1-1 By: Hill, Ehrhardt (Senate Sponsor - Lucio) H.B. No. 3059
1-2 (In the Senate - Received from the House May 7, 1999;
1-3 May 10, 1999, read first time and referred to Committee on Economic
1-4 Development; May 14, 1999, reported favorably by the following
1-5 vote: Yeas 4, Nays 0; May 14, 1999, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to the operation of the Texas State Affordable Housing
1-9 Corporation.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. Section 2306.553, Government Code, is amended to
1-12 read as follows:
1-13 Sec. 2306.553. PURPOSES. (a) The public purpose of the
1-14 corporation is to perform activities and services that the
1-15 corporation's board of directors determines will promote the public
1-16 health, safety, and welfare through the provision of adequate,
1-17 safe, and sanitary housing primarily for individuals and families
1-18 of low, [and] very low, [income] and extremely low [families of
1-19 moderate] income. The activities and services shall include
1-20 engaging in mortgage banking activities and lending transactions
1-21 and acquiring, holding, selling, or leasing real or personal
1-22 property.
1-23 (b) The corporation's primary public purpose is to
1-24 facilitate the provision of housing and the making of affordable
1-25 loans to individuals and families of low, [and] very low, [income]
1-26 and extremely low [families of moderate] income. The corporation
1-27 may make first lien, single family purchase money mortgage loans
1-28 for single family homes only to individuals and families of low,
1-29 [and] very low, [income] and extremely low [families of moderate]
1-30 income if the individual's or family's household income is not more
1-31 than the greater of 60 percent of the median income for the state,
1-32 as defined by the United States Department of Housing and Urban
1-33 Development, or 60 percent of the area median family income,
1-34 adjusted for family size, as defined by that department. The
1-35 corporation may make loans for multifamily developments if:
1-36 (1) at least 40 percent of the units in a multifamily
1-37 development are affordable to individuals and families with incomes
1-38 at or below 60 percent of the median family income, adjusted for
1-39 family size; or
1-40 (2) at least 20 percent of the units in a multifamily
1-41 development are affordable to individuals and families with incomes
1-42 at or below 50 percent of the median family income, adjusted for
1-43 family size.
1-44 (c) To the extent reasonably practicable, the corporation
1-45 shall use the services of banks, community banks, savings banks,
1-46 thrifts, savings and loan associations, private mortgage companies,
1-47 nonprofit organizations, and other lenders for the origination of
1-48 all loans contemplated by this subchapter and assist the lenders in
1-49 providing credit primarily to individuals and families of low,
1-50 [and] very low, [income] and extremely low [families of moderate]
1-51 income.
1-52 SECTION 2. Section 2306.554, Government Code, is amended to
1-53 read as follows:
1-54 Sec. 2306.554. BOARD OF DIRECTORS AND OFFICERS. (a) The
1-55 board of directors of the corporation consists of five [six]
1-56 members [as follows:]
1-57 [(1) the presiding officer of the board of directors
1-58 of the department;]
1-59 [(2) the presiding officer of the programs committee
1-60 of the board of directors of the department; and]
1-61 [(3) four members of the board of directors of the
1-62 corporation shall be] appointed by the governor who [and shall]
1-63 represent any of the following areas:
1-64 (1) [(A)] state or federal savings banks or savings
2-1 and loan associations;
2-2 (2) [(B)] community banks with assets of $200 million
2-3 or less;
2-4 (3) [(C)] large metropolitan banks with assets of more
2-5 than $1 billion;
2-6 (4) [(D)] asset management companies;
2-7 (5) [(E)] mortgage servicing companies;
2-8 (6) [(F)] builders;
2-9 (7) [(G)] real estate developers;
2-10 (8) [(H)] real estate brokers;
2-11 (9) [(I)] community or economic development
2-12 organizations;
2-13 (10) [(J)] private mortgage companies;
2-14 (11) [(K)] nonprofit housing development companies;
2-15 (12) [(L)] attorneys;
2-16 (13) [(M)] investment bankers;
2-17 (14) [(N)] underwriters;
2-18 (15) [(O)] private mortgage insurance companies;
2-19 (16) [(P)] appraisers;
2-20 (17) [(Q)] property management companies;
2-21 (18) [(R)] financial advisors;
2-22 (19) [(S)] nonprofit foundations;
2-23 (20) [(T)] financial advisors; or
2-24 (21) [(U)] any other area of expertise that the
2-25 governor finds necessary for the successful operation of the
2-26 corporation.
2-27 (b) The governor shall designate the [appoint a] presiding
2-28 officer of the corporation's board of directors from the members
2-29 [who are not also serving as members of the board of directors of
2-30 the department].
2-31 (c) A member of the corporation's board of directors is not
2-32 entitled to compensation, [except for the members who are also
2-33 members of the department's board of directors,] but is entitled to
2-34 reimbursement of travel expenses incurred by the member while
2-35 conducting the business of the board, as provided by the General
2-36 Appropriations Act.
2-37 (d) The corporation shall employ, for compensation to be
2-38 determined by the corporation's board of directors, a qualified
2-39 individual to serve as president of the corporation [The director
2-40 of the department shall serve ex officio as president of the
2-41 corporation. The president is not entitled to compensation, unless
2-42 the president is not also the executive director of the department,
2-43 but is entitled to reimbursement from the corporation of travel
2-44 expenses incurred by the member while conducting the business of
2-45 the board, as provided by the General Appropriations Act. The
2-46 director of the department shall serve as president of the
2-47 corporation only if the director has experience in the field of
2-48 mortgage banking or residential lending as demonstrated by:]
2-49 [(1) employment in one or more middle or upper level
2-50 management positions for at least two years with a mortgage bank,
2-51 commercial bank, thrift, savings and loan association, private
2-52 mortgage company, mortgage servicing entity, or other financial
2-53 institution; or]
2-54 [(2) employment in a position of providing legal or
2-55 consulting services related to mortgage banking or residential
2-56 lending to any one of the type of entities listed in Subsection
2-57 (d)(1) for at least five years].
2-58 (e) [If the director does not satisfy the requirements of
2-59 Subsection (d)(1) or (2), the corporation shall employ, for
2-60 compensation to be determined by the corporation's board of
2-61 directors, an individual that satisfies the requirements of
2-62 Subsection (d)(1) or (2) to serve as president of the corporation.]
2-63 [(f)] The corporation may purchase, with corporation funds,
2-64 liability insurance for each of the members of the corporation's
2-65 board of directors, officers, and other employees of the
2-66 corporation in an amount that the corporation's board of directors
2-67 considers reasonably necessary to:
2-68 (1) insure against foreseeable liabilities; and
2-69 (2) provide for all costs of defending against those
3-1 liabilities, including, without limitation, court costs and
3-2 attorney's fees.
3-3 SECTION 3. Sections 2306.555(b), (c), and (d), Government
3-4 Code, are amended to read as follows:
3-5 (b) In addition to the powers granted by Subsection (a), the
3-6 corporation has all rights and powers necessary to accomplish its
3-7 public purpose, including the powers to:
3-8 (1) purchase, service, sell, lend on the security of,
3-9 or otherwise transact in:
3-10 (A) mortgages, including federal mortgages and
3-11 federally insured mortgages;
3-12 (B) mortgage loans;
3-13 (C) deeds of trust; and
3-14 (D) loans or other advances of credit secured by
3-15 liens against manufactured housing;
3-16 (2) guarantee or insure timely payment of mortgage
3-17 loans and loans or other advances of credit secured by liens
3-18 against manufactured housing, provided that the corporation's
3-19 liability on that guaranty or insurance is limited to the assets of
3-20 a guaranty fund or self-insurance fund established and maintained
3-21 by the corporation;
3-22 (3) make mortgage loans and loans or other advances of
3-23 credit secured by liens against manufactured housing to individuals
3-24 and families of low [to moderate] income;
3-25 (4) make mortgage loans to provide temporary or
3-26 permanent financing or refinancing for housing or land
3-27 developments, including refunding outstanding obligations,
3-28 mortgages, or advances issued for those purposes;
3-29 (5) borrow, give security, pay interest or other
3-30 return, or issue bonds or other obligations, including notes,
3-31 debentures, or mortgage-backed securities, provided that each bond
3-32 or other obligation issued by the corporation must contain a
3-33 statement that the state is not obligated to pay the principal of
3-34 or any premium or interest on the bond or other obligation and that
3-35 the full faith and credit and the taxing power of the state are not
3-36 pledged, given, or loaned to the payment;
3-37 (6) acquire, hold, invest, use, pledge, reserve, and
3-38 dispose of its assets, revenues, income, receipts, funds, and money
3-39 from every source and to select one or more depositories, inside or
3-40 outside the state, subject to the terms of any resolution,
3-41 indenture, or other contract under which any bonds or other
3-42 obligations are issued or any guaranty or insurance is provided;
3-43 (7) establish, charge, and collect fees, charges, and
3-44 penalties in connection with the programs, services, and activities
3-45 of the corporation;
3-46 (8) procure insurance and pay premiums on insurance of
3-47 any type, in amounts, and from insurers as the corporation's board
3-48 of directors considers necessary and advisable to further the
3-49 corporation's public purpose, including, subject to Section
3-50 2306.554(e) [2306.554(f)], liability insurance for the members of
3-51 the corporation's board of directors and the officers and other
3-52 employees of the corporation;
3-53 (9) make, enter into, and enforce contracts,
3-54 agreements, leases, indentures, mortgages, deeds, deeds of trust,
3-55 security agreements, pledge agreements, credit agreements, and
3-56 other instruments with any person, including a mortgage lender,
3-57 servicer, housing sponsor, the federal government, or any public
3-58 agency, on terms the corporation determines may be acceptable;
3-59 (10) own, rent, lease, or otherwise acquire, accept,
3-60 or hold real, personal, or mixed property, or any interest in
3-61 property, by purchase, exchange, gift, assignment, transfer,
3-62 foreclosure, mortgage, sale, lease, or otherwise and hold, manage,
3-63 operate, or improve real, personal, or mixed property, regardless
3-64 of location;
3-65 (11) sell, lease, encumber, mortgage, exchange,
3-66 donate, convey, or otherwise dispose of any or all of its
3-67 properties or any interest in its properties, deeds of trust, or
3-68 mortgage lien interest owned by it or under its control or custody,
3-69 or in its possession, and release or relinquish any right, title,
4-1 claim, lien, interest, easement, or demand, however acquired,
4-2 including any equity or right of redemption in property foreclosed
4-3 by it, by public or private sale, with or without public bidding;
4-4 (12) lease or rent any improvements, lands, or
4-5 facilities from any person;
4-6 (13) request, accept, and use gifts, loans, donations,
4-7 aid, guaranties, allocations, subsidies, grants, or contributions
4-8 of any item of value to further its public purpose; and
4-9 (14) exercise the rights and powers of a nonprofit
4-10 corporation incorporated under the Texas Non-Profit Corporation Act
4-11 (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes).
4-12 (c) In exercising the foregoing powers granted to it under
4-13 this chapter, the corporation shall not actively compete with
4-14 private lenders and shall not originate or make a [any] loan that
4-15 [can or] would be made under [at] the same circumstances [time] by
4-16 a private lender on substantially the same or better terms within
4-17 the submarket in which the loan is proposed to be made[, and, to
4-18 the extent practical, the corporation shall rely on private
4-19 mortgage companies, banks, savings banks, thrifts, savings and loan
4-20 associations, or other similar loan originating entities to
4-21 originate loans. The corporation may act as co-originator in a
4-22 loan where the funding resources emanate from the corporation].
4-23 (d) All of the mortgage banking operations shall be
4-24 dedicated to the furtherance of facilitating affordable housing
4-25 finance primarily for the [ultimate] benefit of individuals and
4-26 families of low, [and] very low, [income] and extremely low
4-27 [families of moderate] income who, generally, are not afforded
4-28 housing finance options through conventional lending channels.
4-29 SECTION 4. Section 2306.557, Government Code, is amended to
4-30 read as follows:
4-31 Sec. 2306.557. DISTRIBUTION OF EARNINGS. Any part of
4-32 earnings remaining after payment of expenses and any establishment
4-33 of reserves by the corporation's board of directors may not inure
4-34 to any person except that the corporation shall use [deposit] these
4-35 excess earnings to further the corporation's new or existing
4-36 affordable housing initiatives [with the department to the credit
4-37 of the housing trust fund established by Section 2306.201] if the
4-38 corporation's board of directors determines that sufficient
4-39 provision has been made for the full payment of the expenses,
4-40 bonds, and other obligations of the corporation and for any
4-41 establishment of reserves by the corporation's board of directors.
4-42 SECTION 5. (a) This Act takes effect September 1, 1999.
4-43 (b) As soon as possible after the effective date of this
4-44 Act, the governor shall appoint a person to serve on the board of
4-45 directors of the Texas State Affordable Housing Corporation, as
4-46 required by Section 2306.554(a), Government Code, as amended by
4-47 this Act. The presiding officer of the board of directors of the
4-48 Texas Department of Housing and Community Affairs and the presiding
4-49 officer of the programs committee of the department's board who are
4-50 serving on the corporation's board immediately before the effective
4-51 date of this Act shall continue to serve on the corporation's board
4-52 until the date on which the person appointed by the governor
4-53 assumes membership duties on the corporation's board.
4-54 SECTION 6. The importance of this legislation and the
4-55 crowded condition of the calendars in both houses create an
4-56 emergency and an imperative public necessity that the
4-57 constitutional rule requiring bills to be read on three several
4-58 days in each house be suspended, and this rule is hereby suspended.
4-59 * * * * *