HF 999

Introduction - 94th Legislature (2025 - 2026)

Posted on 03/12/2025 12:23 p.m.

A bill for an act
relating to housing; modifying the community-based first-generation homebuyers
assistance program; appropriating money; amending Laws 2023, chapter 37, article
1, section 2, subdivision 20; article 2, section 9.

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

Section 1.

Laws 2023, chapter 37, article 1, section 2, subdivision 20, is amended to read:

Subd. 20. Community-Based First-Generation Homebuyers Down Payment Assistance

100,000,000

-0-

This appropriation is for a grant to Midwest
Minnesota Community Development
Corporation (MMCDC) to act as the
administrator of the community-based
first-generation homebuyers down payment
assistance program. The funds shall be
available to MMCDC for a three-year period
commencing with issuance of the funds to
MMCDC. At the expiration of that period, any
unused funds shall be remitted to the agency.
deleted text begin Any funds recaptured by MMCDC after the
expiration of that period shall be remitted to
the agency. deleted text end Funds remitted to the agency
under this paragraph are appropriated to the
agency for administration of the
first-generation homebuyers down payment
assistance fund.

Sec. 2.

Laws 2023, chapter 37, article 2, section 9, is amended to read:

Sec. 9. COMMUNITY-BASED FIRST-GENERATION HOMEBUYERS
ASSISTANCE PROGRAM.

Subdivision 1.

Establishment.

A community-based first-generation homebuyers down
payment assistance program is established as a deleted text begin pilot project deleted text end new text begin program new text end under the administration
of the Midwest Minnesota Community Development Corporation (MMCDC), a community
development financial institution (CDFI) as defined under the Riegle Community
Development and Regulatory Improvement Act of 1994, to provide targeted assistance to
eligible deleted text begin households deleted text end new text begin homebuyers new text end .

Subd. 2.

Eligible deleted text begin household deleted text end new text begin homebuyer new text end .

For purposes of this section, deleted text begin "eligible
household" deleted text end new text begin "eligible homebuyer" new text end means deleted text begin a household deleted text end new text begin an adult person new text end :

(1) whose income is at or below 100 percent of the deleted text begin area deleted text end new text begin statewide new text end median income at the
time of deleted text begin purchase deleted text end new text begin application new text end ; deleted text begin and
deleted text end

deleted text begin (2) that includes at least one adult member:
deleted text end

deleted text begin (i) deleted text end new text begin (2) new text end who is preapproved for a first mortgage loan; new text begin and
new text end

deleted text begin (ii) deleted text end new text begin (3)(i) new text end who either never owned a home or who owned a home but lost it due to
foreclosure; and

deleted text begin (iii) deleted text end new text begin (ii) new text end whose parent or prior legal guardian either never owned a home or owned a
home but lost it due to foreclosure.

deleted text begin At least one adult household member meeting the criteria under clause (2) deleted text end new text begin The eligible
homebuyer new text end must complete an approved homebuyer education course prior to signing a
purchase agreement and, following the purchase of the home, must occupy it as their primary
residence.

Subd. 3.

Use of funds.

Assistance under this section is limited to ten percent of the
purchase price of a one or two unit home, not to exceed $32,000. new text begin Beginning in fiscal year
2027, the maximum amount of assistance may be increased to up to ten percent of the
median home sales price as reported in the previous year's Minnesota Realtors Annual
Report on the Minnesota Housing Market. new text end Funds are reserved at the issuance of preapproval.
Reservation of funds is not contingent on having an executed purchase agreement. The
assistance must be provided in the form of a new text begin no-interest new text end loan that is new text begin forgiven over five years, new text end
forgivable at a rate of 20 percent per year on the day after the anniversary date of the note new text begin ,
with the final 20 percent forgiven on the down payment assistance loan maturity date new text end . new text begin There
is no monthly pro rata or partial year credit. The loan has no monthly payment and does not
accrue interest. new text end The prorated balance due is repayable if the property converts to nonowner
occupancy, is sold, is subjected to an ineligible refinance, is subjected to an unauthorized
transfer of title, or is subjected to a completed foreclosure action within the five-year loan
term. Recapture can be waived in the event of financial or personal hardship. new text begin MMCDC may
retain recaptured funds for assisting eligible homebuyers as provided in this section. new text end Funds
may be used for closing costs, down payment, or principal reduction. The eligible household
may select any first mortgage lender or broker of their choice, provided that the funds are
used in conjunction with a conforming first mortgage loan that is fully amortizing and meets
the standards of a qualified mortgage or meets the minimum standards for exemption under
Code of Federal Regulations, title 12, section 1026.43. Funds may be used in conjunction
with other programs the eligible household may qualify for and the loan placed in any
priority position.

Subd. 4.

Administration.

The community-based first-generation homebuyers down
payment assistance program is available statewide and shall be administered by MMCDC,
the designated central CDFI. MMCDC may originate and service funds and authorize other
CDFIs, Tribal entities, and nonprofit organizations administering down payment assistance
to reserve, originate, fund, and service funds for eligible deleted text begin households deleted text end new text begin homebuyers new text end .
Administrative costs must not exceed deleted text begin $3,200 per loan deleted text end new text begin ten percent of the fiscal year
appropriation new text end .

Subd. 5.

Report to legislature.

By January 15 each year, the fund administrator,
MMCDC, must report to the chairs and ranking minority members of the legislative
committees with jurisdiction over housing finance and policy the following information:

(1) the number and amount of loans closed;

(2) the median loan amount;

(3) the number and amount of loans issued by race or ethnic categories;

(4) the median home purchase price;

(5) the interest rates and types of mortgages;

deleted text begin (6) the credit scores of both applicants and households served;
deleted text end

deleted text begin (7) deleted text end new text begin (6) new text end the total amount returned to the fund; and

deleted text begin (8) deleted text end new text begin (7) new text end the number and amount of loans issued by county.

Sec. 3. new text begin APPROPRIATION; COMMUNITY-BASED FIRST-GENERATION
HOMEBUYERS ASSISTANCE PROGRAM.
new text end

new text begin $25,000,000 in fiscal year 2026 and $50,000,000 in fiscal year 2027 are appropriated
from the general fund to the commissioner of the Minnesota Housing Finance Agency for
a grant to Midwest Minnesota Community Development Corporation (MMCDC), through
its wholly owned subsidiary CDC Investments, Inc., for the community-based first-generation
homebuyers assistance program. At the end of each biennium, MMCDC must remit any
unused funds to the Minnesota Housing Finance Agency. Funds remitted to the agency
under this section are appropriated to the agency for administration of the workforce and
affordable homeownership development program under Minnesota Statutes, section 462A.38.
new text end