(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 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 shall be paid at closing from the proceeds of each qualified mortgage loan and shall 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 subsection (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 article, 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.