By: Lucio S.B. No. 1731
A BILL TO BE ENTITLED
AN ACT
relating to the establishment, fiscal oversight and administration
of the Texas secure loan pilot program by the Texas Department of
Housing and Community Affairs.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 2306, Government Code, is amended by
adding Subchapter OO to read as follows:
SUBCHAPTER OO. TEXAS SECURE LOAN PILOT PROGRAM
Sec. 2306.1081. DEFINITION. In this subchapter, "program"
means the Texas secure loan pilot program.
Sec. 2306.1082. TEXAS SECURE LOAN PILOT PROGRAM. (a) The
department shall establish the Texas secure loan pilot program to
provide first lien single-family mortgage loans to individuals and
families of low income.
(b) The program may include the provision of down payment
and closing cost assistance.
Sec. 2306.1083. ADMINISTRATION OF PROGRAM; RULES. (a) The
department shall administer the program.
(b) The board shall adopt rules governing:
(1) the administration of the program, including the
origination of loans under the program;
(2) the criteria for approving another entity to
service loans originated under the program;
(3) the use of insurance on the loans and the homes
financed under the program, as considered appropriate by the board
to provide additional security for the loans;
(4) the verification of occupancy of the home by the
homebuyer as the homebuyer's principal residence; and
(5) the terms of any memorandum of understanding or
contract with another entity for processing, servicing, or
administering the loans.
(c) The department may adopt rules governing loan
modifications, including specific criteria for authorizing the
modification of loan terms for homebuyers whose income is adversely
affected by circumstances such as unemployment, a reduction of
wages or hours of employment, illness, or the death of a spouse or
other person contributing to the income of a homebuyer.
Sec. 2306.1084. ELIGIBILITY. (a) To be eligible for a
mortgage loan issued by the department under this subchapter, a
homebuyer must:
(1) earn an income, adjusted for family size, of not
more than:
(A) 80 percent of the area median income if the
homebuyer lives in a rural area; or
(B) 60 percent of the area median income if the
homebuyer lives in an urban area;
(2) intend to occupy, as the homebuyer's principal
residence, the home for which the mortgage loan is issued; and
(3) meet any additional eligibility requirements or
limitations prescribed by the department.
(b) The department may enter into memoranda of
understanding with other agencies of the state or may contract with
private entities to process, service, or administer all or a
portion of the loans issued under this subchapter.
Sec. 2306.1085. ALLOCATION OF LOANS. The department shall
issue at least 50 percent of all loans under this subchapter to
homebuyers whose incomes do not exceed 60 percent of area median
family income, adjusted for family size.
Sec. 2306.1086. LOAN TERMS; RECOVERY OF PRINCIPAL.
(a) The department shall establish reasonable interest rates for
mortgage loans under this subchapter to allow full repayment of
those loans by low-income homebuyers.
(b) The department shall recover the full amount of the
principal of a loan issued under this subchapter.
Sec. 2306.1087. MODIFICATION OF LOAN TERMS. If a
homebuyer meets the criteria adopted by the department under
Section 2306.1083(b)(6), the department or other servicer of the
loan may modify the terms of the loan by:
(1) suspending payments for a specific period;
(2) extending the term of the loan to reduce the amount
of the payments; or
(3) lowering the interest rate to reduce the amount of
the payments.
Sec. 2306.1088. INITIATION OF MODIFIED LOAN TERMS.
(a) Regardless of whether a loan payment is missed, the
modification of loan terms under Section 2306.1087 may be requested
by the homebuyer or initiated by the department or other servicer of
the loan.
(b) If a homebuyer misses a scheduled payment for a loan
under this subchapter, the department or other servicer of the loan
shall contact the homebuyer and determine the reason for the missed
payment. If the payment was missed for a reason meeting the
criteria adopted by the board under Section 2306.1083(b)(6), the
department or servicer may modify the terms of the loan under
Section 2306.1087.
Sec. 2306.1089. EDUCATION SERVICES FOR HOMEBUYERS. The
department shall provide homebuyer and homeowner education and
counseling services to persons receiving loans under this
subchapter.
Sec. 2306.1090. FUNDING. (a) The department shall ensure
that a loan issued under this subchapter is structured in a way that
complies with any requirements associated with the source of the
funds used for the loan.
(b) In addition to funds set aside for the program under
Section 1372.023 and any other available funds, including
legislative appropriations, the department may solicit and accept
gifts and grants for the purposes of this subchapter.
(c) The department may package, securitize, and sell the
loans issued under this subchapter and use the proceeds of the sale
to issue additional loans.
SECTION 2. The Texas Department of Housing and Community
Affairs shall adopt the rules required by Subchapter OO, Government
Code, as added by this Act, not later than October 1, 2013, and
shall begin issuing loans under the Texas secure loan pilot program
not later than January 1, 2013.
SECTION 3. This Act takes effect September 1, 2013.