By Cuellar H.B. No. 3315
76R10645 DB-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to loan assistance for low-income individuals and
1-3 families.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 2306, Government Code, is amended by
1-6 adding Subchapter FF to read as follows:
1-7 SUBCHAPTER FF. INTERIM CONSTRUCTION LOAN PROGRAM
1-8 Sec. 2306.751. DEFINITIONS. In this subchapter:
1-9 (1) "Construction supply company" means a retail or
1-10 wholesale entity that sells construction equipment and supplies for
1-11 home construction and home improvements.
1-12 (2) "Nonprofit housing assistance organization" means
1-13 a nonprofit entity that aids low-income persons in acquiring
1-14 affordable housing and includes an entity that provides
1-15 construction equipment and supplies or technical assistance for
1-16 home construction or home improvements.
1-17 (3) "Owner-builder" means a person who owns a piece of
1-18 real property, either through a contract for deed or a warranty
1-19 deed, and who undertakes to make improvements to that property.
1-20 The term does not include a person who owns or operates a
1-21 construction business.
1-22 Sec. 2306.752. INTERIM CONSTRUCTION LOAN PROGRAM. (a) To
1-23 provide for the development of affordable housing in this state,
1-24 the department shall establish a program in which the department:
2-1 (1) cooperates with construction supply companies or
2-2 nonprofit housing assistance organizations to provide interim
2-3 construction loans for owner-builders; and
2-4 (2) provides other services that facilitate the
2-5 implementation of the program, including:
2-6 (A) contract for deed conversion assistance
2-7 under Section 2306.255; and
2-8 (B) assistance in refinancing interim
2-9 construction loans to provide private market-rate mortgages for
2-10 owner-builders who participate in the program.
2-11 (b) An interim construction loan under this program may
2-12 provide resources to:
2-13 (1) build new residential housing; or
2-14 (2) develop, renovate, or otherwise make improvements
2-15 to existing residential housing.
2-16 (c) The department may adopt rules necessary to accomplish
2-17 the purposes of this subchapter.
2-18 Sec. 2306.753. PARTICIPATION AGREEMENT. (a) Under the
2-19 program, the department shall enter into a participation agreement
2-20 with one or more construction supply companies or nonprofit housing
2-21 assistance organizations to provide loan guarantees from the
2-22 department for interim construction loans made by the company or
2-23 organization to eligible owner-builders under this subchapter.
2-24 (b) The department by rule shall establish a limit for the
2-25 percentage of an interim construction loan that the department
2-26 guarantees under the program that is based on the estimated value
2-27 of the property after the improvements to the property are
3-1 completed. The department may not agree to a guarantee for an
3-2 interim builder loan issued to an owner-builder by a participating
3-3 construction supply company or nonprofit housing assistance
3-4 organization that exceeds that limit.
3-5 (c) The department may not make an agreement with a
3-6 construction supply company or nonprofit housing assistance
3-7 organization under the program unless the participation agreement
3-8 allows the department to annually renegotiate the guarantee
3-9 percentage for an interim construction loan issued by the
3-10 construction supply company or nonprofit housing assistance
3-11 organization. The department shall renegotiate the terms of an
3-12 interim construction loan guarantee when possible to obtain a
3-13 better guarantee percentage for the state from the construction
3-14 supply company or nonprofit housing assistance organization.
3-15 (d) A participating construction supply company or nonprofit
3-16 housing assistance organization may require an owner-builder to
3-17 provide a warranty deed for the property that is the proposed
3-18 subject of the interim construction loan as collateral for the
3-19 loan.
3-20 Sec. 2306.754. OWNER-BUILDER ELIGIBILITY. (a) The
3-21 department shall establish eligibility requirements for
3-22 owner-builders to participate in the program. The eligibility
3-23 requirements must include a priority for owner-builders who are
3-24 individuals or families of low, very low, or extremely low income.
3-25 (b) The department may select nonprofit housing assistance
3-26 organizations to certify the eligibility of owner-builders to
3-27 participate in the interim construction loan program. A nonprofit
4-1 housing assistance organization selected by the department shall
4-2 use the eligibility requirements established by the department to
4-3 certify the eligibility of an owner-builder for the program.
4-4 Sec. 2306.755. PARTICIPANT DUTIES. A construction supply
4-5 company or nonprofit housing assistance organization that
4-6 participates in the program shall:
4-7 (1) administer the interim construction loan;
4-8 (2) provide technical assistance to the owner-builder
4-9 for improvements made to the property; and
4-10 (3) perform or assist in performing the necessary
4-11 inspections for improvements made to the property.
4-12 Sec. 2306.756. REFINANCING ASSISTANCE. (a) The department
4-13 shall assist an owner-builder who obtains an interim construction
4-14 loan under the program to refinance the loan to:
4-15 (1) pay the balance of the interim construction loan
4-16 and other debts on the property; and
4-17 (2) obtain a mortgage loan on the improved property.
4-18 (b) The department shall identify:
4-19 (1) private lenders to provide private market-rate
4-20 mortgages for low-income owner-builders who obtain loans under the
4-21 program; and
4-22 (2) nonprofit housing assistance organizations and
4-23 housing assistance programs to aid owner-builders who do not
4-24 qualify for private market-rate mortgages.
4-25 Sec. 2306.757. FUNDING. (a) The department may not spend
4-26 state money to fund a loan guarantee issued under this subchapter.
4-27 (b) The department shall identify funds that are appropriate
5-1 for the program.
5-2 (c) The department may cooperate with nonprofit housing
5-3 assistance organizations to establish loan guarantee pools that may
5-4 be used to obtain loans for the purposes of this subchapter.
5-5 Sec. 2306.758. REPORTING DUTIES. The department shall:
5-6 (1) compose an annual report that evaluates the
5-7 repayment history and coinciding guarantee percentages for
5-8 guarantees issued under a program under this subchapter; and
5-9 (2) deliver a copy of the report to the governor, the
5-10 lieutenant governor, and the speaker of the house of
5-11 representatives.
5-12 SECTION 2. Subchapter K, Chapter 2306, Government Code, is
5-13 amended by adding Section 2306.255 to read as follows:
5-14 Sec. 2306.255. CONTRACT FOR DEED CONVERSION PROGRAM. (a)
5-15 In this section, "office" means the office established by the
5-16 department to promote initiatives for colonias.
5-17 (b) The office shall establish a program to guarantee loans
5-18 made by private lenders to convert a contract for deed into a
5-19 warranty deed.
5-20 (c) The office shall make agreements with private lenders
5-21 that will issue loans for contract conversions under the guarantee
5-22 of the department. The office and the lender must agree on the
5-23 criteria for issuing a deed conversion loan, including the
5-24 percentage of the guarantee to be issued by the department.
5-25 (d) The office may not make an agreement with a lender
5-26 unless the agreement allows the office to annually renegotiate the
5-27 guarantee percentage for a loan issued by the lender. The office
6-1 shall renegotiate the terms of a guarantee when possible to obtain
6-2 a better guarantee percentage for the state from the lender.
6-3 (e) The office shall establish eligibility criteria for a
6-4 holder of a contract for deed who participates in this program.
6-5 The criteria must include a priority for homeowners and owners of
6-6 residential real property who are individuals or families of low,
6-7 very low, or extremely low income.
6-8 (f) The office shall use funds allocated to the department
6-9 under the federal HOME Investment Partnerships program established
6-10 under Title II of the Cranston-Gonzalez National Affordable Housing
6-11 Act (42 U.S.C. Section 12701 et seq.) for a guarantee issued under
6-12 this section.
6-13 (g) The office may use the services of the Texas State
6-14 Affordable Housing Corporation when necessary to accomplish the
6-15 purposes of this section.
6-16 (h) The office shall:
6-17 (1) compose an annual report that evaluates the
6-18 repayment history and coinciding guarantee percentages for
6-19 guarantees issued under this section; and
6-20 (2) deliver a copy of the report to the governor, the
6-21 lieutenant governor, and the speaker of the house of
6-22 representatives.
6-23 (i) The department may adopt rules necessary to accomplish
6-24 the purposes of this section.
6-25 SECTION 3. (a) This Act takes effect September 1, 1999.
6-26 (b) The Texas Department of Housing and Community Affairs
6-27 shall deliver the first report required by Section 2306.758,
7-1 Government Code, as added by this Act, not later than January 1,
7-2 2001.
7-3 (c) The office established by the Texas Department of
7-4 Housing and Community Affairs to promote initiatives for colonias
7-5 shall deliver the first report required by Section 2306.255(h),
7-6 Government Code, as added by this Act, not later than January 1,
7-7 2001.
7-8 SECTION 4. The importance of this legislation and the
7-9 crowded condition of the calendars in both houses create an
7-10 emergency and an imperative public necessity that the
7-11 constitutional rule requiring bills to be read on three several
7-12 days in each house be suspended, and this rule is hereby suspended.