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A BILL TO BE ENTITLED
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AN ACT
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relating to the establishment of the Texas secure loan pilot |
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program by the Texas Department of Housing and Community Affairs. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 2306, Government Code, is amended by |
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adding Subchapter NN to read as follows: |
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SUBCHAPTER NN. TEXAS SECURE LOAN PILOT PROGRAM |
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Sec. 2306.1081. DEFINITION. In this subchapter, "program" |
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means the Texas secure loan pilot program. |
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Sec. 2306.1082. TEXAS SECURE LOAN PILOT PROGRAM. (a) The |
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department shall establish the Texas secure loan pilot program to |
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provide first lien and second lien single-family mortgage loans to |
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individuals and families of low income. |
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(b) The program may include the provision of down payment |
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and closing cost assistance. |
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Sec. 2306.1083. ADMINISTRATION OF PROGRAM; RULES. (a) The |
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department shall administer the program. |
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(b) The board shall adopt rules governing: |
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(1) the administration of the program, including the |
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origination of loans under the program; |
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(2) the criteria for approving another entity to |
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service loans originated under the program; |
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(3) the use of insurance on the loans and the homes |
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financed under the program, as considered appropriate by the board |
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to provide additional security for the loans; |
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(4) the verification of occupancy of the home by the |
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homebuyer as the homebuyer's principal residence; |
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(5) the terms of any memorandum of understanding or |
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contract with another entity for processing, servicing, or |
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administering the loans; and |
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(6) criteria for authorizing the modification of loan |
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terms for homebuyers whose income is adversely affected by |
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circumstances such as unemployment, a reduction of wages or hours |
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of employment, illness, or the death of a spouse or other person |
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contributing to the income of a homebuyer. |
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Sec. 2306.1084. ELIGIBILITY. (a) To be eligible for a |
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mortgage loan issued by the department under this subchapter, a |
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homebuyer must: |
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(1) earn an income, adjusted for family size, of not |
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more than: |
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(A) 80 percent of the area median income if the |
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homebuyer lives in a rural area; or |
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(B) 60 percent of the area median income if the |
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homebuyer lives in an urban area; |
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(2) intend to occupy, as the homebuyer's principal |
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residence, the home for which the mortgage loan is issued; and |
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(3) meet any additional eligibility requirements or |
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limitations prescribed by the department. |
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(b) The department may enter into memoranda of |
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understanding with other agencies of the state or may contract with |
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private entities to process, service, or administer all or a |
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portion of the loans issued under this subchapter. |
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Sec. 2306.1085. ALLOCATION OF LOANS. The department shall |
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issue at least 50 percent of all loans under this subchapter to |
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homebuyers whose incomes do not exceed 60 percent of area median |
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family income, adjusted for family size. |
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Sec. 2306.1086. LOAN TERMS; RECOVERY OF PRINCIPAL. (a) The |
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department shall establish reasonable interest rates for first lien |
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and second lien mortgage loans under this subchapter to allow full |
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repayment of those loans by low-income homebuyers. |
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(b) The department shall recover the full amount of the |
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principal of a loan issued under this subchapter. |
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Sec. 2306.1087. MODIFICATION OF LOAN TERMS. If a homebuyer |
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meets the criteria adopted by the department under Section |
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2306.1083(b)(6), the department or other servicer of the loan may |
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modify the terms of the loan by: |
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(1) suspending payments for a specific period; |
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(2) extending the term of the loan to reduce the amount |
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of the payments; or |
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(3) lowering the interest rate to reduce the amount of |
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the payments. |
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Sec. 2306.1088. INITIATION OF MODIFIED LOAN TERMS. (a) |
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Regardless of whether a loan payment is missed, the modification of |
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loan terms under Section 2306.1087 may be requested by the |
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homebuyer or initiated by the department or other servicer of the |
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loan. |
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(b) If a homebuyer misses a scheduled payment for a loan |
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under this subchapter, the department or other servicer of the loan |
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shall contact the homebuyer and determine the reason for the missed |
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payment. If the payment was missed for a reason meeting the |
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criteria adopted by the board under Section 2306.1083(b)(6), the |
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department or servicer may modify the terms of the loan under |
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Section 2306.1087. |
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Sec. 2306.1089. EDUCATION SERVICES FOR HOMEBUYERS. The |
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department shall provide homebuyer and homeowner education and |
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counseling services to persons receiving loans under this |
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subchapter. |
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Sec. 2306.1090. FUNDING. (a) The department shall ensure |
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that a loan issued under this subchapter is structured in a way that |
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complies with any requirements associated with the source of the |
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funds used for the loan. |
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(b) In addition to funds set aside for the program under |
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Section 1372.023 and any other available funds, including |
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legislative appropriations, the department may solicit and accept |
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gifts and grants for the purposes of this subchapter. |
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(c) The department may package, securitize, and sell the |
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loans issued under this subchapter and use the proceeds of the sale |
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to issue additional loans. |
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SECTION 2. The Texas Department of Housing and Community |
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Affairs shall adopt the rules required by Subchapter NN, Government |
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Code, as added by this Act, not later than October 1, 2009, and |
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shall begin issuing loans under the Texas secure loan pilot program |
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not later than January 1, 2010. |
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SECTION 3. This Act takes effect September 1, 2009. |