Legislature(2001 - 2002)
03/21/2002 09:13 AM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 181
"An Act making the interest rate for the Alaska Housing
Finance Corporation's small community housing mortgage loans
the same as the interest rate on mortgage loans purchased
under the corporation's special mortgage loan purchase program
from the proceeds of the most recent applicable issue of
taxable bonds before the origination or purchase of the small
community housing mortgage loans."
This was the fourth hearing for this bill in the Senate Finance
Committee.
Co-Chair Donley moved for adoption of CS SB 181, 22-LS0488\W as a
working draft.
There were no objections, and the committee substitute was ADOPTED
Amendment #2: This amendment inserts language into the bill's title
and inserts a new bill section as follows.
The title is amended to read:
"An Act relating to the Alaska Housing Finance Corporation's
rural assistance loan program; relating to the use of money
from the housing assistance loan fund in the Alaska Housing
Finance Corporation, preventing use of that money for a
single-family owner-occupied house with a value that exceeds
$250,000, adjusted for inflation, and repealing a provision
authorizing use of that money for nonowner-occupied housing;
repealing the home ownership assistance fund; and providing
for an effective date."
Section 1. AS 18.56.420(a) is amended to read:
(a)There is created in the corporation, as a revolving loan
fund, the housing assistance loan fund consisting of money
appropriated to it by the legislature and deposited in it by
the corporation, and repayments of principal and interest on
loans made or purchased from the assets of the fund. The
corporation shall
(1) adopt regulations to administer the housing
assistance loan fund under AS 18.56.400 - 18.56.600; and
(2) subject to appropriation, provide money for a rural
assistance loan program to originate, purchase, [OR]
participate in the purchase of, or refinance
(A) small community housing mortgage loans;
(B) loans made for building materials for small
community housing;
(C) loans made for renovations or improvements to
small community housing;
(D) loans made for the construction of own-
occupied small community housing other than
loans to builders or contractors or loans that
compensate an owner for the owner's labor or
services in constructing the owner's own
housing.
Co-Chair Donley moved for adoption of Amendment #2.
There being no objection, Amendment #2 was ADOPTED.
AT EASE 9:35 AM /9:36 AM
JOHN BITNEY, Legislative Liaison, Alaska Housing Finance
Corporation, Department of Revenue, explained that Amendment #2 was
offered at the request of the Alaska Housing Finance Corporation
(AHFC) and stated current state law regarding the Housing
Assistance Loan Fund (HALF) Program, does not allow a borrower to
refinance their loan. He stated refinancing "is a very standard"
provision under most conventional loan programs, and is "also an
issue of fairness for the borrowers." He informed the Committee
that AHFC's income would be affected by the refinancing component
because when loans are refinanced at lower interest rates, income
into the fund is also reduced; however, he noted AHFC currently
loses borrowers who want to refinance to other financial
institutions.
Senator Hoffman asked for clarification on how this bill would
affect AHFC's "bottom line".
Mr. Bitney responded AHFC's largest concern is the income
restriction on persons whose income must be less than 400% of the
United States Department of Health and Social Services poverty
level guidelines. He stressed this limitation, based on prior
history of the program, would exempt "close to 50 percent of the
borrowers." He stated recent analysis indicates that most of the
current loans are for household sizes of one or two persons whose
income is slightly over the 400 percent level, or approximately
$44,000 for a one-person household.
Co-Chair Kelly distributed an AHFC chart [copy on file], dated
March 20, 2002, reflecting current loans and the affect this bill
would have on them.
Senator Hoffman summarized this bill would result in a loss of
income to the State.
Mr. Bittner concurred that this bill, as currently drafted, would
reduce revenue to the State.
Co-Chair Donley stated Mr. Bittner's response "was based on the
assumption" that AHFC would lose money by the introduction of a
refinancing program. Co-Chair Donley questioned if AHFC could
expand its business in other areas such as providing loans to
communities that are ineligible for the HALF program.
Mr. Bitney responded the committee substitute does not delete size
restrictions or clarify small community population parameters;
therefore the HALF program is restricted from being expanded to
some communities.
AT EASE 9:41 AM/ 9:42 AM
Co-Chair Donley asked Mr. Bitney to work with his staff to
formulate appropriate language regarding small communities
restrictions.
Co-Chair Kelly stressed the intent of this bill is to offer AHFC
more lending possibilities, and not to harm the program. He
supported Co-Chair Donley's request for AHFC to work with staff to
establish the appropriate language in the bill to provide AHFC with
further lending opportunities.
The bill was HELD in Committee.
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