81R6800 JAM-F

By: Menendez H.B. No. 3430

A BILL TO BE ENTITLED

AN ACT

relating to the operation and administration of the owner-builder loan program.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 2306.753, Government Code, is amended by amending Subsections (a) and (b) and adding Subsection (e) to read as follows:

(a) Subject to this section, the department shall establish eligibility requirements for an owner-builder to receive a loan under this subchapter. The eligibility requirements must establish a priority for loans made under this subchapter to owner-builders with an annual income that does not exceed 30 percent, as determined by the department, of the greater of the state or local median family income, when combined with the income of any person who resides with the owner-builder [, as determined under Subsection (b)(1), of less than $17,500].

(b) To be eligible for a loan under this subchapter, an owner-builder:

(1) may not have an annual income that exceeds 60 percent, as determined by the department, of the greater of the state or local median family income, when combined with the income of any person who resides with the owner-builder;

(2) must have resided in this state for the preceding six months;

(3) must have successfully completed an owner-builder education class under Section 2306.756; and

(4) must agree to provide, personally or through the noncontract labor of family members related within the third degree of consanguinity or second degree of affinity, as determined under Subchapter B, Chapter 573:

(A) [provide] at least 60 percent of the labor necessary to build the proposed housing by working through a state-certified owner-builder housing program; or

(B) [provide] an amount of labor equivalent to the amount required under Paragraph (A) in connection with building housing for others through a state-certified nonprofit owner-builder housing program.

(e) If after the first 210 days of availability in the program year the funds set aside under Subsection (d) have not been reserved for that purpose, the funds may be made available to other eligible applicants under this subchapter.

SECTION 2. Section 2306.754, Government Code, is amended by amending Subsections (a), (b), and (c) and adding Subsection (c-1) to read as follows:

(a) The department may establish the minimum amount of a loan under this subchapter, but a loan may not exceed $45,000 [$30,000].

(b) If it is not possible for an owner-builder to purchase necessary real property and build adequate housing for $45,000 [$30,000], the owner-builder must obtain the amount necessary that exceeds $45,000 [$30,000] from one or more local governmental entities, nonprofit organizations, or private lenders. The department may not provide directly or indirectly any part of the additional amount permitted by this subsection. The total amount of loans made by the department and other entities to an owner-builder under this subchapter, excluding the amounts of any deferred forgivable loans made by a party other than the department, may not exceed $90,000 [$60,000].

(c) A loan made by the department under this subchapter:

(1) may not exceed a term of 30 years;

(2) may bear interest at a fixed rate of not more than three percent or bear interest in the following manner:

(A) no interest for the first two years of the loan;

(B) beginning with the second anniversary of the date the loan was made, interest at the rate of one percent a year;

(C) beginning on the third anniversary of the date the loan was made and ending on the sixth anniversary of the date the loan was made, interest at a rate that is one percent greater than the rate borne in the preceding year; and

(D) beginning on the sixth anniversary of the date the loan was made and continuing through the remainder of the loan term, interest at the rate of five percent; and

(3) must [may] be secured by a lien on the real property.

(c-1) A department lien under Subsection (c)(3) may be [, including a lien that is] subordinate to a lien that secures a loan made by another party under Subsection (b) only if the original principle amount of the loan made under Subsection (b) exceeds 55 percent of the total loan amount, excluding the amounts of any deferred forgivable loans made by the other party [and that is greater than the department's lien].

SECTION 3. Section 2306.758(a), Government Code, is amended to read as follows:

(a) The department may [shall] solicit gifts and grants to make loans under this subchapter.

SECTION 4. The changes in law made by this Act apply only to a loan application submitted to the Texas Department of Housing and Community Affairs on or after the effective date of this Act. A loan application submitted to the department before the effective date of this Act is governed by the law in effect on the date the application was submitted, and the former law is continued in effect for that purpose.

SECTION 5. This Act takes effect September 1, 2009.