PRINTER'S NO. 12
No. 24 Session of 1999
INTRODUCED BY THOMAS, RAMOS AND SEYFERT, JANUARY 20, 1999
REFERRED TO COMMITTEE ON URBAN AFFAIRS, JANUARY 20, 1999
AN ACT
1 Amending the act of December 14, 1992 (P.L.866, No.137),
2 entitled "An act authorizing certain counties to increase the
3 recording fees of deeds and mortgages to support or enhance
4 local affordable housing efforts," extending the act to
5 counties of the first class; providing for a home purchase
6 loan program to be administered by the Pennsylvania Housing
7 Finance Agency; establishing the Affordable Housing Trust
8 Fund; providing for a program of home mortgage insurance; and
9 establishing the Housing Insurance Fund.
10 The General Assembly of the Commonwealth of Pennsylvania
11 hereby enacts as follows:
12 Section 1. The definition of "county" in section 3 of the
13 act of December 14, 1992 (P.L.866, No.137), known as the
14 Optional County Affordable Housing Funds Act, is amended to
15 read:
16 Section 3. Definitions.
17 The following words and phrases when used in this act shall
18 have the meanings given to them in this section unless the
19 context clearly indicates otherwise:
20 * * *
21 "County." Any county of the first, second, second A, third,
1 fourth, fifth, sixth, seventh or eighth class. [The term does 2 not include any county of the first class.] 3 Section 2. Section 4 of the act is amended to read: 4 Section 4. Optional fee increases. 5 The county commissioners or the governing body of each 6 county, as defined in section 3, shall have the power and may by 7 ordinance increase the fees charged by the recorder of deeds for 8 recording deeds and mortgages under the act of June 12, 1919 9 (P.L.476, No.240), referred to as the Second Class County 10 Recorder of Deeds Fee Law, the fees charged for recording deeds 11 and mortgages in counties of the first class under ordinances 12 adopted under the act of August 26, 1953 (P.L.1476, No.433), 13 referred to as the Philadelphia City-County Consolidation Act, 14 and fees charged under the act of April 8, 1982 (P.L.310, 15 No.87), referred to as the Recorder of Deeds Fee Law. The 16 additional fees levied by the county commissioners shall not 17 exceed 100% of the amounts charged on the effective date of this 18 act. 19 Section 3. The act is amended by adding a section to read: 20 Section 6.1. Affordable Housing Trust Fund. 21 (a) Establishment.--There is hereby established under the 22 jurisdiction and control of the agency the Affordable Housing 23 Trust Fund, as a permanent revolving fund of identifiable, 24 renewable and segregated capital to be used by the agency in 25 accordance with this section. The agency shall hold fund moneys 26 separate and distinct from its other assets and other funds 27 which it administers. 28 (b) Sources of fund.--There shall be paid into the fund: 29 (1) All moneys appropriated by the General Assembly for 30 inclusion in the fund. 19990H0024B0012 - 2 -
1 (2) Revenue collected from the imposition of the 2 surcharge on recorded documents under subsection (j). 3 (3) Grants, donations, contributions or gifts from 4 public or private sources specifically earmarked for deposit 5 into the fund. 6 (4) The proceeds from the sale of property, real, 7 personal or otherwise, which may be given or donated to the 8 agency for use in connection with the fund. 9 (5) Any money made available to the agency under the 10 provisions of the act of December 14, 1992 (P.L.866, No.137), 11 known as the Optional County Affordable Housing Funds Act. 12 (6) All interest, dividends and pecuniary gains from 13 investment of money in the fund. 14 (7) Repayments of principal and interest on loans 15 provided from the fund. 16 (8) All other revenues, receipts and fees of whatever 17 source derived from the operation of the fund. 18 (c) Use of fund.--The agency shall use moneys in the fund 19 for the purpose of enabling low-income and moderate-income 20 persons and families to attain home ownership through, but not 21 limited to, any or all of the following programs: 22 (1) The Home Purchase Loan Program, which shall consist 23 of second or subsequent mortgage loans or grants, the 24 proceeds of which can be used to provide closing cost 25 assistance, down payment assistance or both types of 26 assistance to eligible homebuyers. Repayment may be deferred 27 by the agency for a period up to the length of the first 28 mortgage but shall be repaid at the time of a sale, transfer 29 or nonowner occupancy of the property or upon payment in full 30 or a refinance of the first mortgage. The agency may allow 19990H0024B0012 - 3 -
1 subordination of the mortgage loan where the first mortgage 2 is being refinanced to produce more favorable repayment terms 3 for the homeowner or to enable the homeowner to make repairs 4 necessary to preserve the property. 5 (2) The Mortgage Interest Subsidy Program, which shall 6 consist of second or subsequent mortgage loans and grants, 7 the proceeds of which can be used to buy down interest rates 8 for eligible homebuyers, thereby producing an affordable 9 monthly mortgage payment. Repayment of the loans may be 10 deferred by the agency for a period of up to the length of 11 the first mortgage and shall be repaid in the same manner as 12 set forth in paragraph (1). 13 (d) Eligibility criteria.--Persons or families must meet the 14 following criteria to be eligible to participate in a program 15 set forth in subsection (c): 16 (1) Applicants must be persons or families whose annual 17 income adjusted for family size does not exceed 115% of 18 median household income for the county in which the property 19 is located. The agency may establish additional criteria 20 limiting certain kinds of assistance to persons of low or 21 very low income. 22 (2) Applicants must be persons or families who have not 23 had an ownership interest in residential real property within 24 the previous three years. This paragraph may be waived by the 25 agency in the case of single-parent families. 26 (3) Applicants must have insufficient assets or income, 27 as determined by the agency to be able to purchase the 28 property without the assistance provided by this section. 29 (4) The agency shall require homebuyers to undergo home 30 ownership counseling as approved by the agency as a condition 19990H0024B0012 - 4 -
1 of the receipt of a grant and/or loan. 2 (5) The agency shall establish limits on the amount of 3 money available to each applicant. 4 (e) Distribution of moneys.--The agency shall use its best 5 efforts to distribute moneys in the fund on a regional basis in 6 the same proportion to where the moneys were derived; provided, 7 however, that the distribution of moneys in the restricted 8 account within the fund, created under subsection (l), shall not 9 be considered when the agency distributes the remaining moneys 10 in the fund in accordance with subsections (c) through (i). Any 11 Federal funds or moneys donated to the fund from outside this 12 Commonwealth can be used by the agency anywhere in this 13 Commonwealth. 14 (f) Participating lenders.--The following lending 15 institutions shall be eligible to participate in programs 16 authorized by this section, subject to such standards, criteria 17 and procedures as shall be established by the agency: 18 (1) Lending institutions that originate first mortgage 19 loans in conjunction with any of the agency's single family 20 home purchase programs. 21 (2) Lending institutions that originate first mortgage 22 loans in conjunction with a home purchase program operated by 23 a municipality, municipal authority or a residential finance 24 authority. 25 (3) Other lending institutions approved by the agency 26 which have agreed to comply with the homebuyer eligibility 27 and other requirements of subsection (d). 28 Funds will be made available in such amounts as the agency shall 29 determine in order to meet the requirements of subsection (e) 30 and within the financial limitations of the fund. 19990H0024B0012 - 5 -
1 (g) Matching funds.--The agency may use money from the fund 2 to match Federal, State, local or private money to be used for 3 programs which have the purpose of fostering home ownership by 4 persons and families of low income and moderate income. 5 (h) Housing counseling programs.--The agency may use money 6 from the fund to pay for technical assistance, design, finance 7 and administrative services and housing counseling services 8 provided to applicants by nonprofit housing development 9 corporations or other community-based or neighborhood-based 10 organizations. 11 (i) Administrative expenses.--The agency may use money from 12 the fund to pay reasonable expenses incurred in connection with 13 administering the fund and operating the programs authorized 14 under this section. 15 (j) Imposition of surcharge.-- 16 (1) There is hereby imposed a real estate document 17 surcharge in the amount of $10 for every deed, mortgage or 18 other instrument for which a recording fee is provided and 19 which is recorded in the office of the recorder of deeds in 20 each county of this Commonwealth. 21 (2) The surcharge shall be in addition to any other 22 recording fee or other charge lawfully collected by the 23 recorder of deeds and shall be paid by the recorder of deeds 24 to the Department of Revenue at the same time and in the same 25 manner as the realty transfer tax. 26 (3) The Department of Revenue shall remit forthwith to 27 the agency for deposit to the fund all moneys received in 28 connection with the real estate document surcharge. 29 (k) County participation.-- 30 (1) The county commissioners or the governing body of a 19990H0024B0012 - 6 -
1 county with a down payment or closing cost assistance program 2 established under the provisions of the act of December 14, 3 1992 (P.L.866, No.137), known as the Optional County 4 Affordable Housing Funds Act, may elect to not participate in 5 the Affordable Housing Trust Fund established under this 6 section. The election to not participate in the fund shall be 7 evidenced by an ordinance enacted by the county commissioners 8 or the governing body of such county. 9 (2) The surcharge under subsection (j) shall be imposed 10 and any moneys received shall be deposited into the fund 11 until such an ordinance is enacted under this subsection. Any 12 real estate document recorded in the office of the recorder 13 of deeds in a county which has enacted an ordinance under 14 this subsection shall not be subject to the surcharge imposed 15 by subsection (j). 16 (3) The residents of a county which has enacted an 17 ordinance under this subsection shall be ineligible to 18 receive any moneys from the fund until the county 19 commissioners or the governing body of the county repeals the 20 ordinance. The recorder of deeds of the county shall begin 21 collecting the surcharge imposed by subsection (j), 60 days 22 after the repeal is effective. 23 (l) Third class cities program.-- 24 (1) The county commissioners or the governing body of a 25 county in which a city of the third class is located may 26 elect by ordinance to impose a surcharge of $1 on every deed, 27 mortgage or other instrument for which a recording fee is 28 provided and which is recorded in the office of the recorder 29 of deeds. This surcharge shall be in addition to any other 30 recording fee or other charge lawfully collected by the 19990H0024B0012 - 7 -
1 recorder of deeds. 2 (2) The surcharge shall be paid by the recorder of deeds 3 to the Department of Revenue at the same time and in the same 4 manner as the realty transfer tax. The Department of Revenue 5 shall remit forthwith to the agency for deposit into a 6 restricted account within the fund all moneys received in 7 connection with the surcharge imposed under this subsection. 8 (3) In accordance with subsections (c) through (i), 9 where applicable, the agency shall use the moneys in the 10 restricted account only for the purpose of enabling low- 11 income and moderate-income persons and families to attain 12 home ownership within a city of the third class located 13 within a county where the money was collected. If there is 14 more than one city of the third class within a county 15 imposing a surcharge under this subsection, the moneys 16 distributed for use in a city of the third class shall be 17 based upon the total population of all cities of the third 18 class within the county where the money was collected divided 19 by the total population of a city of the third class where 20 the moneys will be distributed. 21 (4) If all of the moneys in the restricted account 22 cannot be distributed under this subsection, the agency shall 23 distribute the moneys in accordance with subsection (e). 24 (m) Semiannual report.--The agency shall report to the 25 General Assembly and the Governor on a semiannual basis, 26 corresponding with the beginning of each two-year legislative 27 session, on the income and expenses of the fund and its uses, 28 including the number and amounts of loans and grants made, the 29 number and types of residential units assisted, the income 30 levels of persons assisted and the geographical distribution of 19990H0024B0012 - 8 -
1 loans and grants made. 2 (n) Expiration.--The Affordable Housing Trust Fund 3 established under this section, together with its statutory 4 functions and duties, and this section, shall terminate on 5 December 31, 2003, unless reestablished or continued by the 6 General Assembly. The Legislative Budget and Finance Committee 7 shall be required to present to the General Assembly a report 8 evaluating the fund by December 31, 2002. This report shall 9 provide the General Assembly with a recommendation as to whether 10 the fund is to be continued and, if so, the changes which are 11 suggested by the committee to improve the operation of the fund. 12 (o) Definitions.--The following words and phrases when used 13 in this section shall have the meanings given to them in this 14 subsection unless the context clearly indicates otherwise: 15 "Agency." The Pennsylvania Housing Finance Agency, a public 16 corporation and government instrumentality, established under 17 the act of December 3, 1959 (P.L.1688, No.621), known as the 18 Housing Finance Agency Law. 19 "Annual income." The total annual income of all members of a 20 family from whatever source derived, including, but not limited 21 to, pension, annuity, retirement and Social Security benefits, 22 but may exclude the following as the Pennsylvania Housing 23 Finance Agency may establish by rule or regulation: 24 (1) Reasonable allowances for dependents. 25 (2) Reasonable allowances for medical expenses. 26 (3) All or a proportionate part of the earnings of 27 dependent family members. 28 (4) Income not received regularly. 29 "Fund." The Affordable Housing Trust Fund established under 30 this section. 19990H0024B0012 - 9 -
1 "Lending institution." Any of the following if it 2 customarily provides residential mortgage services or otherwise 3 aids in the financing of mortgages on residential housing in 4 this Commonwealth: 5 (1) Bank. 6 (2) Bank and trust company. 7 (3) Trust company. 8 (4) Savings bank. 9 (5) National banking association. 10 (6) Federal National Mortgage Association. 11 (7) Federal Home Loan Mortgage Corporation. 12 (8) Government National Mortgage Association. 13 (9) Pennsylvania Housing Finance Agency. 14 (10) Mortgage banker. 15 (11) FHA-approved mortgage service company. 16 (12) Savings and loan association. 17 (13) Federal savings and loan association. 18 (14) Building and loan association. 19 (15) Credit union. 20 (16) A financial institution similar to those listed in 21 paragraphs (1) through (15). 22 "Low-income and moderate-income persons" or "low-income and 23 moderate-income families." An individual who or family that 24 cannot afford to pay the amounts at which private enterprise, 25 without the assistance of this section, is providing a 26 substantial supply of decent, safe and sanitary housing. The 27 agency shall establish income limits for participation of such 28 persons and families, based on countywide income statistics, 29 where available. 30 "Mortgage." A lien other than a judgment on a fee simple 19990H0024B0012 - 10 -
1 estate or leasehold in real property located in this 2 Commonwealth, together with the credit instruments, if any, 3 secured by it. The term shall include insured and uninsured 4 mortgages. 5 "Mortgagor." An individual, joint venture, partnership, 6 limited partnership, trust, corporation, cooperative or 7 condominium, whether organized for profit or not for profit. 8 Section 4. Section 7 of the act is repealed. 9 Section 5. The act is amended by adding a section to read: 10 Section 8. Home mortgage insurance program. 11 (a) Housing Insurance Fund.-- 12 (1) There is hereby established under the jurisdiction 13 of the agency, or any nonprofit corporate subsidiary it may 14 create for this purpose, an insurance reserve fund called the 15 Housing Insurance Fund. 16 (2) There shall be paid into the fund: 17 (i) All money appropriated by the General Assembly 18 for inclusion in the fund. 19 (ii) All proceeds from the issuance of bonds by the 20 agency for inclusion in the fund. 21 (iii) All premiums collected under the home mortgage 22 insurance program. 23 (iv) All interest, dividends and gains from 24 investment of money of the fund. 25 (v) Any other money available to the agency which it 26 determines to use for this purpose. 27 (3) Money held in the fund shall be used to make 28 payments pursuant to home mortgage insurance contracts, to 29 pay any or all expenses of administration and operation of 30 the home mortgage insurance program and to maintain the fund 19990H0024B0012 - 11 -
1 at an amount equal to prudent minimum insurance reserves as 2 determined by the agency. Any money in the fund in excess of 3 that required for the aforesaid purposes may be allocated by 4 the agency to the Affordable Housing Trust Fund, established 5 under section 6.1. 6 (b) Home mortgage insurance program.--The agency, or any 7 nonprofit corporate subsidiary of the agency formed for this 8 purpose, may create, develop, administer and supervise the 9 administration of the home mortgage insurance program in 10 cooperation with public or private mortgage insurers to 11 encourage home ownership for low-income and moderate-income 12 persons and families who are unable to purchase a home without 13 mortgage insurance or similar credit enhancements. In this 14 connection, the agency may: 15 (1) Enter into contracts to insure, reinsure or coinsure 16 the repayment of loans secured by mortgages on single-family 17 owner-occupied residences located in this Commonwealth. 18 (2) Procure reinsurance or coinsurance or enter into 19 reciprocal or interinsurance contracts from and with any 20 local agency, agency of the United States or any licensed 21 private mortgage insurer or reinsurer. 22 (3) Negotiate, solicit, sell and otherwise deal with 23 home mortgage loan insurance policies. 24 (4) Prescribe forms of policies, establish premiums and 25 otherwise implement the home mortgage insurance program. 26 (c) Eligibility requirements.-- 27 (1) To qualify for loan insurance pursuant to this 28 section, a borrower shall be a purchaser of a single-family 29 owner-occupied residence who is qualified and financially 30 able to bear the usual expenses of maintaining such 19990H0024B0012 - 12 -
1 residences and repaying the loan. The agency may insure or 2 issue commitments to insure loans upon certification of an 3 officer of an approved lending institution that the borrower 4 is qualified for the loan according to standard single-family 5 lending practices and agency guidelines. 6 (2) The mortgage loan shall exceed a 95% loan-to-value 7 ratio, but shall not exceed a 100% loan-to-value ratio. 8 (3) The mortgage loan and related documents shall 9 contain such terms as are satisfactory to the agency. 10 (4) A borrower that is approved for mortgage insurance 11 under this section shall be required to complete a home 12 ownership counseling program as approved by the agency. 13 (d) Loan defaults.--The agency shall establish procedures to 14 be followed by lending institutions in the event of a default on 15 the loan insured under this section. The agency may require 16 that, prior to submission and payment of a claim, the lending 17 institution must foreclose and take possession of the property 18 or otherwise acquire title and possession of the property within 19 the time specified by the agency. 20 (e) Home mortgage insurance premiums.--The agency shall fix 21 mortgage insurance premiums for the insurance of mortgage loans 22 under the provisions of this section. The amount of premium need 23 not be uniform for all insured loans. 24 (f) Status of mortgages as investments.--Loans secured by 25 mortgages, the payment of which are insured by the agency, shall 26 be legal investments for trust companies; banks; investment 27 companies; savings banks; building and loan associations; 28 executors, administrators, guardians, conservators, trustees and 29 other fiduciaries; public and private pension, profit-sharing 30 and retirement funds; the State Treasurer; and agencies of the 19990H0024B0012 - 13 -
1 Commonwealth. 2 (g) Licensure exemption.--The authority granted to the 3 agency by this section, or to any nonprofit corporate subsidiary 4 it may create for this purpose, is intended to be in complete 5 substitution of all licensing, filing and other regulatory 6 requirements otherwise applicable to insurance carriers doing 7 business in this Commonwealth and the agency or its nonprofit 8 corporate subsidiary. 9 (h) Expiration.--The Housing Insurance Fund created under 10 this section, together with its statutory functions and duties, 11 and this section, shall expire on December 31, 2003, unless 12 reestablished or continued by the General Assembly. The 13 Legislative Budget and Finance Committee shall present to the 14 General Assembly a report evaluating the fund by December 31, 15 2002. This report shall provide the General Assembly with a 16 recommendation as to whether the fund is to be continued and, if 17 so, the changes which are suggested by the committee to improve 18 the operation of the fund. 19 (i) Definitions.--As used in this section, the following 20 words and phrases shall have the meanings given to them in this 21 subsection: 22 "Agency." The Pennsylvania Housing Finance Agency. 23 "Fund." The Housing Insurance Fund. 24 Section 6. This act shall take effect as follows: 25 (1) The addition of sections 6.1(j) and 8 of the act 26 shall take effect in 60 days. 27 (2) The remainder of this act shall take effect 28 immediately. L16L16DMS/19990H0024B0012 - 14 -