Bill: HB 2473, 84(R) - 2015

Committee

House Investments & Financial Services

Vote Recommendation

Vote Recommendation Economic Freedom Property Rights Personal Responsibility Limited Government Individual Liberty
No Negative Neutral Neutral Negative Neutral

Author(s)

Yvonne Davis

Bill Caption

Relating to establishing a grant program in the Department of Savings and Mortgage Lending to assist certain organizations that make residential mortgage loans to residents of certain neighborhoods.

Fiscal Notes

A fiscal note dated April 30, 2015 anticipates a negative two-year net impact to General Related Funds for CSHB 2473 of $124,628,489 through the biennium ending August 31, 2017, assuming costs equivalent to the amount of the proceeds received by the state through the National Mortgage Fraud Settlement.

The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.

Bill Analysis

House Bill 2473 would amend Subchapter K, Chapter 2306 of the Government Code related to housing programs withing the Texas Department of Housing and Community Affairs to create the Affordable Homeownership Assistance Program.

The program would be administered by the Texas Department of Housing and Community Affairs and would provide grants to assist certain organizations to make below-market rate residential mortgage loans to residents of neighborhoods that have homeownership rates of less than 50 percent.

An eligible organization would have to have a history of making below-market rate residential mortgage loans and moderate income households, provide home buyer education services and post-home purchase counseling and support services.

Grants would have to be awarded in priority to organizations that qualify for matching funds from federal or private sources.

An organization that receives a grant would have to submit an annual report to the Texas Department of Housing and Community Affairs containing information on how the money is being used and the reinvestment of loan principal and interest payments made to that organization.

Vote Recommendation Notes

House Bill 2473 would create a grant program that would subsidize certain organizations to make below-market rate residential mortgage loans to residents of neighborhoods that have home ownership rates of less than 50 percent.

According to the statement of purpose for the bill, the money to pay for these grants could come from some of the proceeds of a joint state-federal settlement that was reached with several large mortgage servicers in response to questionable misconduct that resulted in the premature and unauthorized foreclosure of single-family residential mortgages in Texas and other states. C.S.H.B. 2473 would aim at ensuring that the received funds are used in accordance with the objective of the settlement. 

Although this new housing program may not require any new money, the bill could eventually create the legal basis for an appropriation of funds to implement its provisions.

Additionally, the role of a limited government is not to encourage "affordable" home ownership. Subsidizing below-market rate residential mortgage loans will considerably distort the residential mortgage loan market and could create very bad unintended consequences. The market rates are not fixed out of the blue: they reach a certain level according to many considerations lending institutions must take into account before making loan decisions. Lest we forget, this has been tried before on the same market with onerous and expensive consequences.

House Bill 2473 would considerably expand the scope of government and would distort the free market system. We oppose House Bill 2473.

Source URL (retrieved on 03/28/2024 06:03 PM): http://reports.texasaction.com/bill/84r/hb2473?print_view=true