HF 2279

1st Committee Engrossment - 86th Legislature (2009 - 2010) Posted on 03/19/2013 07:29pm

A bill for an act
relating to housing; creating a pilot program to stabilize market values of
residential real estate in certain areas; providing a five-year guarantee against
depreciation in value of certain properties; providing incentives to restructure
mortgage loans; authorizing rulemaking; appropriating money; proposing coding
for new law in Minnesota Statutes, chapter 462A.

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

Section 1.

new text begin [462A.37] HOME VALUES GUARANTEE PILOT PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the terms defined in
this subdivision have the meanings given.
new text end

new text begin (b) "Commissioner" means the commissioner of the Housing Finance Agency.
new text end

new text begin (c) "Pilot program areas" means Hennepin, Olmsted, Ramsey, St. Louis, and Stearns
Counties.
new text end

new text begin (d) "The program" means the home values guarantee pilot program created in this
section.
new text end

new text begin Subd. 2. new text end

new text begin Creation of program. new text end

new text begin (a) The home values guarantee pilot program is
created to provide a five-year guarantee for the state against declining property values in
certain areas of the state.
new text end

new text begin (b) The commissioner shall administer the program and has for the purposes of this
program all powers otherwise available to the commissioner. The commissioner may
contract for all or any part of the administrative and related functions, and shall pay for
any such services from the fees collected under subdivision 9, paragraph (a).
new text end

new text begin Subd. 3. new text end

new text begin Home values guarantee. new text end

new text begin (a) A purchaser of real estate may apply to the
commissioner for enrollment of the property in the program. The property must be:
new text end

new text begin (1) located in one of the pilot program areas;
new text end

new text begin (2) purchased or to be purchased between July 1, 2009, and June 30, 2011, by a
buyer who intends to occupy the property as the buyer's single-family homestead;
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new text begin (3) in a physical condition that complies with all applicable building and housing
codes, as documented in a home inspection report;
new text end

new text begin (4) suitable for residential use only and not suitable for business or commercial use,
including agriculture. This does not disqualify a property used for home-based businesses
that complies with local zoning laws;
new text end

new text begin (5) have an appraised value of no less than $75,000 nor more than $300,000; and
new text end

new text begin (6) purchased or proposed for purchase without a mortgage loan, or with a mortgage
loan made by a lender licensed to make residential mortgage loans in this state, that
includes an interest rate and monthly payment that are fixed for the full term of the loan
and a downpayment of at least 3.5 percent, by a borrower who meets mortgage loan
underwriting criteria required for loans guaranteed by the Federal Housing Administration,
but the borrower need not obtain a loan guarantee from that source. The requirement that
the monthly mortgage payment be fixed does not apply to charges for escrowed property
taxes, homeowner's insurance, flood zone status monitoring, or similar charges required by
the mortgage lenders that may vary over the course of the loan. The downpayment must
not have come from a government program or from a junior mortgage loan on the property.
new text end

new text begin (b) The commissioner shall issue to the new owner of a property that has declined
in value since it was purchased, and is property that is approved for enrollment in the
program a written guarantee on behalf of the state that the state will buy the property
from the owner after five years from the date of purchase. In exchange for payment from
the state equal to the downpayment made by the owner when the owner purchased the
property and principal payments on the property made by the owner. In exchange for
the payment, the owner must grant to the state a limited warranty deed to the property,
ensuring that the property is free of any encumbrances such as mechanic's liens, second
mortgages, or tax liens, and an inspection report that documents that the property is in
substantially the same condition as the original inspection report under subdivision 3,
paragraph (a), clause (3), taking into consideration normal wear and tear on the property.
new text end

new text begin (c) Upon receipt of the limited warranty deed from the owner, the commissioner
shall contact the mortgage lender or other lienor who has the most senior lien on the
property and offer to provide the lienor with a limited warranty deed to the property from
the state if the lienor agrees to accept it in full satisfaction of the amount secured by
the mortgage or other lien.
new text end

new text begin (d) The total dollar amount of guarantees issued must not exceed $25,000,000.
new text end

new text begin Subd. 4. new text end

new text begin Effect of resale or other transfer. new text end

new text begin If the purchaser transfers the fee title
to the property prior to the end of the five-year guarantee period, the guarantee expires
and is not assumable by the new owner. For purposes of this subdivision, "transfer"
includes but is not limited to a voluntary or involuntary transfer through eminent domain,
foreclosure, deed, contract for deed, probate, a transfer on death deed, a deed to a trust,
or other transfer, other than a transfer between spouses.
new text end

new text begin Subd. 5. new text end

new text begin Effect of use as other than single-family principal residence. new text end

new text begin If
the property is no longer homestead and owner-occupied as the owner's single-family
principal residence at any time, the guarantee automatically expires.
new text end

new text begin Subd. 6. new text end

new text begin Procedure for claim on guarantee. new text end

new text begin (a) If an owner of a property that was
issued a guarantee under this section wishes to make a claim under the guarantee, the
owner shall submit a claim to the commissioner on a form provided by the commissioner.
new text end

new text begin (b) No claim may be made later than 120 days after the end of the five-year
guarantee period.
new text end

new text begin (c) If the commissioner determines that the claim is payable under the terms of the
guarantee, the commissioner shall pay the claim to the owner to whom the guarantee was
made, or as otherwise provided for a spouse of the original owner under subdivision 5,
from the appropriation made under subdivision 8.
new text end

new text begin Subd. 7. new text end

new text begin Pilot project features. new text end

new text begin (a) The commissioner shall report to the legislature
in writing on the status and effects of the pilot project and on recommendations for
changes or clarifications, if any, no later than January 15 of each year of the pilot project's
existence and of each of the two years following its existence.
new text end

new text begin (b) Each year's report shall assess the extent to which the program is stabilizing home
values and influencing lenders and other holders of mortgage loans to restructure existing
loans to reduce the likelihood of foreclosures and short sales in the pilot project areas.
new text end

new text begin (c) The pilot project ends 120 days after the last guarantee under the program has
expired or after the last guarantee claim is resolved, whichever is later.
new text end

new text begin Subd. 8. new text end

new text begin Statutory appropriation. new text end

new text begin The amounts necessary to make payments
required by guarantees issued under this section are appropriated from the general fund to
the commissioner of the Housing Finance Agency for fiscal years 2015, 2016, and 2017,
for the purposes of payments required under this section.
new text end

new text begin Subd. 9. new text end

new text begin Application fee; creation of account; appropriation. new text end

new text begin (a) The
commissioner shall charge a property owner applying for the program an application and
administration fee in the amount of $....... at the time of application. The commissioner
shall not accept an application unless the fee is paid.
new text end

new text begin (b) The home values guarantee pilot program account is created in the special
revenue fund.
new text end

new text begin (c) The commissioner shall deposit fees received under paragraph (a) into the
account created in paragraph (b)
new text end

new text begin (d) Amounts in the account created under paragraph (b) are appropriated from
that account for fiscal years 2010 and 2011 to the commissioner of the Housing Finance
Agency for purposes of performing the commissioner's duties in administering this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end