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SF 3608

as introduced - 92nd Legislature (2021 - 2022) Posted on 03/03/2022 08:18am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to housing; providing down payment assistance to first-generation
homebuyers; 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.41] FIRST-GENERATION HOMEBUYER ASSISTANCE
PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Establishment. new text end

new text begin The agency may establish the Minnesota first-generation
home buyer assistance program for the purposes of providing financial assistance to
first-generation homebuyers to assist them with acquiring owner-occupied primary residences.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin For purposes of this section, the following definitions shall apply:
new text end

new text begin (1) "commissioner" means the commissioner of the agency;
new text end

new text begin (2) "community land trust" has the meaning given in section 462A.30, subdivision 8;
new text end

new text begin (3) "economically challenged area" means a census tract or tracts:
new text end

new text begin (i) wherein at least 40 percent of people reported income less than 200 percent of the
federal poverty level;
new text end

new text begin (ii) wherein at least 45 percent of the people identify as people of color in the most recent
data from the United States Census Bureau; or
new text end

new text begin (iii) that are in Indian country, as defined in United States Code, title 18, section 1151;
new text end

new text begin (4) "eligible home" means a residential dwelling, including a unit in a condominium or
cooperative project or a manufactured housing unit, that meets the requirements of
subdivision 7;
new text end

new text begin (5) "eligible mortgage loan" means a residential mortgage loan that meets the
requirements of subdivision 8;
new text end

new text begin (6) "qualified homebuyer" means a homebuyer who meets the requirements of subdivision
5 and includes homebuyers consisting of multiple individuals, copurchasers, and
multimember households; and
new text end

new text begin (7) "shared equity homeownership program" means affordable homeownership
preservation through a resale restriction program administered by a community land trust,
other nonprofit organization, or state or local government or instrumentalities.
new text end

new text begin Subd. 3. new text end

new text begin Shared equity homeownership program. new text end

new text begin For the purposes of this section, a
shared equity homeownership program must:
new text end

new text begin (1) provide affordable homeownership opportunities to households; and
new text end

new text begin (2) utilize a ground lease, deed restriction, subordinate loan, or similar legal mechanism
that includes provisions ensuring that the program shall:
new text end

new text begin (i) maintain the homeownership unit as affordable for subsequent persons and families
of low and moderate income for an affordability term of at least 30 years after recordation;
new text end

new text begin (ii) apply a resale formula that limits the homeowner's proceeds upon resale; and
new text end

new text begin (iii) provide the program administrator or such administrator's assignee a preemptive
option to purchase the homeownership unit from the homeowner at resale.
new text end

new text begin Subd. 4. new text end

new text begin Assistance criteria and limitations. new text end

new text begin (a) Amounts from a grant under this
section shall be used only to provide assistance:
new text end

new text begin (1) on behalf of a qualified homebuyer; and
new text end

new text begin (2) for:
new text end

new text begin (i) costs in connection with the acquisition involving an eligible mortgage loan of an
eligible home, including down payment costs, closing costs, and costs to reduce the rates
of interest on eligible mortgage loans;
new text end

new text begin (ii) subsidies to make shared equity homes affordable to eligible homebuyers by
discounting the price for which the home will be sold and to preserve the home's affordability
for subsequent eligible homebuyers; and
new text end

new text begin (iii) preoccupancy home modifications required to accommodate qualified homebuyers
or members of their household with disabilities.
new text end

new text begin (b) A grant of assistance under this section:
new text end

new text begin (1) may be provided on behalf of any qualified homebuyer only once; and
new text end

new text begin (2) may not exceed $20,000.
new text end

new text begin (c) A grant under this section may be provided on behalf of a qualified homebuyer who
is receiving assistance from other sources, including other state, federal, local, private,
public, and nonprofit sources, for acquisition of an eligible home.
new text end

new text begin Subd. 5. new text end

new text begin Qualified homebuyers. new text end

new text begin A grant under this section may be provided only on
behalf of a homebuyer who meets all of the following requirements:
new text end

new text begin (1) the homebuyer resides in an economically challenged area;
new text end

new text begin (2) the household of the homebuyer has an income that does not exceed 120 percent of
median income for the area within which:
new text end

new text begin (i) the eligible home to be acquired using such assistance is located; or
new text end

new text begin (ii) the residence of the homebuyer is located; and
new text end

new text begin (3) the homebuyer, as attested by the homebuyer:
new text end

new text begin (i) is a first-time homebuyer; and
new text end

new text begin (ii) is an individual who has at any time been placed in foster care or is an individual:
new text end

new text begin (A) whose parents or legal guardians do not have any present residential ownership
interest in any state; and
new text end

new text begin (B) whose spouse, or domestic partner, and each member of the household has not,
during the three-year period ending upon acquisition of the eligible home to be acquired
using such assistance, had any present ownership interest in a principal residence in any
state.
new text end

new text begin Subd. 6. new text end

new text begin Creditor immunity for reliance on borrower self-attestations. new text end

new text begin No creditor
shall be subject to liability, including monetary penalties or requirements to indemnify a
federal or state agency or repurchase a loan that has been sold or securitized, for the provision
of down payment assistance under this section to a borrower who does not meet the eligibility
requirements if the creditor does so in good faith reliance on the borrower attestations of
eligibility required by this section or regulation.
new text end

new text begin Subd. 7. new text end

new text begin Eligible homes. new text end

new text begin (a) A grant under this section may be provided only in
connection with the acquisition by a qualified homebuyer of a residential property that:
new text end

new text begin (1) is located within an economically challenged area;
new text end

new text begin (2) consists of one to four dwelling units; and
new text end

new text begin (3) will be occupied by the qualified homebuyer, in accordance with such assurances
and commitments as the commissioner shall require, as the primary residence of the
homebuyer.
new text end

new text begin (b) The commissioner shall require that if a homebuyer, on behalf of whom assistance
is provided from grant amounts under this section, fails or ceases to occupy the property
acquired using such assistance as the primary residence of the homebuyer, except in the
case of assistance provided in connection with the purchase of a primary residence through
a shared equity homeownership program, the homebuyer shall repay the assistance to the
commissioner as follows:
new text end

new text begin (1) 100 percent of the amount of such assistance if the failure to occupy commences
before the expiration of the 24-month period beginning on the date of acquisition;
new text end

new text begin (2) 80 percent of the amount of such assistance if the failure to occupy commences after
the expiration of the 24-month period beginning on the date of acquisition but before the
expiration of the 48-month period beginning on the date of acquisition;
new text end

new text begin (3) 60 percent of the amount of such assistance if the failure to occupy commences after
the expiration of the 48-month period beginning on the date of acquisition but before the
expiration of the 72-month period beginning on the date of acquisition;
new text end

new text begin (4) 40 percent of the amount of such assistance if the failure to occupy commences after
the expiration of the 72-month period beginning on the date of acquisition but before the
expiration of the 96-month period beginning on the date of acquisition; and
new text end

new text begin (5) 20 percent of the amount of such assistance if the failure to occupy commences after
the expiration of the 96-month period beginning on the date of acquisition but before the
expiration of the 120-month period beginning on the date of acquisition.
new text end

new text begin (c) Notwithstanding paragraph (b), if a homebuyer, on behalf of whom assistance is
provided from grant amounts under this section, experiences an unforeseen hardship, such
as death or military deployment, or sells the property acquired with assistance before the
expiration of the 60-month period beginning on such date of acquisition and the capital
gains from the sale are less than the amount the homebuyer is required to repay the
commissioner under paragraph (b), the homebuyer shall not be liable to the commissioner
for repayment of the amount of the shortage.
new text end

new text begin (d) If a grant under this section is provided in connection with an eligible home made
available through a community land trust or shared equity homeownership program, such
assistance shall remain in the community land trust or shared equity property upon transfer
of the property to keep the home affordable to the next eligible community land trust or
shared equity homebuyer.
new text end

new text begin Subd. 8. new text end

new text begin Eligible mortgage loans. new text end

new text begin A grant under this section may be provided only in
connection with the acquisition of an eligible home involving a residential mortgage loan
that:
new text end

new text begin (1) meets the underwriting requirements and dollar amount limitations for acquisition
by the Federal National Mortgage Association or the Federal Home Loan Mortgage
Corporation;
new text end

new text begin (2) is made, insured, or guaranteed under title 2 of the National Housing Act or title 5
of the Housing Act of 1949;
new text end

new text begin (3) is a qualified mortgage, as defined in section 129C(b)(2) of the Truth in Lending
Act;
new text end

new text begin (4) is made, insured, or guaranteed under United States Code, title 38, chapter 37; or
new text end

new text begin (5) is guaranteed under section 184 of the Housing and Community Development Act
of 1992.
new text end

new text begin Subd. 9. new text end

new text begin Housing counseling requirement. new text end

new text begin (a) Assistance with grant amounts under
this section may not be provided on behalf of a qualified homebuyer unless the homebuyer
has completed a program of counseling with respect to the responsibilities and financial
management involved in homeownership before entering into a sales purchase agreement
or loan application, except as provided under paragraph (c), as the commissioner shall
require, provided through a nonprofit or political subdivision funded by the homeownership
education, counseling, and training program established by section 462A.209. That program
may be delivered virtually, by telephone, or by any other method the commissioner
determines acceptable and shall include providing information on fair housing rights and
on the availability of postpurchase housing counseling opportunities and instruction on how
to file a fair housing complaint.
new text end

new text begin (b) If a qualified homebuyer is unable to complete the requirement under paragraph (a)
within 30 days due to capacity issues at nonprofits or political subdivisions funded by the
homeownership education, counseling, and training program established by section 462A.209,
the commissioner may allow the qualified homebuyer to complete alternative homebuyer
education to fulfill the requirement under paragraph (a), including homebuyer education
that is provided through an online platform, and the qualified homebuyer shall be made
aware of the availability of postpurchase housing counseling opportunities.
new text end

new text begin (c) The commissioner shall require that any qualified homebuyer who has completed a
counseling program referred to in paragraph (a) or alternative requirement pursuant to
paragraph (b) who receives a commitment for assistance with grant amounts under this
section and who applies for an eligible mortgage loan for acquisition of an eligible home
and is denied a mortgage loan, shall be referred to a counseling agency described in paragraph
(a) for counseling related to the denial and requalification. An eligible homebuyer may be
requalified at least one additional time in a calendar year or more as determined by the
commissioner.
new text end

new text begin (d) Of any amounts appropriated to carry out this section, the commissioner shall use
not less than five percent for costs of providing counseling referred to in paragraph (a).
new text end

new text begin Subd. 10. new text end

new text begin Reporting requirements. new text end

new text begin The agency shall submit a biennial report to the
legislature and the governor on the use of funds issued pursuant to this section, including
the number of loans and grants made, the number and types of residential units assisted
through the program, and the number of households for whom down payment assistance
payments were provided.
new text end

new text begin Subd. 11. new text end

new text begin Rules. new text end

new text begin The commissioner may promulgate rules as necessary to implement
and make specific the provisions of this section.
new text end

new text begin Subd. 12. new text end

new text begin Applications. new text end

new text begin The commissioner may prescribe the content, form, and manner
of applications for grants under this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2022.
new text end

Sec. 2. new text begin APPROPRIATION.
new text end

new text begin $....... in fiscal year 20.. is appropriated from the general fund to the commissioner of
the Minnesota Housing Finance Agency to administer the first-generation homebuyer
assistance program under section 1.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2022.
new text end