a loan guarantee to convert a contract for
deed to a warranty deed program. 

PURPOSE

As enrolled, S.B. 867 creates a contract for deed conversion programs.

RULEMAKING AUTHORITY

Rulemaking authority is granted to the Texas Department of Housing and
Community Affairs in SECTION 1 (Section 2306.255(i), Government Code) of
this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 2306K, Government Code, by adding Section
2306.255, as follows: 

Sec. 2306.255. CONTRACT FOR DEED CONVERSION PROGRAM. Provides that the
definition of "office" means the office established by the Texas Department
of Housing and Community Affairs (TDHCA) to promote initiatives for
colonias. Requires the office to establish a program to guarantee loans
made by private lenders to convert a contract for deed into a warranty
deed. Requires the office to make agreements with private lenders that will
issue loans for contract conversions under the guarantee of TDHCA. Requires
the office and the lender to agree on the criteria for issuing a deed
conversion loan, including the percentage of the guarantee to be issued by
TDHCA. Prohibits the office from making an agreement with a lender unless
the agreement allows the office to annually renegotiate the guarantee
percentage for a loan issued by the lender. Requires the office to
renegotiate the terms of a guarantee when possible to obtain a better
guarantee percentage for the state from the lender. Authorizes the office
to establish eligibility criteria for a holder of a contract for deed who
participates in this program. Requires the criteria to include a priority
for homeowners and owners of residential real property who are individuals
or families of low, very low, or extremely low income. Requires the office
to use funds allocated to TDHCA under the federal HOME Investment
Partnerships program established under Title II of the CranstonGonzalez
National Affordable Housing Act (42 U.S.C. Section 12701 et seq.) for a
guarantee issued under this section. Authorizes the office to use the
services of the Texas State Affordable Housing Corporation when necessary
to accomplish the purposes of this section. Requires the office to compose
an annual report that evaluates the repayment history and coinciding
guarantee percentages for guarantees issued under this section, and deliver
a copy of the report to the governor, the lieutenant governor, and the
speaker of the house of representatives. Authorizes TDHCA to adopt rules
necessary to accomplish the purposes of this section. 

SECTION 2. (a) Effective date: September 1, 1999. 

(b) Requires the office established by TDHCA to promote initiatives for
colonias to deliver the first report required by Section 2306.255(h),
Government Code, as added by this Act, no later than January 1, 2001. 

SECTION 3. Emergency clause.