February 16, 2024 - Introduced by Representatives Krug, Goyke and Armstrong, cosponsored by Senators Knodl and L. Johnson. Referred to Committee on Housing and Real Estate.
AB1094,,22An Act to create 234.665 of the statutes; relating to: a workforce home loan program. AB1094,,33Analysis by the Legislative Reference Bureau 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.
4. The applicant’s credit score, rating, or other classification, as determined by WHEDA, satisfies WHEDA’s underwriting guidelines.