LRB-0497/1
MPG&MDE:cjs
2023 - 2024 LEGISLATURE
October 30, 2023 - Introduced by Senators L. Johnson, Hesselbein, Roys,
Larson,
Wirch and Agard, cosponsored by Representatives Goyke,
Moore Omokunde,
Baldeh, Ohnstad, Cabrera, Hong, Joers, Stubbs, Subeck, Billings,
Shankland, Bare, Palmeri, Sinicki, C. Anderson, Clancy and Jacobson.
Referred to Committee on Housing, Rural Issues and Forestry.
SB576,1,3
1An Act to create 20.490 (3) (fq), 20.490 (3) (gq) and 234.665 of the statutes;
2relating to: a revolving workforce home loan program and making an
3appropriation.
Analysis 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
home in Wisconsin that is or will be the eligible applicant's primary residence. The
bill appropriates $100,000,000 for the program and requires WHEDA to use
repayments of loans to fund additional loans under the program. The bill authorizes
WHEDA to establish an interest rate for any workforce home loan that is below the
market interest rate or to charge no interest.
Under the bill, a local housing authority or community-based organization or
other qualified local organization, as determined by WHEDA, certifies a loan
applicant to WHEDA, 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 is an individual applying for the loan as a head of household,
as determined by WHEDA.
2. The applicant has not had any ownership interest in residential real
property for the three consecutive years immediately preceding the date of the
application.
3. The applicant's household annual income is less than 120 percent of the area
median income for the county in which the home is located.
4. The applicant's housing costs, excluding utility-related costs, in the home
for which the applicant is applying for a workforce home loan, as determined by the
qualified organization, will not exceed 30 percent of the applicant's household
income.
5. The total amount of the mortgage for which the applicant is applying for a
workforce home loan does not exceed the conforming loan limit for the county in
which the home is located, as established by the federal housing finance agency.
6. The applicant has a satisfactory credit record, history, or rating, as
determined by the qualified organization in consultation with WHEDA.
The bill provides that WHEDA may not issue a workforce home loan that
exceeds $100,000, adjusted for inflation annually beginning on the effective date of
the bill. The bill requires that the amount of each workforce home loan be based on
the applicant's household income and size in combination with the amount of funding
available for the loan.
The bill establish different repayment rules for workforce home loans
depending on the eligible applicant's household income. Specifically, if the authority
issues a workforce home loan to an applicant whose household income is less than
80 percent of the area median income for the county in which the home is located, all
of the following apply:
1. The repayment of principal due on the loan must be deferred until the
recipient of the workforce home loan sells the home or loses equity in the home as a
result of refinancing or the home ceases to be the primary residence of the recipient.
2. Beginning with the sixth full year following the issuance date of the
workforce home loan, each year WHEDA must forgive 10 percent of the total amount
of unpaid principal on the loan.
On the other hand, if WHEDA issues a workforce home loan to an applicant
whose household income is 80 percent or more of the area median income for the
county in which the home is located, the repayment of principal on the loan must be
deferred for the five consecutive years beginning after the date on which the loan is
issued, immediately after which the loan recipient is required to begin the
repayment of principal on the loan in monthly installments, or until the recipient of
the workforce home loan sells the home or loses equity in the home as a result of
refinancing or the home ceases to be the primary residence of the recipient.
Because this bill may increase or decrease, directly or indirectly, the cost of the
development, construction, financing, purchasing, sale, ownership, or availability of
housing in this state, the Department of Administration, as required by law, will
prepare a report to be printed as an appendix to this bill.
For further information see the state and local fiscal estimate, which will be
printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB576,2
3Section
2. 20.490 (3) (fq) of the statutes is created to read:
SB576,3,54
20.490
(3) (fq)
Workforce home loan program. As a continuing appropriation,
5the amounts in the schedule for workforce home loans under s. 234.665.
SB576,3
6Section
3. 20.490 (3) (gq) of the statutes is created to read:
SB576,3,97
20.490
(3) (gq)
Workforce home loan repayments. All moneys received from the
8repayment of workforce home loans made under s. 234.665, to be used for workforce
9home loans under s. 234.665.
SB576,4
10Section
4. 234.665 of the statutes is created to read:
SB576,3,1111
234.665
Workforce home loan program. (1) Definitions. In this section:
SB576,3,1412
(a) “Area median income” means the area median family income in the county
13in which the housing is located, adjusted for family size, as published annually by
14the federal department of housing and urban development.
SB576,3,1715
(b) “Qualified organization” means a housing authority, as defined in s. 16.301
16(2) (a), a community based organization, as defined in s 16.301 (1), or another
17qualified local organization, as determined by the authority.
SB576,3,1918
(c) “Workforce home loan” means a loan issued by the authority under sub. (3)
19(a).
SB576,4,3
1(2) Certifications. (a) A qualified organization may certify an eligible
2applicant to receive a workforce home loan in an amount determined by the qualified
3organization, subject to the approval of the authority.
SB576,4,54
(b) An applicant for a workforce home loan is eligible if the applicant satisfies
5all of the following:
SB576,4,76
1. The applicant is an individual applying for the loan as a head of household,
7as determined by the authority.
SB576,4,108
2. The applicant has not had any ownership interest in residential real
9property for the 3 consecutive years immediately preceding the date of the
10application.
SB576,4,1211
3. The applicant's household annual income is less than 120 percent of the area
12median income.
SB576,4,1613
4. The applicant's housing costs, excluding utility-related costs, in the home
14for which the applicant is applying for a workforce home loan, as determined by the
15qualified organization, will not exceed 30 percent of the applicant's household
16income.
SB576,4,1917
5. The total amount of the mortgage for which the applicant is applying for a
18workforce home loan does not exceed the conforming loan limit for the county in
19which the home is located, as established by the federal housing finance agency.
SB576,4,2120
6. The applicant has a satisfactory credit record, history, or rating, as
21determined by the qualified organization in consultation with the authority.
SB576,5,2
22(3) Loan issuance. (a) Subject to pars. (b) to (e), from the appropriations under
23s. 20.490 (3) (fq) and (gq), the authority may issue a loan to an eligible applicant
24certified by a qualified organization under sub. (2). The authority may establish an
1interest rate for any workforce home loan that is below the market interest rate or
2may charge no interest.
SB576,5,63
(b) The authority may issue a workforce home loan only for the purpose of
4providing gap financing to supplement a conventional mortgage for the purchase of
5a single-family home in this state, whether new construction or an existing home,
6that is or will be the eligible applicant's primary residence.
SB576,5,117
(c) The authority may not issue a workforce home loan that exceeds $100,000,
8adjusted for inflation annually beginning on the effective date of this paragraph ....
9[LRB inserts date]. The amount of each workforce home loan shall be based on the
10eligible applicant's household income and size in combination with the amount of
11funding available for the loan.
SB576,5,1412
(d) If the authority issues a workforce home loan to an eligible applicant whose
13household income is less than 80 percent of the area median income, all of the
14following apply:
SB576,5,1715
1. The repayment of principal on the loan shall be deferred until any of the
16following occurs, at which time the total amount of unpaid principal on the loan,
17minus the principal forgiven under subd. 2., shall become due and payable:
SB576,5,1818
a. The recipient of the workforce home loan sells the home.
SB576,5,2019
b. The recipient of the workforce home loan loses equity in the home as a result
20of refinancing.
SB576,5,2121
c. The home ceases to be the primary residence of the recipient.
SB576,5,2422
2. Beginning with the 6th full year following the issuance date of the workforce
23home loan, each year the authority shall forgive 10 percent of the total amount of
24unpaid principal on the loan.
SB576,6,7
1(e) If the authority issues a workforce home loan to an eligible applicant whose
2household income is at least 80 percent of the area median income, the repayment
3of principal on the loan shall be deferred for the 5 consecutive years beginning after
4the date on which the loan is issued, immediately after which the loan recipient shall
5begin the repayment of principal on the loan in monthly installments, or until any
6of the following occurs, at which time the total amount of unpaid principal on the loan
7shall become due and payable:
SB576,6,88
1. The recipient of the workforce home loan sells the home.
SB576,6,109
2. The recipient of the workforce home loan loses equity in the home as a result
10of refinancing.
SB576,6,1111
3. The home ceases to be the primary residence of the recipient.
