76R10645 DB-D By Cuellar H.B. No. 3315 Substitute the following for H.B. No. 3315: By Najera C.S.H.B. No. 3315 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.