By Ellis S.B. No. 1703
76R3565 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) "Owner-builder" means a person who owns a piece of
1-13 real property, either through a contract for deed or a warranty
1-14 deed, and who undertakes to make improvements to that property.
1-15 The term does not include a person who owns or operates a
1-16 construction business.
1-17 Sec. 2306.752. INTERIM CONSTRUCTION LOAN PROGRAM. (a) To
1-18 provide for the development of affordable housing in this state,
1-19 the department shall:
1-20 (1) cooperate with construction supply companies to
1-21 provide interim construction loans for owner-builders; and
1-22 (2) provide other services that facilitate the
1-23 implementation of the program, including:
1-24 (A) contract for deed conversion assistance
2-1 under Section 2306.255; and
2-2 (B) assistance in refinancing interim
2-3 construction loans to provide private market-rate mortgages for
2-4 owner-builders who participate in the program.
2-5 (b) An interim construction loan under this program may
2-6 provide resources to:
2-7 (1) build new residential housing; or
2-8 (2) develop, renovate, or otherwise make improvements
2-9 to existing residential housing.
2-10 (c) The department may adopt rules necessary to accomplish
2-11 the purposes of this subchapter.
2-12 Sec. 2306.753. PARTICIPATION AGREEMENT. (a) Under the
2-13 program, the department shall enter into a participation agreement
2-14 with one or more construction supply companies to provide loan
2-15 guarantees from the department for interim construction loans made
2-16 by the construction supply companies to eligible owner-builders
2-17 under this subchapter.
2-18 (b) The department by rule shall establish a threshold limit
2-19 for the percentage of an interim construction loan that the
2-20 department guarantees under the program that is based on the
2-21 estimated value of the property after the improvements to the
2-22 property are completed. The department may not agree to a
2-23 guarantee for an interim builder loan issued to an owner-builder by
2-24 a participating construction supply company that exceeds that
2-25 threshold.
2-26 (c) The department may not make an agreement with a
2-27 construction supply company under the program unless the
3-1 participation agreement allows the department to annually
3-2 renegotiate the guarantee percentage for an interim construction
3-3 loan issued by the construction supply company. The department
3-4 shall renegotiate the terms of an interim construction loan
3-5 guarantee when possible to obtain a better guarantee percentage for
3-6 the state from the construction supply company.
3-7 (d) A participating construction supply company may require
3-8 an owner-builder to provide a warranty deed for the property that
3-9 is the proposed subject of the interim construction loan as
3-10 collateral for the loan.
3-11 Sec. 2306.754. OWNER-BUILDER ELIGIBILITY. (a) The
3-12 department shall establish eligibility requirements for
3-13 owner-builders to participate in the program. The eligibility
3-14 requirements must include a priority for owner-builders who are
3-15 individuals or families of low, very low, or extremely low income.
3-16 (b) The department may select nonprofit housing assistance
3-17 organizations to certify the eligibility of owner-builders to
3-18 participate in the interim construction loan program. A nonprofit
3-19 housing assistance organization selected by the department shall
3-20 use the eligibility requirements established by the department to
3-21 certify the eligibility of an owner-builder for the program.
3-22 Sec. 2306.755. CONSTRUCTION SUPPLY COMPANY DUTIES. A
3-23 construction supply company that participates in the program shall:
3-24 (1) administer the interim construction loan;
3-25 (2) provide technical assistance to the owner-builder
3-26 for improvements made to the property; and
3-27 (3) perform or assist in performing the necessary
4-1 inspections for improvements made to the property.
4-2 Sec. 2306.756. REFINANCING ASSISTANCE. (a) The department
4-3 shall assist an owner-builder who obtains an interim construction
4-4 loan under the program to refinance the loan to:
4-5 (1) pay the balance of the interim construction loan
4-6 and other debts on the property; and
4-7 (2) obtain a mortgage loan on the improved property.
4-8 (b) The department shall identify:
4-9 (1) private lenders to provide private market rate
4-10 mortgages for low-income owner-builders who obtain loans under the
4-11 program; and
4-12 (2) nonprofit housing assistance organizations and
4-13 housing assistance programs to aid owner-builders who do not
4-14 qualify for private market-rate mortgages.
4-15 Sec. 2306.757. FUNDING. (a) The department may not spend
4-16 state money to fund a loan guarantee issued under this subchapter.
4-17 (b) The department shall identify funds that are appropriate
4-18 for the program.
4-19 (c) The department may cooperate with nonprofit housing
4-20 assistance organizations to establish loan guarantee pools that may
4-21 be used to obtain loans for the purposes of this subchapter.
4-22 Sec. 2306.758. REPORTING DUTIES. The department shall:
4-23 (1) compose an annual report that evaluates the
4-24 repayment history and coinciding guarantee percentages for
4-25 guarantees issued under a program under this subchapter; and
4-26 (2) deliver a copy of the report to the governor, the
4-27 lieutenant governor, and the speaker of the house of
5-1 representatives.
5-2 SECTION 2. Subchapter K, Chapter 2306, Government Code, is
5-3 amended by adding Section 2306.255 to read as follows:
5-4 Sec. 2306.255. CONTRACT FOR DEED CONVERSION PROGRAM. (a)
5-5 In this section, "office" means the office established by the
5-6 department to promote initiatives for colonias.
5-7 (b) The office shall establish a program to guarantee loans
5-8 made by private lenders to convert a contract for deed into a
5-9 warranty deed.
5-10 (c) The office shall make agreements with private lenders
5-11 that will issue loans for contract conversions under the guarantee
5-12 of the department. The office and the lender must agree on the
5-13 criteria for issuing a deed conversion loan, including the
5-14 percentage of the guarantee to be issued by the department.
5-15 (d) The office may not make an agreement with a lender
5-16 unless the agreement allows the office to annually renegotiate the
5-17 guarantee percentage for a loan issued by the lender. The office
5-18 shall renegotiate the terms of a guarantee when possible to obtain
5-19 a better guarantee percentage for the state from the lender.
5-20 (e) The office shall establish eligibility criteria for a
5-21 holder of a contract for deed who participates in this program.
5-22 The criteria must include a priority for homeowners and owners of
5-23 residential real property who are individuals or families of low,
5-24 very low, or extremely low income.
5-25 (f) The office shall use funds allocated to the department
5-26 under the federal HOME Investment Partnerships program established
5-27 under Title II of the Cranston-Gonzalez National Affordable Housing
6-1 Act (42 U.S.C. Section 12701 et seq.) for a guarantee issued under
6-2 this section. The office may not spend state money to fund a
6-3 guarantee for a loan under the program.
6-4 (g) The office may use the services of the Texas State
6-5 Affordable Housing Corporation when necessary to accomplish the
6-6 purposes of this section.
6-7 (h) The office shall:
6-8 (1) compose an annual report that evaluates the
6-9 repayment history and coinciding guarantee percentages for
6-10 guarantees issued under this section; and
6-11 (2) deliver a copy of the report to the governor, the
6-12 lieutenant governor, and the speaker of the house of
6-13 representatives.
6-14 (i) The department may adopt rules necessary to accomplish
6-15 the purposes of this section.
6-16 SECTION 3. (a) This Act takes effect September 1, 1999.
6-17 (b) The Texas Department of Housing and Community Affairs
6-18 shall deliver the first report required by Section 2306.758,
6-19 Government Code, as added by this Act, not later than January 1,
6-20 2001.
6-21 (c) The office established by the Texas Department of
6-22 Housing and Community Affairs to promote initiatives for colonias
6-23 shall deliver the first report required by Section 2306.255(h),
6-24 Government Code, as added by this Act, not later than January 1,
6-25 2001.
6-26 SECTION 4. The importance of this legislation and the
6-27 crowded condition of the calendars in both houses create an
7-1 emergency and an imperative public necessity that the
7-2 constitutional rule requiring bills to be read on three several
7-3 days in each house be suspended, and this rule is hereby suspended.