By: Ellis S.B. No. 1703
A BILL TO BE ENTITLED
AN ACT
1-1 relating to loan assistance for low-income individuals and
1-2 families.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Chapter 2306, Government Code, is amended by
1-5 adding Subchapter FF to read as follows:
1-6 SUBCHAPTER FF. INTERIM CONSTRUCTION LOAN PROGRAM
1-7 Sec. 2306.751. DEFINITIONS. In this subchapter:
1-8 (1) "Construction supply company" means a retail or
1-9 wholesale entity that sells construction equipment and supplies for
1-10 home construction and home improvements.
1-11 (2) "Nonprofit housing assistance organization" means
1-12 a nonprofit entity that aids low-income persons in acquiring
1-13 affordable housing and includes an entity that provides
1-14 construction equipment and supplies or technical assistance for
1-15 home construction or home improvements.
1-16 (3) "Owner-builder" means a person who owns a piece of
1-17 real property, either through a contract for deed or a warranty
1-18 deed, and who undertakes to make improvements to that property.
1-19 The term does not include a person who owns or operates a
1-20 construction business.
1-21 Sec. 2306.752. INTERIM CONSTRUCTION LOAN PROGRAM. (a) To
1-22 provide for the development of affordable housing in this state,
1-23 the department shall establish a program in which the department:
1-24 (1) cooperates with construction supply companies or
2-1 nonprofit housing assistance organizations to provide interim
2-2 construction loans for owner-builders; and
2-3 (2) provides other services that facilitate the
2-4 implementation of the program, including assistance in refinancing
2-5 interim construction loans to provide private market-rate mortgages
2-6 for owner-builders who participate in the program.
2-7 (b) An interim construction loan under this program may
2-8 provide resources to:
2-9 (1) build new residential housing; or
2-10 (2) develop, renovate, or otherwise make improvements
2-11 to existing residential housing.
2-12 (c) The department may adopt rules necessary to accomplish
2-13 the purposes of this subchapter.
2-14 Sec. 2306.753. PARTICIPATION AGREEMENT. (a) Under the
2-15 program, the department shall enter into a participation agreement
2-16 with one or more construction supply companies or nonprofit housing
2-17 assistance organizations to provide loan guarantees from the
2-18 department for interim construction loans made by the company or
2-19 organization to eligible owner-builders under this subchapter.
2-20 (b) The department by rule shall establish a limit for the
2-21 percentage of an interim construction loan that the department
2-22 guarantees under the program that is based on the estimated value
2-23 of the property after the improvements to the property are
2-24 completed. The department may not agree to a guarantee for an
2-25 interim builder loan issued to an owner-builder by a participating
2-26 construction supply company or nonprofit housing assistance
3-1 organization that exceeds that limit.
3-2 (c) The department may not make an agreement with a
3-3 construction supply company or nonprofit housing assistance
3-4 organization under the program unless the participation agreement
3-5 allows the department to annually renegotiate the guarantee
3-6 percentage for an interim construction loan issued by the
3-7 construction supply company or nonprofit housing assistance
3-8 organization. The department shall renegotiate the terms of an
3-9 interim construction loan guarantee when possible to obtain a
3-10 better guarantee percentage for the state from the construction
3-11 supply company or nonprofit housing assistance organization.
3-12 (d) A participating construction supply company or nonprofit
3-13 housing assistance organization may require an owner-builder to
3-14 provide a warranty deed for the property that is the proposed
3-15 subject of the interim construction loan as collateral for the
3-16 loan.
3-17 Sec. 2306.754. OWNER-BUILDER ELIGIBILITY. (a) The
3-18 department shall establish eligibility requirements for
3-19 owner-builders to participate in the program. The eligibility
3-20 requirements must include a priority for owner-builders who are
3-21 individuals or families of low, very low, or extremely low income.
3-22 (b) The department may select nonprofit housing assistance
3-23 organizations to certify the eligibility of owner-builders to
3-24 participate in the interim construction loan program. A nonprofit
3-25 housing assistance organization selected by the department shall
3-26 use the eligibility requirements established by the department to
4-1 certify the eligibility of an owner-builder for the program.
4-2 Sec. 2306.755. PARTICIPANT DUTIES. A construction supply
4-3 company or nonprofit housing assistance organization that
4-4 participates in the program shall:
4-5 (1) administer the interim construction loan;
4-6 (2) provide technical assistance to the owner-builder
4-7 for improvements made to the property; and
4-8 (3) perform or assist in performing the necessary
4-9 inspections for improvements made to the property.
4-10 Sec. 2306.756. REFINANCING ASSISTANCE. (a) The department
4-11 shall assist an owner-builder who obtains an interim construction
4-12 loan under the program to refinance the loan to:
4-13 (1) pay the balance of the interim construction loan
4-14 and other debts on the property; and
4-15 (2) obtain a mortgage loan on the improved property.
4-16 (b) The department shall identify:
4-17 (1) private lenders to provide private market-rate
4-18 mortgages for low-income owner-builders who obtain loans under the
4-19 program; and
4-20 (2) nonprofit housing assistance organizations and
4-21 housing assistance programs to aid owner-builders who do not
4-22 qualify for private market-rate mortgages.
4-23 Sec. 2306.757. FUNDING. (a) The department may not spend
4-24 state money to fund a loan guarantee issued under this subchapter.
4-25 (b) The department shall identify funds that are appropriate
4-26 for the program.
5-1 (c) The department may cooperate with nonprofit housing
5-2 assistance organizations to establish loan guarantee pools that may
5-3 be used to obtain loans for the purposes of this subchapter.
5-4 Sec. 2306.758. REPORTING DUTIES. The department shall:
5-5 (1) compose an annual report that evaluates the
5-6 repayment history and coinciding guarantee percentages for
5-7 guarantees issued under a program under this subchapter; and
5-8 (2) deliver a copy of the report to the governor, the
5-9 lieutenant governor, and the speaker of the house of
5-10 representatives.
5-11 SECTION 2. (a) This Act takes effect September 1, 1999.
5-12 (b) The Texas Department of Housing and Community Affairs
5-13 shall deliver the first report required by Section 2306.758,
5-14 Government Code, as added by this Act, not later than January 1,
5-15 2001.
5-16 SECTION 3. The importance of this legislation and the
5-17 crowded condition of the calendars in both houses create an
5-18 emergency and an imperative public necessity that the
5-19 constitutional rule requiring bills to be read on three several
5-20 days in each house be suspended, and this rule is hereby suspended.