By Senators Barron, Little (Z), Smitherman, Mitchell, Bishop, Benefield, Denton, Little (T), Bedford, Singleton, Means, Waggoner, Dixon, Ross, Coleman, Sanders, Holley, and Smith
ENROLLED, An Act,
To provide for a program to be administered by the Alabama Housing Finance Authority; to create a mortgage guarantee fund to offset certain losses of investors in the program; and to appropriate to the guarantee fund a total of six million dollars from the Alabama Capital Improvement Trust Fund.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. This act shall be known and may be cited as "The Alabama Home Buyers Initiative Act."
Section 2. The Legislature finds that the effects of the global and national recession are now affecting Alabama's housing industry and adversely affecting the state's economic development activity. The large number of homes on the market is causing a reduction in housing starts, resulting in fewer construction jobs and lower tax collections from the sale of building materials. In addition, the large number of existing homes on the market is adversely affecting the states economic recovery. The Legislature desires to provide a stimulus to provide a boost to the housing industry and to facilitate economic development and industrial recruitment by creating a guarantee fund that would encourage investments in new thirty-year, fixed-rate conventional mortgage loans through a program administered by the Alabama Housing Finance Authority. The guarantee fund will reduce the investor's potential for losses.
Section 3. As used in this act, the following terms shall have the following meanings:
(1) ALABAMA HOME BUYERS INITIATIVE. A conventional mortgage program not to exceed one billion dollars in aggregate loan amount to be administered by the Program Administrator, under which "single family mortgage loans" as defined in Section 2, Chapter 1A of Title 24 are purchased by the Program Administrator and sold to the initial holder. No mortgage loan shall be made to any person who is not a citizen of the United States or is not legally present in the United States with appropriate documentation from the federal government.
(2) ELIGIBLE PROPERTIES. Both newly constructed residences and existing homes.
(3) FORECLOSURE BALANCE. The sum of (a) the unpaid principal balance of a qualified mortgage loan, (b) any interest accrued thereon through the date of foreclosure, and (c) foreclosure expenses, which shall include attorney fees, title work, recording or filing fees, escrow advances, and other actual expenses associated with a foreclosure sale.
(4) FORECLOSURE LOSS. The foreclosure balance for a qualified mortgage loan less its resale proceeds.
(5) HOLDER. Any person that owns a qualified mortgage loan.
(6) INVESTOR. The holder of a qualified mortgage loan on the date on which a foreclosure loss occurs with respect to such loan.
(7) MORTGAGE GUARANTEE FUND. The fund established under Section 4 of this act.
(8) MORTGAGE GUARANTEE FUND FEE. A fee equal to one percent (1%) of the sales price of each home financed with a qualified mortgage loan under the Alabama Home Buyers Initiative.
(9) PERSON. Any individual, trust, estate, corporation, association, partnership, limited liability company, or other entity of any kind.
(10) PROGRAM ADMINISTRATOR. The Alabama Housing Finance Authority.
(11) QUALIFIED MORTGAGE LOAN. A mortgage loan secured by an eligible property originated under the Alabama Home Buyers Initiative.
(12) RESALE PROCEEDS. The net sales proceeds from the remarketing or resale of a residence following a foreclosure sale conducted under a qualified mortgage loan, which shall be equal to the sales price received in an arm's length sale less closing costs, commissions, property preservation, and reasonable and customary expenses associated with the sale of a residential property.
Section 4. (a) There is hereby established a mortgage guarantee fund to be held in the State Treasury and to be administered by the Alabama Housing Finance Authority that will be available to reimburse foreclosure losses, if any, that arise with respect to a qualified mortgage loan under the Alabama Home Buyers Initiative. There is hereby appropriated from the Alabama Capital Improvement Trust Fund to the guarantee fund a total of six million dollars ($6,000,000) for the fiscal year ending September 30, 2009. This appropriation shall be irrevocably deposited in the guarantee fund within ten days after this act becomes effective. Pursuant to Section VII of Amendment 666 to the Constitution of Alabama 1901, the Legislature finds that it is advisable and necessary to make this appropriation to the guarantee fund which is in excess of the amount contained in the Governor's certification of the amount of funds needed for Capital Improvements.
(b) A guarantee fund fee will be paid at closing from the proceeds of each qualified mortgage loan and will be deposited in the guarantee fund. All interest or investment income on funds deposited in the guarantee fund shall be credited to, and shall remain part of, the guarantee fund.
(c) The State Comptroller shall issue payment warrants from the guarantee fund only after receipt of a certification from the program administrator that identifies each qualified mortgage loan that has suffered a foreclosure loss, contains a calculation of the amount of the foreclosure loss, and provides payment instructions for each investor that suffered such foreclosure loss. Payments from the guarantee fund shall be deemed made first from the six million dollars ($6,000,000) appropriated to the guarantee fund in Section 4(a), until exhausted, thereafter from interest or investment income on the guarantee fund, and finally from guarantee fund fees deposited in the guarantee fund.
(d) The amount of reimbursement available from the guarantee fund for each qualified mortgage loan shall not exceed forty percent (40%) of such loan's foreclosure balance.
(e) Reimbursements to investors from the guarantee fund shall be paid in the order in which certifications of foreclosure loss are received.
(f) The guarantee fund shall remain available until it is depleted. If the program administrator certifies to the State Treasurer that (1) all qualified mortgage loans have been paid in full before the guarantee fund is depleted or (2) the existing balance in the guarantee fund exceeds the maximum amount that is available to be withdrawn to reimburse foreclosure losses under this act, the remaining balance or excess amount in the guarantee fund, as the case may be, and all future guarantee fund fees if any shall be made available for other housing programs identified and administered by the program administrator, including without limitation guarantee funds for other housing initiatives, and homeowner education.
Section 5. This act shall become effective immediately following its passage and approval by the Governor, or its otherwise becoming law.