AN ACT
1-1 relating to housing loans to low-income families.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Chapter 2306, Government Code, is amended by
1-4 adding Subchapter FF to read as follows:
1-5 SUBCHAPTER FF. OWNER-BUILDER LOAN PROGRAM
1-6 Sec. 2306.751. DEFINITION. In this subchapter,
1-7 "owner-builder" means a person, other than a person who owns or
1-8 operates a construction business:
1-9 (1) who:
1-10 (A) owns or purchases a piece of real property
1-11 through a warranty deed or a warranty deed and deed of trust; or
1-12 (B) is purchasing a piece of real property under
1-13 a contract for deed entered into before January 1, 1999; and
1-14 (2) who undertakes to make improvements to that
1-15 property.
1-16 Sec. 2306.752. OWNER-BUILDER LOAN PROGRAM. (a) To provide
1-17 for the development of affordable housing in this state, the
1-18 department, through the colonia self-help centers established under
1-19 Subchapter Z or a nonprofit organization certified by the
1-20 department as a nonprofit owner-builder housing program, shall make
1-21 loans for owner-builders to enable them to:
1-22 (1) purchase or refinance real property on which to
1-23 build new residential housing;
1-24 (2) build new residential housing; or
2-1 (3) improve existing residential housing.
2-2 (b) The department may adopt rules necessary to accomplish
2-3 the purposes of this subchapter.
2-4 Sec. 2306.753. OWNER-BUILDER ELIGIBILITY. (a) Subject to
2-5 this section, the department shall establish eligibility
2-6 requirements for an owner-builder to receive a loan under this
2-7 subchapter. The eligibility requirements must establish a priority
2-8 for loans made under this subchapter to owner-builders with an
2-9 annual income, as determined under Subsection (b)(2), of less than
2-10 $17,500.
2-11 (b) To be eligible for a loan under this subchapter, an
2-12 owner-builder:
2-13 (1) must reside with at least two other persons
2-14 related to the owner-builder in the first degree by consanguinity
2-15 or affinity, as determined under Subchapter B, Chapter 573;
2-16 (2) may not have an annual income that exceeds 60
2-17 percent, as determined by the department, of the greater of the
2-18 state or local median family income, when combined with the income
2-19 of any person who resides with the owner-builder;
2-20 (3) must have resided in this state for the preceding
2-21 six months;
2-22 (4) must have successfully completed an owner-builder
2-23 education class under Section 2306.756; and
2-24 (5) must agree to:
2-25 (A) provide at least 60 percent of the labor
2-26 necessary to build the proposed housing by working through a
3-1 state-certified owner-builder housing program; or
3-2 (B) provide an amount of labor equivalent to the
3-3 amount required under Paragraph (A) in connection with building
3-4 housing for others through a state-certified nonprofit
3-5 owner-builder housing program.
3-6 (c) The department may select nonprofit owner-builder
3-7 housing programs to certify the eligibility of owner-builders to
3-8 receive a loan under this subchapter. A nonprofit housing
3-9 assistance organization selected by the department shall use the
3-10 eligibility requirements established by the department to certify
3-11 the eligibility of an owner-builder for the program.
3-12 (d) At least two-thirds of the dollar amount of loans made
3-13 under this subchapter in each fiscal year must be made to borrowers
3-14 whose property is located in a county that is eligible to receive
3-15 financial assistance under Subchapter K, Chapter 17, Water Code.
3-16 Sec. 2306.754. AMOUNT OF LOAN; LOAN TERMS. (a) The
3-17 department may establish the minimum amount of a loan under this
3-18 subchapter, but a loan may not exceed $25,000.
3-19 (b) If it is not possible for an owner-builder to purchase
3-20 necessary real property and build adequate housing for $25,000, the
3-21 owner-builder must obtain the amount necessary that exceeds $25,000
3-22 from one or more local governmental entities, nonprofit
3-23 organizations, or private lenders. The total amount of loans made
3-24 by the department and other entities to an owner-builder under this
3-25 subchapter may not exceed $60,000.
3-26 (c) A loan made by the department under this subchapter:
4-1 (1) may not exceed a term of 30 years;
4-2 (2) may bear interest at a fixed rate of not more than
4-3 three percent or bear interest in the following manner:
4-4 (A) no interest for the first two years of the
4-5 loan;
4-6 (B) beginning with the second anniversary of the
4-7 date the loan was made, interest at the rate of one percent a year;
4-8 (C) beginning on the third anniversary of the
4-9 date the loan was made and ending on the sixth anniversary of the
4-10 date the loan was made, interest at a rate that is one percent
4-11 greater than the rate borne in the preceding year; and
4-12 (D) beginning on the sixth anniversary of the
4-13 date the loan was made and continuing through the remainder of the
4-14 loan term, interest at the rate of five percent; and
4-15 (3) may be secured by a lien on the real property,
4-16 including a lien that is subordinate to a lien that secures a loan
4-17 made under Subsection (b) and that is greater than the department's
4-18 lien.
4-19 (d) If an owner-builder is purchasing real property under a
4-20 contract for deed, the department may not disburse any portion of a
4-21 loan made under this subchapter until the owner-builder:
4-22 (1) fully completes the owner-builder's obligation
4-23 under the contract and receives a deed to the property; or
4-24 (2) refinances the owner-builder's obligation under
4-25 the contract and converts the obligation to a note secured by a
4-26 deed of trust.
5-1 Sec. 2306.755. NONPROFIT OWNER-BUILDER HOUSING PROGRAMS.
5-2 The department may certify nonprofit owner-builder housing programs
5-3 to:
5-4 (1) qualify potential owner-builders for loans under
5-5 this subchapter;
5-6 (2) provide owner-builder education classes under
5-7 Section 2306.756;
5-8 (3) assist owner-builders in building housing; and
5-9 (4) administer loans made by the department under this
5-10 subchapter.
5-11 Sec. 2306.756. OWNER-BUILDER EDUCATION CLASSES. (a) A
5-12 state-certified nonprofit owner-builder housing program shall offer
5-13 owner-builder education classes to potential owner-builders. A
5-14 class under this section must provide information on:
5-15 (1) the financial responsibilities of an owner-builder
5-16 under this subchapter, including the consequences of an
5-17 owner-builder's failure to meet those responsibilities;
5-18 (2) the building of housing by owner-builders;
5-19 (3) resources for low-cost building materials
5-20 available to owner-builders; and
5-21 (4) resources for building assistance available to
5-22 owner-builders.
5-23 (b) A nonprofit owner-builder housing program may charge a
5-24 potential owner-builder who enrolls in a class under this section a
5-25 reasonable fee not to exceed $50 to offset the program's costs in
5-26 providing the class.
6-1 Sec. 2306.757. LOAN PRIORITY FOR WAIVER OF LOCAL GOVERNMENT
6-2 FEES. In making loans under this subchapter, the department shall
6-3 give priority to loans to owner-builders who will reside in
6-4 counties or municipalities that agree in writing to waive capital
6-5 recovery fees, building permit fees, inspection fees, or other fees
6-6 related to the building of the housing to be built with the loan
6-7 proceeds.
6-8 Sec. 2306.758. FUNDING. (a) The department shall solicit
6-9 gifts and grants to make loans under this subchapter.
6-10 (b) The department may also make loans under this subchapter
6-11 from:
6-12 (1) available funds in the housing trust fund
6-13 established under Section 2306.201;
6-14 (2) federal block grants that may be used for the
6-15 purposes of this subchapter; and
6-16 (3) amounts received by the department in repayment of
6-17 loans made under this subchapter.
6-18 Sec. 2306.759. REPORTING DUTIES. The department shall:
6-19 (1) prepare a report that evaluates the repayment
6-20 history of owner-builders who receive loans under this subchapter,
6-21 including for each owner-builder:
6-22 (A) the owner-builder's income;
6-23 (B) the date on which the owner-builder
6-24 completed building or improving the residential housing for which
6-25 the loan was made;
6-26 (C) the county in which the residential housing
7-1 is located;
7-2 (D) the identity of the owner-builder housing
7-3 program through which the housing was constructed; and
7-4 (E) a description of the type of construction or
7-5 improvement made; and
7-6 (2) deliver a copy of the report to the governor, the
7-7 lieutenant governor, and the speaker of the house of
7-8 representatives not later than November 15, 2000.
7-9 Sec. 2306.760. EXPIRATION. This subchapter expires
7-10 September 1, 2005.
7-11 SECTION 2. For the state fiscal biennium ending August 31,
7-12 2001, the Texas Department of Housing and Community Affairs shall
7-13 use not more than $2.8 million from funds allocated to the housing
7-14 trust fund established under Section 2306.201, Government Code, and
7-15 not less than $2.8 million from any other source available to the
7-16 department to make loans under Subchapter FF, Chapter 2306,
7-17 Government Code, as added by this Act.
7-18 SECTION 3. The office of the secretary of state shall assist
7-19 the Texas Department of Housing and Community Affairs in
7-20 administering the owner-builder loan program under Subchapter FF,
7-21 Chapter 2306, Government Code, as added by this Act, until August
7-22 31, 2000. Beginning on September 1, 2000, the Texas Department of
7-23 Housing and Community Affairs shall administer the owner-builder
7-24 loan program.
7-25 SECTION 4. The importance of this legislation and the
7-26 crowded condition of the calendars in both houses create an
8-1 emergency and an imperative public necessity that the
8-2 constitutional rule requiring bills to be read on three several
8-3 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. 1287 passed the Senate on
May 4, 1999, by a viva-voce vote; and that the Senate concurred in
House amendment on May 28, 1999, by a viva-voce vote.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1287 passed the House, with
amendment, on May 25, 1999, by a non-record vote.
_______________________________
Chief Clerk of the House
Approved:
_______________________________
Date
_______________________________
Governor