§ 8-286 — Homeownership loan program. Lending guidelines and terms of loans. Residential mortgage guarantee program.

Connecticut § 8-286

• Jurisdiction: Connecticut
• Title 8: Zoning, Planning, Housing and Economic and Community Development
• Ch. 136: Department of Housing: Home Ownership Loans

Text

(a) The authority shall administer, within the resources allocated by the State Bond Commission to the Department of Housing for the purposes of sections 8-283 to 8-289, inclusive, the homeownership loan program established by said sections 8-283 to 8-289. The purpose of the program shall be to provide, through a contract, an eligible family or person based on the financial needs of such family or person, a loan, which loan may be amortizing, deferred or forgivable as to principal or interest, to assist in the purchase of a dwelling or the purchase and rehabilitation of a dwelling containing up to four residential units, provided such family or person shall reside in at least one of such units. (b) (1) Not later than October 1, 2021, the authority shall establish guidelines for issuing loans under the program. Such guidelines shall permit the authority to (A) provide loans to borrowers with a debt-to-income ratio equal to the highest debt-to-income ratio permitted by the Federal Housing Administration, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation for residential mortgage loans, as applicable, subject to any other limitations of this chapter, and (B) consider (i) the application of a prospective borrower, regardless of the prospective borrower's credit score, and (ii) nontraditional credit references submitted by the prospective borrower including, but not limited to, proof of employment or proof of rental and utility payments. (2) If the dwelling being purchased by an eligible applicant under the program is situated within an affordability incentive zone, established pursuant to section 8-286e , the authority may utilize lending guidelines that are different from the guidelines utilized for the purchase of a dwelling that is not situated within an affordability incentive zone, which alternative lending guidelines may include, but need not be limited to, increased eligibility limits with respect to the purchase price of the dwelling or the maximum loan amount or a reduced interest rate for such loan. (c) Any loan issued under the program shall include the customary and reasonable closing costs of the purchase of the dwelling, if so requested by the borrower, and to the extent the loan amount inclusive of such closing costs does not exceed the maximum loan amount under the authority's procedures and guidelines, and shall not exceed twenty-five per cent of the cost of acquiring such dwelling or twenty-five per cent of the value of such dwelling after rehabilitation, if greater; except that no such limitation may apply to any loan made to a tenant whose dwelling unit is being converted to a condominium and who is able to obtain a mortgage for the purchase of such dwelling unit. Such value shall be determined from the appraisal, if any, required by the lending institution granting the first mortgage loan on such dwelling, and if no such appraisal has been made at the time that a contract for loan is entered into pursuant to this chapter, the authority shall cause such appraisal to be made. (d) Commencing October 1, 1995, the proceeds of the sale of any bonds of the state authorized by any public or special act effective on or after July 1, 1995, that are to be used for the purpose of making loans pursuant to this chapter shall be used by the department to make grants-in-aid to the authority and used by the authority, subject to the purposes and conditions of this chapter, for the purpose of making loans pursuant to this chapter. (e) The commissioner shall establish and administer within available funds a residential mortgage guarantee program for eligible persons purchasing a home for owner occupancy. Real property eligible for the program shall be located in public investment communities, as defined in section 7-545 , and may contain one to three dwelling units.

Legislative History

(P.A. 77-612, S. 4; P.A. 80-396, S. 2, 5; P.A. 92-166, S. 21, 31; P.A. 95-202, S. 1; 95-250, S. 28, 42; 95-309, S. 11, 12; P.A. 13-234, S. 2; P.A. 21-101, S. 1; P.A. 22-94, S. 18; P.A. 23-45, S. 5.) History: P.A. 80-396 amended Subsec. (b) to exclude 25% loan limit in cases where tenant is purchasing his dwelling unit upon its conversion to a condominium; P.A. 92-166 amended Subsec. (a) to make deferred loans a form of financial assistance available under the section and providing that payments on interest are due immediately but that payments on principal may be made at a later time and amended Subsec. (b) to make technical changes consistent with the changes in Subsec. (a); P.A. 95-202 added new Subsec., designated as Subsec. (d) by the Revisors because of changes enacted in P.A. 95-250, re establishment of residential mortgage guarantee program; P.A. 95-250 amended Subsec. (a) to transfer program from Housing Department to the Connecticut Housing Finance Authority and added Subsec. (c) re use of the proceeds of bonds by the authority; P.A. 95-309 changed effective date of P.A. 95-250 but did not affect this section; pursuant to P.A. 13-234, reference to Department of Economic and Community Development was changed editorially by the Revisors to reference to Department of Housing in Subsec. (a), effective June 19, 2013; P.A. 21-101 added new Subsec. (b) re guidelines for issuing loans under the program, redesignated existing Subsec. (b) as Subsec. (c) and amended same by adding provision re inclusion of customary and reasonable closing costs and redesignated existing Subsecs. (c) and (d) as Subsecs. (d) and (e), effective June 30, 2021; P.A. 22-94 made a technical change in Subsec. (b); P.A. 23-45 amended Subsec. (a) by making a technical change, replacing “or deferred loan” with provision re loan may be amortizing, deferred or forgivable and by deleting provision re payments on deferred loans, amended Subsec. (b) by redesignating existing Subsec. (b) as new Subsec. (b)(1), redesignating existing Subsecs. (b)(1) and (b)(2) as Subsecs. (b)(1)(A) and (b)(1)(B), redesignating existing Subsecs. (b)(2)(A) and (b)(2)(B) as Subsecs. (b)(1)(B)(i) and (b)(1)(B)(ii), adding new Subdiv. (2) re different lending guidelines may be utilized if dwelling is in affordability incentive zone, amended Subsec. (c) by replacing “A loan” with “Any loan” and deleting “or deferred loan” and amended Subsec. (d) by deleting “or deferred loans”.