Report Title:

Teacher First-Time Homebuyer Assistance Program

Description:

Establishes the teacher first-time homebuyer assistance program within the housing and community development corporation of Hawaii in the form of downpayment assistance and forgiveness to teachers.

THE SENATE

S.B. NO.

1526

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to housing.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that attracting and retaining fully qualified teachers is of the utmost importance to ensuring that pupils have fair access to a quality education and a fair chance to succeed academically.

Unfortunately, Hawaii's high cost of living, particularly the State's high housing costs, often serves as a deterrent in attracting qualified teachers from accepting employment in Hawaii. The legislature further finds that other states that have also experienced shortages of teachers may seek to lure these individuals to accept employment in those states, in part because of lower housing costs or programs that have been specifically designed to attract and retain these individuals.

The legislature finds that teachers serve as a positive influence to Hawaii's young people and help to enhance the quality of life and strengthen the communities in which they live. Offering opportunities for home ownership will serve to attract teachers to these positions in the State by offsetting Hawaii's high housing costs.

Accordingly, the purpose of this Act is to address the shortage of highly qualified teachers in Hawaii and support their significant contributions to the State, by establishing a teacher first-time homebuyer assistance program to make it easier for teachers who are first-time homebuyers to purchase a home by providing downpayment assistance and forgiveness. The legislature finds that this Act will encourage teachers to remain in Hawaii, give them a stake in their community, and provide a needed incentive for teachers to continue teaching in the public school system.

SECTION 2. Chapter 201G, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§201G- Teacher first-time homebuyer assistance program. (a) As used in this section:

"Dwelling" includes a condominium unit.

"First-time homebuyer" means that the teacher has never personally, or whose spouse does not if the person is married, own any interest in a principal residence within or without the State, and meets other qualifications as established by rules adopted by the corporation pursuant to chapter 91.

"Fund" means the teachers homebuyer assistance fund.

"New century charter school" has the same meaning as defined in section 302A-101.

"Program" means the teacher first-time homebuyer assistance program established by this section.

"Public school" has the same meaning as defined in section 302A-101.

"Teacher" has the same meaning as defined in section 302A-101.

"Termination of employment" means that, for whatever reason, the borrower is no longer meeting each of the elements of the definition of a teacher at any time during the first five years immediately following the date of recordation of a subordinate mortgage loan.

(b) There is hereby created in the state treasury the teachers homebuyer assistance fund. The following may be deposited into the fund: appropriations made by the legislature, private contributions, repayment of loans, interest, other returns, and moneys from other sources. All moneys in the fund shall be expended for the implementation of the teacher first-time homebuyer assistance program, established pursuant to this section, and for defraying actual administrative costs of the agency.

(c) The agency shall administer the teacher first-time homebuyer assistance program in accordance with this section. The purpose of this program is to provide downpayment assistance to teachers for purchasing residences within the jurisdiction in which they are employed.

(d) A teacher shall be eligible to participate in the program if the teacher:

(1) Is employed in a public school or a new century charter school in this State;

(2) Has obtained a current license or credential from the department of education pursuant to section 302A-805;

(3) Is a first-time homebuyer;

(4) Is currently employed in the county in which the individual intends to purchase a home; and

(5) Agrees that the residence financed shall be continuously occupied by the teacher as the teacher's principal residence for at least five years following the recordation of the mortgage loan; provided that the corporation may establish guidelines for consideration of hardship cases in which it may waive this five-year continuous occupancy requirement.

(e) The maximum downpayment assistance to any teacher under this section shall be $20,000, or ten per cent of the downpayment on a dwelling, whichever is less.

(f) Assistance under this section shall be in the form of a deferred-payment, low-interest subordinate mortgage loan with a term not longer than the term of the first mortgage loan. Interest on this subordinate mortgage loan shall accrue at a rate of up to per cent a year.

(g) The borrower's obligation to repay the loan shall be evidenced by a lien on the property in the form of the subordinate mortgage loan. The subordinate mortgage loan shall be subordinate in priority to the borrower's first mortgage loan financing required to purchase the property. If the borrower continuously meets the qualifications specified in subsection (d) for the five-year period immediately following the date of recordation of the subordinate mortgage loan, and there has been no termination of employment, repayment of the subordinate mortgage loan shall be forgiven and considered a grant, so long as the borrower produces employment records, to the agency's satisfaction, that the conditions specified in subsection (d) have been continuously met during that five-year period.

(h) Repayment of the principal and accrued interest in accordance with subsection (i) shall be due and payable at the earlier of the following events:

(1) Change or transfer of title to the residence, including sale of the residence;

(2) Termination of employment;

(3) Failure to continuously occupy the residence in accordance with subsection (d);

(4) Refinance of the first mortgage loan; or

(5) Payoff of the first mortgage loan.

In no event shall this loan be assumable.

(i) If any of the events specified in subsection (h) occur within the first five years following recordation of the subordinate mortgage loan, the borrower shall be obligated to repay to the agency, in addition to other amounts due on the loan, the pro rata amount of principal and accrued interest on the loan. In order to qualify for any pro rata forgiveness of repayment of the loan, the borrower shall produce employment records to the agency's satisfaction that all of the conditions specified in subsection (d) have been met for the period in which the pro rata forgiveness of loan is sought; provided that pro rata forgiveness of repayment of the loan shall be at a rate of twenty per cent of the loan amount for each of the five years following recordation of the subordinate mortgage loan.

(j) The corporation shall adopt rules pursuant to chapter 91 as may be necessary to implement this section."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:

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