SENATE AMENDED PRIOR PRINTER'S NOS. 1630, 1704, 1810 PRINTER'S NO. 1871
No. 1426 Session of 1997
INTRODUCED BY J. TAYLOR, PETRONE, FARGO, FICHTER, GORDNER, THOMAS, ROONEY, McCALL, E. Z. TAYLOR, LEDERER, DiGIROLAMO, CARN, HALUSKA, SCRIMENTI, CORNELL, TIGUE, MANDERINO, KENNEY, GRUITZA, YOUNGBLOOD, STURLA, OLASZ, SERAFINI, DeLUCA, O'BRIEN, SAINATO, PRESTON, WOGAN, BELFANTI, TRICH, HENNESSEY, MILLER, MELIO, L. I. COHEN, TRELLO, TANGRETTI, CORRIGAN, M. COHEN, REINARD, CIVERA, PISTELLA, SURRA, CURRY, WALKO, FLICK, BOSCOLA, RAMOS, HORSEY, WASHINGTON AND RAYMOND, APRIL 29, 1997
SENATOR ULIANA, URBAN AFFAIRS AND HOUSING, IN SENATE, AS AMENDED, JUNE 2, 1997
AN ACT 1 Amending the act of December 3, 1959 (P.L.1688, No.621), 2 entitled, as amended, "An act to promote the health, safety 3 and welfare of the people of the Commonwealth by broadening 4 the market for housing for persons and families of low and 5 moderate income and alleviating shortages thereof, and by 6 assisting in the provision of housing for elderly persons 7 through the creation of the Pennsylvania Housing Finance 8 Agency as a public corporation and government 9 instrumentality; providing for the organization, membership 10 and administration of the agency, prescribing its general 11 powers and duties and the manner in which its funds are kept 12 and audited, empowering the agency to make housing loans to 13 qualified mortgagors upon the security of insured and 14 uninsured mortgages, defining qualified mortgagors and 15 providing for priorities among tenants in certain instances, 16 prescribing interest rates and other terms of housing loans, 17 permitting the agency to acquire real or personal property, 18 permitting the agency to make agreements with financial 19 institutions and Federal agencies, providing for the purchase 20 by persons of low and moderate income of housing units, and 21 approving the sale of housing units, permitting the agency to 22 sell housing loans, providing for the promulgation of 23 regulations and forms by the agency, prescribing penalties 24 for furnishing false information, empowering the agency to 25 borrow money upon its own credit by the issuance and sale of
1 bonds and notes and by giving security therefor, permitting 2 the refunding, redemption and purchase of such obligations by 3 the agency, prescribing remedies of holders of such bonds and 4 notes, exempting bonds and notes of the agency, the income 5 therefrom, and the income and revenues of the agency from 6 taxation, except transfer, death and gift taxes; making such 7 bonds and notes legal investments for certain purposes; and 8 indicating how the act shall become effective," further 9 providing for homeowner's emergency assistance. 10 The General Assembly of the Commonwealth of Pennsylvania 11 hereby enacts as follows: 12 Section 1. Section 401-C(a) of the act of December 3, 1959 13 (P.L.1688, No.621), known as the Housing Finance Agency Law, 14 amended May 31, 1984 (P.L.364, No.73) and December 18, 1992 15 (P.L.1652, No.182), is amended to read: 16 Section 401-C. General Authority.--(a) The Pennsylvania 17 Housing Finance Agency, hereinafter referred to as the "agency," 18 may make loans secured by liens on residential real property 19 located in Pennsylvania to residents of Pennsylvania eligible 20 for such loans as described in this article. For the purpose of 21 this article, the term "mortgage" shall include any obligation 22 evidenced by a security document and secured by a lien upon real 23 property located within this Commonwealth including, but not 24 limited to, a deed of trust and land sale agreement. The term 25 shall also include an obligation evidenced by a security lien on 26 real property upon which an owner-occupied mobile home is 27 located. The provisions of this article shall not be applicable 28 if: 29 (1) The property securing the mortgage is not the principal 30 residence of the mortgagor. 31 (2) The property securing the mortgage is not a one or two- 32 family owner-occupied residence. 33 (3) The mortgage is insured by the Federal Housing 34 Administration under Title II of the National Housing Act (12 19970H1426B1871 - 2 -
1 U.S.C. §§ 1707-1715z-18). 2 (4) The mortgage on the property was given by a noncorporate 3 seller, unless the noncorporate seller elects, in writing, in 4 the mortgage or elsewhere to be covered by this article. For 5 purposes of this article "noncorporate seller" means any person 6 [giving] who is given a mortgage by a buyer to secure repayment 7 of the purchase price of real property who is not a bank, a 8 savings and loan association, a mortgage bank, a consumer 9 discount company or other entity in the mortgage lending 10 business. 11 (5) The mortgagor is more than [thirty-six (36)] twenty-four 12 (24) months delinquent or in default for more than [thirty-six 13 (36)] twenty-four (24) months, pursuant to the terms of 14 mortgagor's residential mortgage. This requirement shall mean 15 that if the mortgagor is more than [thirty-six (36)] twenty-four 16 (24) consecutive or nonconsecutive months in arrears on the 17 residential mortgage in question, no matter what the reason 18 therefor, the agency shall not be authorized to make any loans 19 hereunder to such mortgagor. 20 (6) The aggregate amount of arrearages due to a mortgagee 21 pursuant to the terms of the mortgage, without regard to any 22 acceleration under the mortgage including, but not limited to, 23 the amount of principal, interest, taxes, assessments, ground 24 rents, hazard insurance, any mortgage insurance or credit 25 insurance premiums, exceeds the sum of sixty thousand dollars 26 ($60,000). 27 (7) If the property is encumbered by more than two 28 mortgages, other than a mortgage filed by the agency to secure 29 repayment of the mortgage assistance loans, or by other liens or 30 encumbrances which would unreasonably impair the security of the 19970H1426B1871 - 3 -
1 agency's mortgage. 2 * * * 3 Section 2. Section 403-C(f) of the act, added December 18, <-- 4 1992 (P.L.1652, No.182), is amended to read: 5 Section 403-C. Notice Requirements.--* * * 6 (f) Notwithstanding any other provisions of this section, a 7 mortgagee shall not be required to send the uniform notice 8 provided in subsection (b) to any mortgagor who is more than 9 [thirty-six (36)] twenty-four (24) months delinquent or in 10 default for more than [thirty-six (36)] twenty-four (24) months, 11 pursuant to the terms of mortgagor's residential mortgage with 12 mortgagee. This requirement shall mean that if the mortgagor is 13 more than [thirty-six (36)] twenty-four (24) consecutive or 14 nonconsecutive months in arrears on the residential mortgage in 15 question, no matter what the reason therefor, he shall be 16 ineligible to receive the notice in subsection (b). 17 SECTION 2. SECTION 402-C OF THE ACT IS AMENDED BY ADDING A <-- 18 SUBSECTION TO READ: 19 SECTION 402-C. NOTICE AND INSTITUTION OF FORECLOSURE 20 PROCEEDINGS.--* * * 21 (D) IF NOTICE IS GIVEN PURSUANT TO THIS SECTION AT LEAST 22 THIRTY (30) DAYS PRIOR TO TAKING ANY ACTION SPECIFIED IN THIS 23 SECTION AND SUCH NOTICE CONTAINS ALL OF THE INFORMATION 24 PRESCRIBED BY THE PROVISIONS OF THE ACT OF JANUARY 30, 1974 25 (P.L.13, NO.6), REFERRED TO AS THE LOAN INTEREST AND PROTECTION 26 LAW, THEN NO ADDITIONAL NOTICE SHALL BE REQUIRED PURSUANT TO 27 SECTION 403 OF THE LOAN INTEREST AND PROTECTION LAW. 28 SECTION 3. SECTION 403-C(A) AND (F) OF THE ACT, AMENDED OR 29 ADDED MAY 31, 1984 (P.L.364, NO.73) AND DECEMBER 18, 1992 30 (P.L.1652, NO.182), ARE AMENDED AND THE SECTION IS AMENDED BY 19970H1426B1871 - 4 -
1 ADDING A SUBSECTION TO READ: 2 SECTION 403-C. NOTICE REQUIREMENTS.--(A) ANY MORTGAGEE WHO 3 DESIRES TO FORECLOSE UPON A MORTGAGE SHALL SEND TO SUCH 4 MORTGAGOR AT HIS OR HER LAST KNOWN ADDRESS THE NOTICE PROVIDED 5 IN SUBSECTION (B): PROVIDED, HOWEVER, THAT SUCH MORTGAGOR SHALL 6 BE AT LEAST SIXTY (60) DAYS CONTRACTUALLY DELINQUENT IN HIS 7 MORTGAGE PAYMENTS OR BE IN VIOLATION OF ANY OTHER PROVISION OF 8 SUCH MORTGAGE. IF NOTICE IS GIVEN PURSUANT TO THIS SECTION, AT 9 LEAST THIRTY (30) DAYS PRIOR TO TAKING ANY ACTION SPECIFIED IN 10 SECTION 402-C, AND SUCH NOTICE CONTAINS ALL OF THE INFORMATION 11 PRESCRIBED BY THE PROVISIONS OF THE ACT OF JANUARY 30, 1974 12 (P.L.13, NO.6), REFERRED TO AS THE LOAN INTEREST AND PROTECTION 13 LAW, THEN NO ADDITIONAL NOTICE SHALL BE REQUIRED PURSUANT TO 14 SECTION 403 OF THE LOAN INTEREST AND PROTECTION LAW. 15 * * * 16 (F) NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS SECTION, A 17 MORTGAGEE SHALL NOT BE REQUIRED TO SEND THE UNIFORM NOTICE 18 PROVIDED IN SUBSECTION [(B) TO ANY MORTGAGOR WHO IS MORE THAN 19 THIRTY-SIX (36) MONTHS DELINQUENT OR IN DEFAULT FOR MORE THAN 20 THIRTY-SIX (36) MONTHS, PURSUANT TO THE TERMS OF MORTGAGOR'S 21 RESIDENTIAL MORTGAGE WITH MORTGAGEE. THIS REQUIREMENT SHALL MEAN 22 THAT IF THE MORTGAGOR IS MORE THAN THIRTY-SIX (36)] (B): 23 (1) TO ANY MORTGAGOR WHO IS MORE THAN TWENTY-FOUR (24) 24 CONSECUTIVE OR NONCONSECUTIVE MONTHS IN ARREARS ON THE 25 RESIDENTIAL MORTGAGE IN QUESTION, NO MATTER WHAT THE REASON 26 THEREFOR[, HE SHALL BE INELIGIBLE TO RECEIVE THE NOTICE IN 27 SUBSECTION (B).]; OR 28 (2) WHERE THE AGGREGATE AMOUNT OF ARREARAGES DUE TO A 29 MORTGAGEE PURSUANT TO THE TERMS OF THE MORTGAGE, WITHOUT REGARD 30 TO ANY ACCELERATION UNDER THE MORTGAGE INCLUDING, BUT NOT 19970H1426B1871 - 5 -
1 LIMITED TO, THE AMOUNT OF PRINCIPAL, INTEREST, TAXES, 2 ASSESSMENTS, GROUND RENTS, HAZARD INSURANCE, ANY MORTGAGE 3 INSURANCE OR CREDIT INSURANCE PREMIUMS, EXCEEDS THE SUM OF SIXTY 4 THOUSAND ($60,000) DOLLARS. 5 (G) NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS SECTION, A 6 MORTGAGEE SHALL NOT BE REQUIRED TO SEND THE UNIFORM NOTICE 7 PROVIDED IN SUBSECTION (B) TO ANY MORTGAGOR WHO HAS ALREADY BEEN 8 SENT THE UNIFORM NOTICE AND: 9 (1) WHO DID NOT APPLY FOR A MORTGAGE ASSISTANCE LOAN; 10 (2) WHO APPLIED FOR A MORTGAGE ASSISTANCE LOAN BUT WHOSE 11 APPLICATION WAS DENIED; OR 12 (3) WHOSE MORTGAGE ASSISTANCE DISBURSEMENTS WERE TERMINATED 13 BY THE AGENCY FOR ANY REASON. 14 UNLESS THE MORTGAGOR HAS CURED HIS OR HER MORTGAGE DELINQUENCY, 15 BY MEANS OF A MORTGAGE ASSISTANCE LOAN OR OTHERWISE, RECEIPT OF 16 PARTIAL PAYMENTS OF ARREARS FROM THE MORTGAGOR, SUBSEQUENT TO 17 THE SENDING OF THE UNIFORM NOTICE, SHALL NOT MEAN THAT THE 18 MORTGAGEE MUST SEND A NEW UNIFORM NOTICE TO THE MORTGAGOR PRIOR 19 TO LEGAL ACTION BEING TAKEN TO ENFORCE THE MORTGAGE. A UNIFORM 20 NOTICE SENT TO THE MORTGAGOR, WHILE THE MORTGAGOR WAS IN 21 BANKRUPTCY, SHALL BE VALID FOR THE PURPOSE OF THIS ACT AND NO 22 NEW UNIFORM NOTICE NEED BE PROVIDED AS A RESULT OF ANY DISCHARGE 23 OR DISMISSAL OF THE BANKRUPTCY PETITION OR RELIEF FROM THE 24 AUTOMATIC STAY. 25 Section 3 4. Section 404-C(a) of the act, amended May 31, <-- 26 1984 (P.L.364, No.73) and December 18, 1992 (P.L.1652, No.182), 27 is amended to read: 28 Section 404-C. Eligibility for Assistance.--(a) No 29 assistance may be made with respect to a mortgage or mortgagor 30 under this article unless all of the following are established: 19970H1426B1871 - 6 -
1 (1) The property securing the mortgage, or other security
2 interest in the case of units in cooperative or condominium
3 projects, is a one-family residence, or two-family owner-
4 occupied residence including one-family units in a condominium
5 project or a membership interest and occupancy agreement in a
6 cooperative housing project, is the principal residence of the
7 mortgagor and is located in this Commonwealth.
8 (2) (i) Any mortgagee has indicated to the mortgagor its
9 intention to foreclose; and
10 (ii) payments under any mortgage have been contractually
11 delinquent for at least sixty (60) days.
12 (3) The mortgage is not insured by the Federal Housing
13 Administration under Title II of the National Housing Act (12
14 U.S.C. §§ 1707-1715z-18).
15 (4) The mortgagor is a permanent resident of this
16 Commonwealth and is suffering financial hardship due to
17 circumstances beyond the mortgagor's control which render the
18 mortgagor unable to correct the delinquency or delinquencies
19 within a reasonable time and make full mortgage payments.
20 (5) The agency has determined that there is a reasonable
21 prospect that the mortgagor will be able to resume full mortgage
22 payments within [thirty-six (36)] twenty-four (24) months after
23 the beginning of the period for which assistance payments are
24 provided under this article and pay the mortgage or mortgages in
25 full by its maturity date or by a later date agreed to by the
26 mortgagee or mortgagees for completing mortgage payments.
27 (6) The mortgagor has applied to the agency for assistance
28 on an application form prescribed by the agency for this use
29 which includes a financial statement disclosing all assets and
30 liabilities of the mortgagor, whether singly or jointly held,
19970H1426B1871 - 7 -
1 and all household income regardless of source. Any applicant who 2 intentionally misrepresents any financial information in 3 conjunction with the filing of an application for assistance 4 under this article may be denied assistance or required to 5 immediately repay any amount of assistance made as a result of 6 such misrepresentation, and the mortgagee may, at any time 7 thereafter, take any legal action to enforce the mortgage 8 without any further restrictions or requirements under this 9 article. 10 (7) The mortgagee is not prevented by law from foreclosing 11 upon the mortgage. 12 (8) The agency has determined, based on the mortgagor's 13 financial statement, that the mortgagor has insufficient 14 household income or net worth to correct the delinquency or 15 delinquencies within a reasonable period of time and make full 16 mortgage payments. 17 (9) Except for the current delinquency, the mortgagor shall 18 have had a favorable residential mortgage credit history for the 19 previous five (5) years. This requirement shall mean that, if 20 the mortgagor has been more than three (3) consecutive months in 21 arrears on a residential mortgage within the previous five (5) 22 years, he shall be ineligible for assistance, unless the 23 mortgagor can demonstrate that the prior delinquency was the 24 result of financial hardship due to circumstances beyond his 25 control. 26 (10) For purposes of this section, in order to determine 27 whether the financial hardship is due to circumstances beyond 28 the mortgagor's control, the agency may consider information 29 regarding the mortgagor's employment record, credit history and 30 current income. 19970H1426B1871 - 8 -
1 (11) The mortgagor meets any other procedural requirements 2 established by the agency. 3 (12) The mortgagor is not more than [thirty-six (36)] 4 twenty-four (24) months delinquent or in default for more than 5 [thirty-six (36)] twenty-four (24) months pursuant to the terms 6 of mortgagor's residential mortgage. This requirement shall mean 7 that if the mortgagor is more than [thirty-six (36)] twenty-four 8 (24) consecutive or nonconsecutive months in arrears on the 9 residential mortgage in question, no matter what the reason 10 therefor, he shall be ineligible for assistance. 11 (13) The property is not encumbered by more than two 12 mortgages, other than a mortgage filed by the agency to secure 13 repayment of the mortgage assistance loan, or by other liens or 14 encumbrances which would unreasonably impair the security of the 15 agency's mortgage. 16 * * * 17 Section 4 5. Sections 405-C(a), (b), (f) and (g), 406-C and <-- 18 408-C of the act, added December 23, 1983 (P.L.385, No.91), are 19 amended to read: 20 Section 405-C. Assistance Payments.--(a) If the agency 21 determines that a mortgagor is eligible for assistance under 22 this article, the agency shall pay directly to each mortgagee 23 secured by the mortgagor's real estate payments on behalf of the 24 mortgagor. The agency shall pay to each mortgagee the full 25 amount then due to that mortgagee pursuant to the terms of the 26 mortgage without regard to any acceleration under the mortgage, 27 or the full amount of any alternate mortgage payments agreed to 28 by the mortgagee and mortgagor. This amount shall include, but 29 not be limited to, the amount of principal, interest, taxes, 30 assessments, ground rents, hazard insurance, any mortgage 19970H1426B1871 - 9 -
1 insurance or credit insurance premiums. The initial payment made 2 by the agency to each mortgagee shall be an amount which makes 3 each mortgage current and pays reasonable costs and reasonable 4 attorneys' fees already incurred by such mortgagee. However, in 5 no event shall the total payment exceed the sum equal to twenty- 6 four (24) consecutive or nonconsecutive months of arrears on any 7 residential mortgage. 8 (b) After the agency has paid any and all arrearages 9 pursuant to subsection (a) to each mortgagee, the mortgagor may 10 be entitled to monthly mortgage assistance payments pursuant to 11 this article. A mortgagor on whose behalf the agency is making 12 mortgage assistance payments shall pay monthly payments to the 13 agency. Such payments shall be in an amount which will cause the 14 mortgagor's total housing expense not to exceed [thirty-five 15 (35)] forty (40) percent of the mortgagor's net effective 16 income. This shall be the maximum amount the mortgagor can be 17 required to pay during the [thirty-six (36) months] period a 18 mortgagor is eligible for emergency mortgage assistance[.]: 19 Provided, however, That beginning July 1, 1997, and continuing 20 thereafter, any mortgagor approved for continuing monthly 21 mortgage assistance or whose continuing mortgage assistance is 22 approved after being recertified by the agency, shall pay to the 23 agency a minimum monthly payment of at least twenty-five ($25) 24 dollars for each mortgage being assisted. The mortgagor shall 25 make the above payment to the agency at least [seven (7)] 26 fifteen (15) days before each mortgage payment is due to each 27 mortgagee. Upon receipt of this payment from the mortgagor, the 28 agency or its duly authorized agent shall send the total 29 mortgage payment directly to each mortgagee. "Housing expense" 30 shall be defined as the sum of the mortgagor's monthly 19970H1426B1871 - 10 -
1 [maintenance,] utility, hazard insurance expense, real estate 2 taxes and required mortgage payments, including escrows. "Net 3 effective income" shall be defined as gross household income 4 less city, State and Federal income and social security taxes. 5 "Gross household income" means the total income of [a husband, 6 wife] the applicant, all other owner-occupants of the residence, 7 any spouse and children residing in the same household as the 8 applicant and any other resident of the household declared by 9 the mortgagor as a dependent for Federal tax purposes. The 10 income of other unrelated individuals residing in the household 11 shall be considered part of gross household income to the extent 12 that their income is made available in support of the household. 13 If the mortgagor is receiving emergency mortgage assistance 14 under a program other than that established in this article, the 15 amount of the payment he or she is required to make to the 16 agency under this article shall take into consideration the 17 amount of assistance he is receiving under such other programs. 18 * * * 19 (f) Payments under this article shall be provided for a 20 period not to exceed [thirty-six (36)] twenty-four (24) months, 21 either consecutively or nonconsecutively[.], whether such 22 payments are on account of arrears, continuing monthly 23 assistance or any combination thereof, and shall not exceed the 24 sum of sixty thousand ($60,000) dollars on behalf of any 25 mortgagor. The agency shall establish procedures for periodic 26 review of the mortgagor's financial circumstances for the 27 purpose of determining the necessity for continuation, 28 termination or adjustment of the amount of the payments. 29 Payments shall be discontinued when the agency determines that, 30 because of the changes in the mortgagor's financial 19970H1426B1871 - 11 -
1 circumstances, the payments are no longer necessary in 2 accordance with the standards set forth in section 404-C. 3 (f.1) The twenty-four (24) month limit on assistance 4 available under this act established in subsection (f), and 5 referenced in sections 401-C(a)(5), 403-C(f) and 404-C(a)(5) and 6 (12), shall increase to thirty-six (36) months if during the 7 month the homeowner submits an application for assistance, the 8 average rate of total unemployment in the Commonwealth, as 9 seasonally adjusted, for the period consisting of the most 10 recent three (3) months for which such data for the Commonwealth 11 is published before the close of such month equals or exceeds 12 six and one-half (6.5) percent. 13 (f.2) Every five (5) years, beginning in the year 2003, the 14 General Assembly shall review the limit on the total assistance 15 available under this act established in subsection (f) and the 16 minimum monthly payment established in subsection (b). The 17 General Assembly may increase either or both upon a showing that 18 increases in housing costs require higher loan amounts in order 19 for the act to be beneficial to homeowners in all regions of the 20 Commonwealth. 21 (g) Repayment of amounts owed to the agency from a mortgagor 22 shall be secured by a mortgage lien on the property and by such 23 other obligation as the agency may require. The priority of any 24 lien obtained by the agency under this article shall be 25 determined in the same manner as the lien of a general secured 26 creditor of the mortgagor. The lien or other security interest 27 of the agency shall not be deemed to take priority over any 28 other secured lien or secured interest in effect against the 29 mortgagor's property on the date assistance payments begin. The 30 agency may allow subordination of the mortgage assistance lien 19970H1426B1871 - 12 -
1 if such subordination is necessary to permit the mortgagor to 2 obtain a home improvement loan for repairs necessary to preserve 3 the property. 4 (h) In cases of joint mortgagors who are husband and wife, 5 where only one spouse who is an occupant of the mortgaged 6 premises makes application for and receives assistance under 7 this article, the lien to secure repayment as aforesaid shall be 8 a lien on the property of like force and effect as a mechanic's 9 lien. 10 Section 406-C. Repayment.--Upon approval of mortgage 11 assistance, the agency shall enter into an agreement with the 12 mortgagor for repayment of all mortgage assistance made by the 13 agency plus interest as provided in paragraph (5). The agreement 14 shall provide for monthly payments by the mortgagor and be 15 subject to the following [forbearance] provisions: 16 (1) If the mortgagor's total housing expense as defined in 17 section 405-C is less than [thirty-five (35)] forty (40) percent 18 of his or her net effective income, the mortgagor shall pay to 19 the agency the difference between [thirty-five (35)] forty (40) 20 percent of the mortgagor's net effective income and the 21 mortgagor's total housing expense unless otherwise determined by 22 the agency after examining the mortgagor's financial 23 circumstances and ability to contribute to repayment of the 24 mortgage assistance. 25 (2) If the mortgagor's total housing expense is more than 26 [thirty-five (35)] forty (40) percent of his or her net 27 effective income, repayment of the mortgage assistance shall be 28 deferred until the mortgagor's total housing expense is less 29 than [thirty-five (35)] forty (40) percent of his or her net 30 effective income[.]: Provided, however, That beginning July 1, 19970H1426B1871 - 13 -
1 1997, and continuing thereafter, any mortgagor who has received 2 mortgage assistance shall pay to the agency a minimum monthly 3 repayment of at least twenty-five ($25) dollars for each 4 mortgage that was assisted. Such minimum monthly repayment shall 5 not result in the accrual of interest on the mortgage assistance 6 loan pursuant to paragraph (5). 7 (2.1) The forty (40) percent ratio established under 8 subsections (1) and (2) shall be reduced to thirty-five (35) 9 percent if during the month the homeowner submits an application 10 for assistance the average rate of total unemployment in the 11 Commonwealth, as seasonally adjusted, for the period consisting 12 of the most recent three (3) months for which such data for the 13 Commonwealth is published before the close of such month equals 14 or exceeds six and one-half (6.5) percent. 15 (3) If repayment of mortgage assistance is not made by the 16 date any mortgage is paid, the mortgagor shall make mortgage 17 assistance repayments in an amount not less than the mortgage 18 payment until the mortgage assistance is repaid. 19 (4) The agency shall establish procedures for periodic 20 review of the mortgagor's financial circumstances to determine 21 the amounts of repayment required under this section. 22 Notwithstanding any other provision of this section, the agency 23 shall require full or partial repayment of the mortgage 24 assistance loan once the mortgagor has established credit to the 25 extent that there is sufficient equity in the property for the 26 mortgagor to be able to refinance their mortgage obligations at 27 reasonable rates and terms as determined by the agency. 28 (5) Interest shall accrue on all mortgage assistance made by 29 the agency at the rate of nine (9) percent per annum. Interest 30 shall start to accrue whenever the mortgagor begins to make 19970H1426B1871 - 14 -
1 repayment under this section. Interest shall accrue only during 2 the period in which the mortgagor is required to make repayment 3 under this section. When any mortgage for which mortgage 4 assistance was made is paid, interest shall then accrue on all 5 mortgage assistance due and owing at the same rate and on the 6 same basis as the mortgage for which the mortgage assistance was 7 made. 8 (6) All moneys received from mortgagors for repayment of 9 mortgage assistance shall be deposited in the State Homeowner's 10 Emergency Mortgage Assistance Fund established by the agency for 11 the sole purpose of implementing the provisions of this article. 12 Section 408-C. Homeowner's Emergency Mortgage Assistance 13 Fund.--The Homeowner's Emergency Mortgage Assistance Fund is 14 hereby created as a separate account within the agency for the 15 sole purpose of implementing the provisions of this article. No 16 other agency funds, moneys or interest earnings shall be 17 utilized for the purposes of this article. [The Homeowner's 18 Emergency Mortgage Assistance Fund shall only be utilized by the 19 agency whenever funds are specifically authorized and 20 appropriated by the General Assembly pursuant to section 410-C 21 of this article for the purposes provided for in this article. 22 All moneys paid by mortgagors to the agency to repay loans 23 provided by the agency shall be accounted for and lapsed into or 24 transferred back to the source from which the funds are 25 appropriated unless the funds cannot be lapsed or transferred 26 pursuant to any other act of the General Assembly: Provided, 27 however, That investment] Investment and interest earnings on 28 moneys from this fund may be used by the agency for the 29 administrative costs of the program. The Homeowner's Emergency 30 Mortgage Assistance Fund shall operate as a revolving loan fund 19970H1426B1871 - 15 -
1 to which shall be credited all repayment of principal and 2 interest by mortgagors to the agency to repay loans provided by 3 the agency pursuant to this article, as well as grants or 4 donations from other sources and any funds that may be 5 appropriated by the General Assembly. 6 Section 5 6. Section 410-C of the act is repealed. <-- 7 Section 6 7. This act shall take effect in 60 days. <-- D29L64JS/19970H1426B1871 - 16 -