Washington State Housing Finance Commission.
The Washington State Housing Finance Commission (Commission) is a public body created to act as a financial conduit which, without using public funds or lending the credit of the state or local government, can issue nonrecourse revenue bonds and participate in federal, state, and local housing programs. The Commission 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. In addition, the Commission issues bonds to provide below market rate financing for sustainable energy projects, nonprofit facilities, and beginning farmers and ranchers. The Commission also uses bond financing to offer home loans and down payment and closing cost assistance programs to low-income and first-time homebuyers.
The Commission's operating costs are funded through fees earned on its programs. Most of the Commission's programs are public-private partnerships that rely on private equity investment. Taxpayer dollars are not used for Commission operations except when the Commission is directed to administer a state program or contract with another state agency.
Housing Finance Program.
The Housing Finance Program (Program) was created in 1994 to provide subsidized or unsubsidized mortgage financing for single-family homeownership. The Commission is authorized to develop and implement the Program in cooperation with the Department of Commerce using resources of the State Investment Board to purchase mortgage-backed securities collateralized by loans made within the state. Participation in the Program is limited to first-time homebuyers with incomes that do not exceed 115 percent of state or county median family income, whichever is higher, adjusted for family size. The Program is not currently in operation.
Housing Finance Plan.
The Commission must adopt and periodically update a general plan of housing finance objectives, known as the Housing Finance Plan. In developing the plan, the Commission must consider and set objectives. The plan must include an estimate of the amount of bonds the Commission will issue during the term of the plan and how the bond proceeds will be expended. The plan must be adopted by resolution of the Commission following a public hearing, and a draft of the plan must be made available not less than 30 days prior to the public hearing. The Commission must report to the Legislature at least every two years regarding implementation of the plan. The Commission must adopt rules designed to result in the use of bond proceeds in a manner consistent with the plan and may periodically update its rules.
State Finance Committee.
The State Finance Committee (SFC), composed of the Governor, the Lieutenant Governor, and the State Treasurer, is responsible for supervising and controlling the issuance of state bonds, including the general obligation bonds used to finance capital projects in the state's capital and transportation budgets. The SFC does not have any role in issuing the private activity bonds that the Commission uses to fund its housing programs; however, the SFC must be notified before the issuance of any bonds by the Commission in order to promote the orderly offering of obligations in the financial markets.
The Commission is empowered to make loans and mortgage loans, but not loans or mortgage loans for owner-occupied residential home purchases or refinancing, except for certain down payment assistance loans. Except for these down payment assistance loans, the Commission may not originate or make residential mortgage loans directly to natural persons for the purchase or refinancing of owner-occupied single-family housing.
The Commission is not intended to function as a retail mortgage lender, nor is it authorized to compete with private financial institutions in the origination of residential mortgage loans to individual homebuyers. Instead, the Commission's mortgage lending authority is intended solely to streamline financing for multifamily and other non-owner-occupied housing.
The length of time that the Commission attorney may serve is increased from two years to four years. The requirement that the SFC be notified in advance of the issuance of bonds by the Commission is removed. The Housing Finance Program and Housing Finance Plan are repealed.
The Commission's declaration of purpose is updated by:
The substitute bill modifies the authorization for the Commission to make loans and mortgage loans by specifying that this does not include loans or mortgage loans for owner-occupied residential home purchases or refinancing, and specifies that the Commission may not originate or make residential mortgage loans directly to natural persons for the purchase or refinancing of owner-occupied single-family housing, except for certain down payment assistance loans. The substitute bill also adds an intent section stating that the Commission is not intended to function as a retail mortgage lender, the Commission is not authorized to compete with private financial institutions in the origination of residential mortgage loans to individual homebuyers, and the new mortgage lending authority granted by the bill is intended solely to streamline financing for multifamily and other non-owner-occupied housing.
(In support) This bill was requested by the Commission to modernize their statutes. The Governor asked state agencies to take a look at their statutes and improve administrative efficiency, so the Commission took a look and found some opportunities for improvement.
The Commission was created in 1983 to increase affordable housing options throughout the state. The statutes still reflect 1983 realities although it is now 40 years later. The Commission's core business of issuing bonds and allocating tax credits will remain unchanged by this bill. However, removing some restrictions from 1983 will create new opportunities to increase housing. After discussions with banking partners, the Commission is working on an amendment to clarify that the direct mortgage lending updates do not apply to single-family homebuyers and only apply to multifamily housing.
(Opposed) Some bankers have concerns with the direct lending changes and would like to see a more precise definition of "borrowers." There are also some concerns with the change to the use of "public funds" language.
(Other) Some bankers support the goal of the bill but want to make sure the statutory language is more precise.
(In support) Representative Janice Zahn, prime sponsor; Steve Walker, Washington State Housing Finance Commission; and Lisa Vatske, WSHFC.