FINAL BILL REPORT

SB 5558

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

Background: The Washington State Housing Finance Commission (Commission) was created by the Legislature in 1983. The Commission however, is not a state agency, does not receive or lend state funds, and its debt is not backed by the full faith and credit of the state. In addition to other power and duties, the Commission's purpose is to provide decent, safe, sanitary, and affordable housing for eligible persons.

The Commission acts as a conduit of federal financing for housing, nonprofit facilities, and beginning farmers and ranchers. It issues both tax-exempt and taxable bonds to provide below market-rate financing to nonprofit and for-profit housing developers who set aside a certain percentage of their units for low-income individuals and families. The Commission also issues tax-exempt bonds to provide below market-rate financing for non-housing nonprofit facilities and for beginning farmers and ranchers.

In December 2012, the Department of Housing and Urban Development (HUD) published an interpretive rule that requires the Commission to provide down payment assistance to home buyers using Federal Housing Administration mortgage insurance directly at the closing table and not through a third-party, or non-governmental entity. HUD has since provided further guidance that down payment assistance loans should be closed in the name of the Commission and not in the name of the first mortgage lender.

Currently, the Commission can purchase a down payment assistance loan from a participating mortgage lender, but cannot make a direct down payment assistance loan to a borrower.

Votes on Final Passage:

Senate	48	0
House	59	38