AN ACT
 1-1     relating to a loan guarantee to convert a contract for deed to a
 1-2     warranty deed.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Subchapter K, Chapter 2306, Government Code, is
 1-5     amended by adding Section 2306.255 to read as follows:
 1-6           Sec. 2306.255.  CONTRACT FOR DEED CONVERSION PROGRAM.
 1-7     (a)  In this section, "office" means the office established by the
 1-8     department to promote initiatives for colonias.
 1-9           (b)  The office shall establish a program to guarantee loans
1-10     made by private lenders to convert a contract for deed into a
1-11     warranty deed.
1-12           (c)  The office shall make agreements with private lenders
1-13     that will issue loans for contract conversions under the guarantee
1-14     of the department.  The office and the lender must agree on the
1-15     criteria for issuing a deed conversion loan, including the
1-16     percentage of the guarantee to be issued by the department.
1-17           (d)  The office may not make an agreement with a lender
1-18     unless the agreement allows the office to annually renegotiate the
1-19     guarantee percentage for a loan issued by the lender.  The office
1-20     shall renegotiate the terms of a guarantee when possible to obtain
1-21     a better guarantee percentage for the state from the lender.
1-22           (e)  The office may establish eligibility criteria for a
1-23     holder of a contract for deed who participates in this program.
1-24     The criteria must include a priority for homeowners and owners of
 2-1     residential real property who are individuals or families of low,
 2-2     very low, or extremely low income.
 2-3           (f)  The office shall use funds allocated to the department
 2-4     under the federal HOME Investment Partnerships program established
 2-5     under Title II of the Cranston-Gonzalez National Affordable Housing
 2-6     Act (42 U.S.C. Section 12701 et seq.) for a guarantee issued under
 2-7     this section.
 2-8           (g)  The office may use the services of the Texas State
 2-9     Affordable Housing Corporation when necessary to accomplish the
2-10     purposes of this section.
2-11           (h)  The office shall:
2-12                 (1)  compose an annual report that evaluates the
2-13     repayment history and coinciding guarantee percentages for
2-14     guarantees issued under this section; and
2-15                 (2)  deliver a copy of the report to the governor, the
2-16     lieutenant governor, and the speaker of the house of
2-17     representatives.
2-18           (i)  The department may adopt rules necessary to accomplish
2-19     the purposes of this section.
2-20           SECTION 2.  (a)  This Act takes effect September 1, 1999.
2-21           (b)  The office established by the Texas Department of
2-22     Housing and Community Affairs to promote initiatives for colonias
2-23     shall deliver the first report required by Subsection (h), Section
2-24     2306.255, Government Code, as added by this Act, not later than
2-25     January 1, 2001.
2-26           SECTION 3.  The importance of this legislation and the
 3-1     crowded condition of the calendars in both houses create an
 3-2     emergency and an imperative public necessity that the
 3-3     constitutional rule requiring bills to be read on three several
 3-4     days in each house be suspended, and this rule is hereby suspended.
         _______________________________     _______________________________
             President of the Senate              Speaker of the House
               I hereby certify that S.B. No. 867 passed the Senate on
         May 4, 1999, by a viva-voce vote.
                                             _______________________________
                                                 Secretary of the Senate
               I hereby certify that S.B. No. 867 passed the House on
         May 26, 1999, by a non-record vote.
                                             _______________________________
                                                 Chief Clerk of the House
         Approved:
         _______________________________
                     Date
         _______________________________
                   Governor