HBA-DMH S.B. 1798 77(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 1798 By: Bivins Financial Institutions 5/10/2001 Engrossed BACKGROUND AND PURPOSE The state of Texas is suffering from a teacher shortage. In recent years, it has been difficult to attract teachers to the profession because of low salaries. By making it more affordable for a teacher to purchase a home, the state may create an incentive for more qualified teachers to take positions in Texas school districts. Senate Bill 1798 requires the Texas State Affordable Housing Corporation to establish a teachers home loan program and dedicates a portion of the state ceiling to the corporation for the purpose of issuing low-interest home mortgage loans to teachers in this state who are eligible for the program. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the board of directors of the Texas State Affordable Housing Corporation in SECTION 3 (Section 2306.562, Government Code) of this bill. ANALYSIS Senate Bill 1798 amends the Government Code to require the Texas State Affordable Housing Corporation (corporation) to establish a teachers home loan program (program) to provide eligible teachers with low-interest home mortgage loans (loans). The bill sets forth criteria for a teacher to be eligible for a loan. Out of that portion of the state ceiling that is available exclusively for reservations by issuers of qualified mortgage bonds, the bill requires $25 million to be allotted each year and made available exclusively to the corporation for the purpose of issuing qualified mortgage bonds in connection with the program. The bill authorizes the corporation to contract with state agencies or with private entities to determine whether applicants qualify as eligible or otherwise to administer the program. The bill authorizes the board of directors of the corporation (board) to set and collect from each applicant any fees the board considers reasonable and necessary to cover the expenses of administering the program. The bill requires the board to adopt rules governing: _the administration of the program; _the making of loans under the program; _the criteria for approving mortgage lenders; _the use of insurance on the loans and the homes financed under the program; _the verification of occupancy of the home by the teacher as the teacher's principal residence; and _the terms of any contract made with any mortgage lender for processing, originating, servicing, or administering the loans. In addition to funds set aside for the program from the state ceiling, the bill authorizes the corporation to solicit and accept funding for the program from gifts and grants, available money in the housing trust fund, federal block grants, other state or federal programs that provide money that may be used for the program, and amounts received by the corporation in repayment of loans made by the program. These provisions expire September 1, 2012. The bill requires the corporation to give priority to a teacher who resides or teaches in an area of the state with a teacher shortage, as determined by the commissioner of education, aggressively pursue funding for the program, and implement the program not later than September 1, 2002. If the legislature finds in a scheduled review of the corporation by the Sunset Advisory Commission that the program is not being managed to accomplish the goal of providing low-interest home mortgage loans to teachers, the bill requires the legislature to make specific recommendations to remedy any problems. If the legislature finds in a scheduled review of the corporation by the Sunset Advisory Commission that the corporation should be abolished, the bill requires the program to be transferred to another appropriate state agency. EFFECTIVE DATE On passage, or if the Act does not receive the necessary vote, the Act takes effect September 1, 2001.