PRINTER'S NO. 22
No. 18 Session of 1997
INTRODUCED BY THOMAS, RAMOS, PISTELLA, DALEY AND ROBINSON,
JANUARY 27, 1997
REFERRED TO COMMITTEE ON URBAN AFFAIRS, JANUARY 27, 1997
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; creating the Affordable Housing Trust Fund;
8 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) Creation and administration of fund.--There is hereby
22 created and established under the jurisdiction and control of
23 the agency the Affordable Housing Trust Fund, as a permanent
24 revolving fund of identifiable, renewable and segregated capital
25 to be used by the agency in accordance with this section. The
26 agency shall hold fund moneys separate and distinct from its
27 other assets and other funds 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.
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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 and/or grants, the
24 proceeds of which can be used to provide closing cost
25 assistance and/or down payment assistance to eligible
26 homebuyers. Repayment may be deferred by the agency for a
27 period up to the length of the first mortgage but shall be
28 repaid at the time of a sale, transfer or nonowner occupancy
29 of the property or upon payment in full or a refinance of the
30 first mortgage. The agency may allow subordination of the
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1 mortgage loan where the first mortgage is being refinanced to
2 produce more favorable repayment terms for the homeowner or
3 to enable the homeowner to make repairs necessary to preserve
4 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 provision 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
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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.
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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.--There is hereby imposed a real
16 estate document surcharge in the amount of $10 for every deed,
17 mortgage or other instrument for which a recording fee is
18 provided and which is recorded in the office of the recorder of
19 deeds in each county of this Commonwealth. The surcharge shall
20 be in addition to any other recording fee or other charge
21 lawfully collected by the recorder of deeds and shall be paid by
22 the recorder of deeds to the Department of Revenue at the same
23 time and in the same manner as the realty transfer tax. The
24 Department of Revenue shall remit forthwith to the agency for
25 deposit to the fund all moneys received in connection with the
26 real estate document surcharge.
27 (k) County participation.--The county commissioners or the
28 governing body of a county with a down payment and/or closing
29 cost assistance program established under the provisions of the
30 act of December 14, 1992 (P.L.866, No.137), known as the
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1 Optional County Affordable Housing Funds Act, shall have the
2 power and may elect to not participate in the Affordable Housing
3 Trust Fund established under this section. The election to not
4 participate in the fund shall be evidenced by an ordinance
5 enacted by the county commissioners or the governing body of
6 such county. The surcharge under subsection (j) shall be imposed
7 and any moneys received shall be deposited into the fund until
8 such an ordinance is enacted under this subsection. Any real
9 estate document recorded in the office of the recorder of deeds
10 in a county which has enacted an ordinance under this subsection
11 shall not be subject to the surcharge imposed by subsection (j).
12 The residents of a county which has enacted an ordinance under
13 this subsection shall be ineligible to receive any moneys from
14 the fund until the county commissioners or the governing body of
15 the county repeals the ordinance. The recorder of deeds of the
16 county shall begin collecting the surcharge imposed by
17 subsection (j), 60 days after the repeal is effective.
18 (l) Third class cities program.--The county commissioners or
19 the governing body of a county in which a city of the third
20 class is located shall have the power and may elect by ordinance
21 to impose a surcharge of $1 on every deed, mortgage or other
22 instrument for which a recording fee is provided and which is
23 recorded in the office of the recorder of deeds. This surcharge
24 shall be in addition to any other recording fee or other charge
25 lawfully collected by the recorder of deeds. This surcharge
26 shall be paid by the recorder of deeds to the Department of
27 Revenue at the same time and in the same manner as the realty
28 transfer tax. The Department of Revenue shall remit forthwith to
29 the agency for deposit into a restricted account within the fund
30 all moneys received in connection with the surcharge imposed
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1 under this subsection. In accordance with subsections (c)
2 through (i), where applicable, the agency shall use the moneys
3 in the restricted account only for the purpose of enabling low-
4 income and moderate-income persons and families to attain home
5 ownership within a city of the third class located within a
6 county where the money was collected. If there is more than one
7 city of the third class within a county imposing a surcharge
8 under this subsection, the moneys distributed for use in a city
9 of the third class shall be based upon the total population of
10 all cities of the third class within the county where the money
11 was collected divided by the total population of a city of the
12 third class where the moneys will be distributed. If all of the
13 moneys in the restricted account cannot be distributed under
14 this subsection, the agency shall distribute the moneys in
15 accordance with subsection (e).
16 (m) Semiannual report.--The agency shall report to the
17 General Assembly and the Governor on a semiannual basis,
18 corresponding with the beginning of each two-year legislative
19 session, on the income and expenses of the fund and its uses,
20 including the number and amounts of loans and grants made, the
21 number and types of residential units assisted, the income
22 levels of persons assisted and the geographical distribution of
23 loans and grants made.
24 (n) Expiration.--The Affordable Housing Trust Fund created
25 under this section, together with its statutory functions and
26 duties, and this section, shall terminate on December 31, 2001,
27 unless reestablished or continued by the General Assembly. The
28 Legislative Budget and Finance Committee shall be required to
29 present to the General Assembly a report evaluating the fund by
30 December 31, 2000. This report shall provide the General
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1 Assembly with a recommendation as to whether the fund is to be
2 continued and, if so, the changes which are suggested by the
3 committee to improve the operation of the fund.
4 (o) Definitions.--The following words and phrases when used
5 in this section shall have the meanings given to them in this
6 subsection unless the context clearly indicates otherwise:
7 "Agency." The Pennsylvania Housing Finance Agency, a public
8 corporation and government instrumentality, established under
9 the act of December 3, 1959 (P.L.1688, No.621), known as the
10 Housing Finance Agency Law.
11 "Annual income." The total annual income of all members of a
12 family from whatever source derived, including, but not limited
13 to, pension, annuity, retirement and Social Security benefits,
14 but may exclude the following as the Pennsylvania Housing
15 Finance Agency may establish by rule or regulation:
16 (1) Reasonable allowances for dependents.
17 (2) Reasonable allowances for medical expenses.
18 (3) All or a proportionate part of the earnings of
19 dependent family members.
20 (4) Income not received regularly.
21 "Fund." The Affordable Housing Trust Fund created under this
22 section.
23 "Lending institution." Any of the following if it
24 customarily provides residential mortgage services or otherwise
25 aids in the financing of mortgages on residential housing in
26 this Commonwealth:
27 (1) Bank.
28 (2) Bank and trust company.
29 (3) Trust company.
30 (4) Savings bank.
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1 (5) National banking association.
2 (6) Federal National Mortgage Association.
3 (7) Federal Home Loan Mortgage Corporation.
4 (8) Government National Mortgage Association.
5 (9) Pennsylvania Housing Finance Agency.
6 (10) Mortgage banker.
7 (11) FHA-approved mortgage service company.
8 (12) Savings and loan association.
9 (13) Federal savings and loan association.
10 (14) Building and loan association.
11 (15) Credit union.
12 (16) A financial institution similar to those listed in
13 paragraphs (1) through (15).
14 "Low-income and moderate-income persons" or "low-income and
15 moderate-income families." Individuals or families who cannot
16 afford to pay the amounts at which private enterprise, without
17 the assistance of this section, is providing a substantial
18 supply of decent, safe and sanitary housing. The agency shall
19 establish income limits for participation of such persons and
20 families, based on countywide income statistics, where
21 available.
22 "Mortgage." A lien other than a judgment on a fee simple
23 estate or leasehold in real property located in this
24 Commonwealth, together with the credit instruments, if any,
25 secured by it. The term shall include insured and uninsured
26 mortgages.
27 "Mortgagor." Individuals, joint ventures, partnerships,
28 limited partnerships, trusts, corporations, cooperatives and
29 condominiums, whether organized for profit or not for profit.
30 Section 4. Section 7 of the act is repealed.
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1 Section 5. The act is amended by adding a section to read:
2 Section 8. Home mortgage insurance program.
3 (a) Housing Insurance Fund.--
4 (1) There is hereby created under the jurisdiction of
5 the agency, or any nonprofit corporate subsidiary it may
6 create for this purpose, an insurance reserve fund called the
7 Housing Insurance Fund.
8 (2) There shall be paid into the fund:
9 (i) All money appropriated by the General Assembly
10 for inclusion in the fund.
11 (ii) All proceeds from the issuance of bonds by the
12 agency for inclusion in the fund.
13 (iii) All premiums collected under the home mortgage
14 insurance program.
15 (iv) All interest, dividends and gains from
16 investment of money of the fund.
17 (v) Any other money available to the agency which it
18 determines to use for this purpose.
19 (3) Money held in the fund shall be used to make
20 payments pursuant to home mortgage insurance contracts, to
21 pay any or all expenses of administration and operation of
22 the home mortgage insurance program and to maintain the fund
23 at an amount equal to prudent minimum insurance reserves as
24 determined by the agency. Any money in the fund in excess of
25 that required for the aforesaid purposes may be allocated by
26 the agency to the Affordable Housing Trust Fund, created
27 under section 6.1.
28 (b) Home mortgage insurance program.--The agency, or any
29 nonprofit corporate subsidiary of the agency formed for this
30 purpose, shall have the authority to create, develop, administer
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1 and supervise the administration of the home mortgage insurance
2 program in cooperation with public or private mortgage insurers
3 to encourage home ownership for low-income and moderate-income
4 persons and families who are unable to purchase a home without
5 mortgage insurance or similar credit enhancements. In this
6 connection, the agency may:
7 (1) Enter into contracts to insure, reinsure or coinsure
8 the repayment of loans secured by mortgages on single-family
9 owner-occupied residences located in this Commonwealth.
10 (2) Procure reinsurance or coinsurance or enter into
11 reciprocal or interinsurance contracts from and with any
12 local agency, agency of the United States or any licensed
13 private mortgage insurer or reinsurer.
14 (3) Negotiate, solicit, sell and otherwise deal with
15 home mortgage loan insurance policies.
16 (4) Prescribe forms of policies, establish premiums and
17 otherwise implement the home mortgage insurance program.
18 (c) Eligibility requirements.--
19 (1) To qualify for loan insurance pursuant to this
20 section, a borrower shall be a purchaser of a single-family
21 owner-occupied residence who is qualified and financially
22 able to bear the usual expenses of maintaining such
23 residences and repaying the loan. The agency may insure or
24 issue commitments to insure loans upon certification of an
25 officer of an approved lending institution that the borrower
26 is qualified for the loan according to standard single-family
27 lending practices and agency guidelines.
28 (2) The mortgage loan shall exceed a 95% loan-to-value
29 ratio, but shall not exceed a 100% loan-to-value ratio.
30 (3) The mortgage loan and related documents shall
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1 contain such terms as are satisfactory to the agency.
2 (4) A borrower that is approved for mortgage insurance
3 under this section shall be required to complete a home
4 ownership counseling program as approved by the agency.
5 (d) Loan defaults.--The agency shall establish procedures to
6 be followed by lending institutions in the event of a default on
7 the loan insured under this section. The agency may require
8 that, prior to submission and payment of a claim, the lending
9 institution must foreclose and take possession of the property
10 or otherwise acquire title and possession of the property within
11 the time specified by the agency.
12 (e) Home mortgage insurance premiums.--The agency shall fix
13 mortgage insurance premiums for the insurance of mortgage loans
14 under the provisions of this section. The amount of premium need
15 not be uniform for all insured loans.
16 (f) Status of mortgages as investments.--Loans secured by
17 mortgages, the payment of which are insured by the agency, shall
18 be legal investments for trust companies; banks; investment
19 companies; savings banks; building and loan associations;
20 executors, administrators, guardians, conservators, trustees and
21 other fiduciaries; public and private pension, profit-sharing
22 and retirement funds; the State Treasurer; and agencies of the
23 Commonwealth.
24 (g) Licensure exemption.--The authority granted to the
25 agency by this section, or to any nonprofit corporate subsidiary
26 it may create for this purpose, is intended to be in complete
27 substitution of all licensing, filing and other regulatory
28 requirements otherwise applicable to insurance carriers doing
29 business in this Commonwealth and the agency or its nonprofit
30 corporate subsidiary.
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1 (h) Expiration.--The Housing Insurance Fund created under
2 this section, together with its statutory functions and duties,
3 and this section, shall expire on December 31, 2001, unless
4 reestablished or continued by the General Assembly. The
5 Legislative Budget and Finance Committee shall present to the
6 General Assembly a report evaluating the fund by December 31,
7 2000. This report shall provide the General Assembly with a
8 recommendation as to whether the fund is to be continued and, if
9 so, the changes which are suggested by the committee to improve
10 the operation of the fund.
11 (i) Definitions.--As used in this section, the following
12 words and phrases shall have the meanings given to them in this
13 subsection:
14 "Agency." The Pennsylvania Housing Finance Agency.
15 "Fund." The Housing Insurance Fund.
16 Section 6. This act shall take effect as follows:
17 (1) The addition of sections 6.1(j) and 8 of the act
18 shall take effect in 60 days.
19 (2) The remainder of this act shall take effect
20 immediately.
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