HB-4580, As Passed House, May 31, 2017

HOUSE BILL No. 4580

May 3, 2017, Introduced by Rep. Farrington and referred to the Committee on Financial Services.

A bill to amend 1966 PA 346, entitled

"State housing development authority act of 1966,"

by amending section 44 (MCL 125.1444), as amended by 2012 PA 326.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 44. (1)(a) The authority may make loans to a nonprofit

housing corporation, consumer housing cooperative, limited dividend

housing corporation, limited dividend housing association, mobile

home park corporation, or mobile home park association or to a

public body or agency for the construction or rehabilitation, and

for the long-term financing, of the following:

(i) Housing for low income or moderate income persons.

(ii) For the period beginning May 1, 1984, and ending November

1, 1987, housing projects in which not less than 20% of the

dwelling units are allotted to individuals of low or moderate

income within the meaning of former section 103(b)(4)(A) of the

internal revenue code of 1954; not less than 60% of the dwelling

units are available to persons and families whose gross household

income does not exceed 125% of the higher of either the median

income for a family in this state or the median income for a family

within the nonmetropolitan county or metropolitan statistical area

in which the housing project is located, as determined by the

authority; and not more than 20% of the dwelling units are

available for occupancy without regard to income. The enactment of

this subparagraph or the expiration of the authority granted by it

does not affect rules in effect before July 10, 1984, or

promulgated after July 9, 1984, to define low or moderate income

persons.

(iii) For the period of time beginning May 1, 1984, and ending

November 1, 1987, housing projects in eligible distressed areas in

which housing projects not less than 20% of the dwelling units are

allotted to individuals of low or moderate income within the

meaning of former section 103(b)(4)(A) of the internal revenue code

of 1954, not less than 60% of the dwelling units are available to

persons and families whose gross household income does not exceed

150% of the higher of either the median income for a family in this

state or the median income for a family within the nonmetropolitan

county or metropolitan statistical area in which the housing

project is located, as determined by the authority, and not more

than 20% of the dwelling units are available for occupancy without

regard to income.

(iv) Beginning November 1, 1987, multifamily housing projects

that meet the 20-50 or 40-60 test established in section 142 of the

internal revenue code, 26 USC 142, and ~~, in addition,~~ in which the

remaining dwelling units are available for occupancy without regard

to income.

(v) Social, recreational, commercial, or communal facilities

necessary to serve and improve the residential area in which an

authority-financed housing project is located or is planned to be

located thereby enhancing the viability of the housing.

(b) Notwithstanding the other provisions of this subsection,

the authority may establish by resolution higher income limits that

it considers necessary to achieve sustained occupancy of a housing

project financed under subdivision (a) if the authority determines

both of the following:

(i) The owner of the housing project exercised reasonable

efforts to rent the dwelling units to persons and families whose

incomes did not exceed the income limitations originally

applicable.

(ii) For an annual period after the first tenant has occupied

the housing project, the owner of the housing project has been

unable to attain and sustain at least a 95% occupancy level at the

housing project.

project cost as approved by the authority. For purposes of this

section, the term "project cost" includes all items included in the

definition of a project cost in section 11 and also includes a

builder's fee equal to an amount up to 5% of the amount of the

construction contract, a developer overhead allowance and fee of 5%

of the amount of the project cost, the cost of furnishings, and a

sponsor's risk allowance equal to 10% of the project cost. A loan

shall not be made under this section unless a market analysis has

been conducted that demonstrates a sufficient market exists for the

housing project.

(d) After November 1, 1987, the authority may continue to

finance multifamily housing projects for families or persons whose

incomes do not exceed the limits provided in subsection (1)(a)(ii)

or (iii) or (1)(b), until funds derived from the proceeds of bonds

or notes issued before November 2, 1987, for that purpose,

including the proceeds of prepayments or recovery payments with

respect to these multifamily housing projects, have been expended.

Multifamily housing projects or single family housing units in an

eligible distressed area that are financed by proceeds of notes or

bonds issued before June 30, 1984, and that the authority has

designated for occupancy by persons and families without regard to

income pursuant to this act shall remain eligible for occupancy by

families and persons without regard to income until the authority's

mortgage loan issued with respect to these multifamily housing

projects is fully repaid.

(e) Notwithstanding the expiration of lending authority under

subsection (1)(a)(ii), (iii), (iv), or (v), multifamily housing

projects financed under those subparagraphs may continue to remain

eligible for occupancy by persons and families whose incomes do not

exceed the limits provided in those subparagraphs or subsection

(1)(b).

(f) For purposes of this subsection:

(i) "Gross household income" means gross income of a household

as those terms are defined in rules of the authority.

(ii) "Median income for a family in this state" and "median

income for a family within the nonmetropolitan county or

metropolitan statistical area" mean those income levels as

determined by the authority.

(2)(a) The authority may make loans to a nonprofit housing

corporation, limited dividend housing corporation, mobile home park

corporation, or mobile home park association for the construction

or rehabilitation of housing units, including residential

condominium units as condominium unit is defined in section 4 of

the condominium act, 1978 PA 59, MCL 559.104, for sale to

individual purchasers of low or moderate income or to individual

purchasers without regard to income when the housing units are

located in an eligible distressed area. A loan under this

subsection shall not exceed 100% of the project cost as approved by

the authority in the case of a nonprofit housing corporation or

individual purchaser, and shall not exceed 90% of the project cost

as approved by the authority in the case of a limited dividend

housing corporation, mobile home park corporation, or mobile home

park association.

(b) While a loan under this subsection is outstanding, a sale

by a nonprofit housing corporation or limited dividend housing

corporation or a subsequent resale is subject to approval by the

authority. The authority may provide in its rules concerning these

sales and resales that the price of the housing unit sold, the

method of making payments after the sale, the security afforded,

and the interest rate, fees, and charges to be paid shall at all

times be sufficient to permit the authority to make the payments on

its bonds and notes and to meet administrative or other costs of

the authority in connection with the transactions. Housing units

shall be sold under terms that provide for monthly payments

including principal, interest, taxes, and insurance.

authority, before the approval of sale by a nonprofit housing

corporation, limited dividend housing corporation, mobile home park

corporation, or mobile home park association, shall determine that

the sale is to persons of low or moderate income if the housing

unit is not located in an eligible distressed area, or to persons

without regard to income if the housing unit is located in an

eligible distressed area.

(3) The authority may make, purchase, or participate in loans

made to individual purchasers for acquisition and long-term

financing or refinancing of newly rehabilitated, newly constructed,

or existing 1- to 4-unit housing units, including a residential

condominium unit as condominium unit is defined in section 4 of the

condominium act, 1978 PA 59, MCL 559.104. All of the following

apply to making, purchasing, or participating in a loan under this

subsection:

(a) The borrower's family income shall not exceed ~~The~~ the

income requirements established in section 143 of the internal

revenue code, 26 USC 143. If those income requirements are

repealed, the borrower's family income shall not exceed the income

requirements that were in effect immediately before the repeal.

(b) The purchase price or, in the case of a refinancing, the

appraised value shall not exceed the following:

(i) With respect to a 1- or 2-family unit, $224,500.00.

(ii) With respect to a 3-family unit, $261,625.00.

(iii) With respect to a 4-family unit, $299,000.00.

improvements to adapt new or existing property for use by disabled

individuals, the authority may increase the purchase price limit by

an amount sufficient to cover these cost increases, but not to

exceed $3,500.00.

(d) If a purchase price limit prescribed by this subsection

exceeds an applicable limit prescribed by the internal revenue

code, the internal revenue code limit applies if the loan will be

financed with the proceeds of a tax-exempt bond.

(e) Except with respect to newly constructed housing units,

the authority may by resolution establish, for a length of time the

authority considers appropriate, maximum borrower income or

purchase price limits more restrictive than those maximum

limitations set forth in this subsection. The authority shall

advise the appropriate house and senate standing committees 5 days

prior to adopting a resolution establishing more restrictive

maximum borrower income or purchase price limits.

(f) Before the authority makes a loan under this section,

authority staff shall determine that the borrower has the ability

to repay the loan.

(g) A loan made or purchased to finance the acquisition of an

existing housing unit may include funds for rehabilitation.

(h) If the loan ~~made~~ is ~~a loan~~ for refinancing of a 1- to 4-

unit housing unit, including a residential condominium unit as

condominium unit is defined in section 4 of the condominium act,

1978 PA 59, MCL 559.104, the authority shall determine that 1 of

the units is occupied by the borrower.

(4) A loan under this section shall be secured in a manner and

be repaid in a period, not exceeding 50 years, as may be determined

by the authority. A loan shall bear interest at a rate determined

by the authority.

(5) A person who, for purposes of securing a loan under this

act, misrepresents his or her income, including taking a leave of

absence from his or her employment for purposes of diminishing his

or her income, is not eligible for a loan under this act.

~~(6) With regard to refinancing, the authority shall not make,~~

~~purchase, or commence participation in loans to individual~~

~~purchasers pursuant to subsection (3) after April 3, 2011.~~

(6)(a) ~~(7)(a)~~ The authority may make, purchase, or participate

in a loan for acquisition and long-term financing or refinancing of

newly rehabilitated, newly constructed, or existing 1- to 4-unit

housing units, including a residential condominium unit as

condominium unit is defined in section 4 of the condominium act,

1978 PA 59, MCL 559.104, if all of the following requirements are

met:

(i) The loan is made to an individual purchaser or purchasers,

whose income does not exceed the income requirements established in

section 143 of the internal revenue code, 26 USC 143. If those

income requirements are repealed, the borrower's family income

shall not exceed the income requirements that were in effect

immediately before the repeal.

(ii) The purchase price of the housing unit does not exceed

the greatest of purchase price limits established for similar

housing units by Fannie Mae, Freddie Mac, and Ginnie Mae.

(iii) At least 1 of the dwelling units is owned and occupied

by the individual purchaser or purchasers to whom the loan is made.

(iv) Authority staff determine that the individual purchaser

or purchasers receiving the loan have the ability to repay the

loan.

(b) If the authority makes, purchases, or participates in a

loan under this subsection, the loan may be securitized by the

authority and may either be sold to investors or held by the

authority.

(i) "Fannie Mae" means the ~~federal national mortgage~~

~~association~~ Federal National Mortgage Association established under

authority of the federal national mortgage association charter act,

12 USC 1716 to ~~1723i.~~1749aaa-5.

(ii) "Freddie Mac" means the ~~federal home loan mortgage~~

~~corporation~~ Federal Home Loan Mortgage Corporation established

under authority of the federal home loan mortgage corporation act,

~~12 USC 1451 to 1459.~~title III of Public Law 91-351.

(iii) "Ginnie Mae" means the ~~government national mortgage~~

~~association~~ Government National Mortgage Association established

under authority of the federal national mortgage association

charter act, 12 USC 1716 to ~~1723i.~~1749aaa-5.