SB 975

This bill establishes a revolving loan program administered by the Wisconsin

Housing and Economic Development Authority for the purpose of issuing loans,

which the bill terms “workforce home loans,” to eligible applicants to provide gap

financing to supplement a conventional mortgage for the purchase of a single-family

residence in Wisconsin, whether new construction or an existing residence and

whether detached or attached, that will be the eligible applicant's primary residence.

The bill requires WHEDA to use repayments of workforce home loans to fund

additional loans under the program.

The bill prohibits WHEDA from charging any interest for a workforce home

loan, and workforce home loans are not forgivable in whole or in part. Each

workforce home loan must be secured as a second lien real estate mortgage. The loan

term is 30 years, except that the loan term may be extended to 40 years for certain

applicants who qualify for limited workforce home loan payment deferral, as

provided in the bill, and a workforce home loan may be prepaid in whole or in part

at any time without penalty. Under the bill, the total amount of unpaid principal on

a workforce home loan becomes due and payable upon the occurrence of any of the

following:

1. The recipient of the workforce home loan sells the home.

2. No recipient of the workforce home loan continues to reside in the home as

a primary residence.

Under the bill, a lender authorized by WHEDA or a local housing authority or

community-based organization or other qualified local organization, as determined

by WHEDA, certifies that a loan applicant is eligible to receive a workforce home

loan, subject to WHEDA's approval. An applicant is eligible for a workforce home

loan under the bill if all of the following are satisfied:

1. The applicant has not had any ownership interest in residential real

property for the three consecutive years immediately preceding the date of the

application.

2. The applicant's annual household compliance income equals 100 percent or

less of the area median family income for the county in which the home is located,

not adjusted for family size, as established by the Federal Housing Finance Agency.

Under the bill, household compliance income means the anticipated combined

income, as determined by WHEDA according to its conventional first-time home

buyer first mortgage program underwriting guidelines (underwriting guidelines), of

all individuals age 18 or older who intend to occupy the residence subject to a

workforce home loan, regardless of whether the individual is an applicant for the

workforce home loan and regardless of the individual's relationship to the applicant

for the workforce home loan.

3. The applicant's debt-to-income ratio, calculated by WHEDA as provided in

the bill, satisfies WHEDA's underwriting guidelines.