Session Laws

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 1 of chapter 708 of the acts of 1966 is hereby amended by striking out paragraph (), as appearing in section 17 of chapter 574 of the acts of 1983, and inserting in place thereof the following paragraph:-

(k) "New residential mortgage", a loan, including a home improvement loan, made by or on behalf of the MHFA or by a mortgage lender and secured by a mortgage, note, bond or other obligation constituting a lien upon real property or by a lease of the fee of real property or a pledge of stock in a cooperative and an assignment of a proprietary lease on real property located in the commonwealth and improved by a residential building or unimproved if the proceeds of such loan shall be used for purpose of erecting, acquiring or rehabilitating a residential building thereon, or for the purpose of acquiring, constructing or rehabilitating a condominium unit or a cooperative share in a cooperative provided that each such loan made from the proceeds of a loan made or acquired by MHFA or made by a mortgage lender shall be made to an owner-occupant pursuant to section five A.

SECTION 2. Paragraph (a) of section 4 of said chapter 708, as most recently amended by section 18 of said chapter 574, is hereby amended by inserting after the word "loans", in line 1, the words:- or other loans secured in such manner as the MHFA shall by resolution determine to be necessary to assure payment of such loans and the interest thereon as the same become due,- and by inserting after the word "building", in line 7, the word:- acquisition.

SECTION 3. Paragraph (h) of said section 4 of said chapter 708 is hereby amended by adding the following sentence:- In effecting a foreclosure sale, the MHFA may require that the purchaser acquire title subject to such restrictions on use and occupancy for low and moderate income persons and families as may be in effect for the development at the time of the sale.

SECTION 4. Paragraph (q) of said section 4 of said chapter 708 is hereby amended by inserting after the word "act", in line 3, the words:- , including the establishment of any type of subsidiary, subordinated, independent or affiliated entity otherwise allowed by law, including stock corporations or membership corporations whether organized for profit or for nonprofit purposes, partnerships, joint ventures or trusts, and to hold any type or form of ownership or other beneficial interest in any such entity.

SECTION 5. Said section 4 of said chapter 708 is hereby further amended by striking out paragraph (u), inserted by section 1 of chapter 519 of the acts of 1976, and inserting in place thereof the following paragraph:-

(u) The MHFA may establish a program or programs to insure its mortgage loans pursuant to section five or new residential mortgages made or acquired by it or made by mortgage lenders from the proceeds of a loan pursuant to section five A alone or in conjunction with private enterprise or the commonwealth or the United States or any agency of either or both of them. The MHFA may establish loss reserve accounts for insurance programs and may fund such accounts from available monies.

SECTION 6. Said section 4 of said chapter 708, as most recently amended by section 18 of chapter 574 of the acts of 1983, is hereby further amended by adding the following paragraph:-

(x) Establish a program to utilize the net proceeds realized from the prepayment of any mortgage purchased from the United States or any agency thereof, to provide subsidies for the purpose of enabling low income persons or families to continue to occupy units in such projects after the mortgage has been prepaid.

SECTION 7. Section 4A of said chapter 708 is hereby amended by striking out paragraph (a), as appearing in section 11 of chapter 264 of the acts of 1982, and inserting in place thereof the following paragraph:-

(a) Make and acquire new residential mortgages and participations therein and make loans to mortgage lenders under terms and conditions requiring the proceeds thereof to be used by such mortgage lenders for the making of new residential mortgages, all subject to the provisions of section five A.

SECTION 8. Said section 4A of said chapter 708 is hereby further amended by striking out paragraph (c), as so appearing, and inserting in place thereof the following paragraph:-

(c) Collect, enforce the collection of, and foreclose on any collateral securing new residential mortgages made or acquired by it and its loans to mortgage lenders and acquire or take possession of such collateral and sell the same at public or private sales, with or without public bidding, and otherwise deal with such collateral as may be necessary to protect the interest of the MHFA therein, all subject to any agreement with bondholders or noteholders.

SECTION 9. Said section 4A of said chapter 708 is hereby further amended by striking out paragraph (e), as so appearing, and inserting in place thereof the following paragraph:-

(e) Establish, and revise from time to time, and charge and collect fees and charges in connection with new residential mortgages made or acquired by the MHFA and loans made by the MHFA to mortgage lenders and in connection with MHFA's mortgage insurance program.

SECTION 10. Said section 4A of said chapter 708 is hereby further amended by striking out paragraph (f), as so appearing, and inserting in place thereof the following paragraph:-

(f) Establish programs to insure new residential mortgages made or acquired by the MHFA and loans made by mortgage lenders with the proceeds of loans made by MHFA to such mortgage lenders, subject to the provisions of section five B.

SECTION 11. Said section 4A of said chapter 708 is hereby further amended by striking out paragraph (h), as so appearing, and inserting in place thereof the following paragraph:-

(h) Sell, purchase and contract and enter into advance commitments to purchase and take assignments from mortgage lenders of new residential mortgages owned or to be owned by mortgage lenders, including securities and other obligations of mortgage lenders secured by or representing an interest in new residential mortgages, all subject to the provisions of section five A. Acquire or accept by pledge Government National Mortgage Association guaranteed mortgage-backed securities, backed by new residential mortgages or interests therein, or other instruments of indebtedness issued or guaranteed by the United States of America or any agency or instrumentality thereof or corporation created thereby which have been or will be issued to finance new residential mortgages.

SECTION 12. Said section 4A of said chapter 708 is hereby further amended by adding the following two paragraphs:-

(m) Make loans to eligible mortgagors as defined in paragraph (b) of section five, and acquire loans from mortgage lenders or make loans to mortgage lenders, for the purpose of financing the construction or acquisition and rehabilitation of owner-occupied housing available for purchase by persons and families qualifying for a new residential mortgage made or acquired by or on behalf of MHFA pursuant to section five A. Prior to making a construction loan for owner-occupied housing, the MHFA will make a finding that such construction financing is not available from conventional financing sources.

(n) Establish a qualified mortgage credit certificate program and issue mortgage credit certificates, as defined in Section 25 of the Internal Revenue Code of 1986, and thereunder, upon such terms and conditions as the MHFA, in its discretion, may determine to be necessary or desirable, provided such certificates shall not constitute bonds or notes or other evidence or indebtedness of the MHFA under the provisions of this chapter or be deemed to be a debt or pledge of the faith and credit of the MHFA.

SECTION 13. Paragraph (a) of section 5 of said chapter 708, as most recently amended by chapter 544 of the acts of 1981, is hereby further amended by striking out the first sentence and inserting in place thereof the following sentence:- The MHFA may make mortgage loans to owners or sponsors of such housing projects containing two or more dwelling units as in the judgment of MHFA are supplying or have promise of supplying well planned, well designed apartment units which are providing or will provide housing for low-income persons or families in a location where there is a need for such housing, or purchase or participate in the purchase of securities which are secured by such mortgage loans.

SECTION 14. Said section 5 of said chapter 708 is hereby further amended by striking out paragraph (d), as amended by section 16 of chapter 1215 of the acts of 1973, and inserting in place thereof the following paragraph:-

(d) Limited Profit. - A mortgagor may not make distributions in any one year with respect to a project financed by the MHFA in excess of ten percent of the mortgagor's equity in such project. The mortgagor's initial equity in a project shall consist of the difference between the mortgage and the total project value or cost, whichever is greater as determined by MHFA in accordance with its regulations or other published procedures. The MHFA may reestablish the mortgagor's equity not more than once every five years thereafter, based upon the total project value at that time.

Notwithstanding the foregoing, the provisions of this paragraph shall not apply to mortgages purchased by MHFA from the United States or any agency thereof. In the event any such mortgage is increased or otherwise modified, the provisions of this paragraph shall apply and the MHFA shall, pursuant to regulations adopted by it, establish the mortgagor's equity at the time of such increase or modification.

SECTION 15. Paragraph (f) of said section 5 of said chapter 708, as most recently amended by section 19 of chapter 574 of the acts of 1983, is hereby further amended by adding the following sentence:- Notwithstanding the foregoing, the provisions of this section shall not apply to mortgages purchased by the MHFA from the United States or any agency thereof.

SECTION 16. Paragraph (g) of said section 5 of said chapter 708, as amended by section 1 of chapter 546 of the acts of 1982, is hereby further amended by inserting after the word "exists", in line 10, the words:- or would exist but for the project.

SECTION 17. Said paragraph (g) of said section 5 of said chapter 708 is hereby further amended by striking out the last sentence and inserting in place thereof the following sentence:- The findings as to the elimination of unsafe and unsanitary dwelling units need not be made in the case of the purchase of a mortgage by the MHFA from the United States or any agency thereof or the financing of a project previously financed by the United States or any agency thereof, or in the case of any project located in a rural, nonfarm area, or of any project developed on the site of substandard area or of any project undertaken within an urban renewal or land assembly and redevelopment area.

SECTION 18. Paragraph (i) of said section 5 of said chapter 708, added by section 10 of chapter 789 of the acts of 1981, is hereby amended by striking out the last sentence and inserting in place thereof the following sentence:- The MHFA and its successors and assigns may waive the requirement that a disposition agreement be entered into with respect to only those units designated for persons or families paying market-rate rents if the MHFA determines that such waiver will be in the interest of furthering the purpose of this act.

SECTION 19. Said chapter 708 is hereby further amended by striking out section 5B, inserted by section 12 of chapter 264 of the acts of 1982, and inserting in place thereof the following section:-

Section 5B. Mortgage Insurance Programs. Without limiting the powers of the MHFA otherwise granted by this chapter, the MHFA, or any subsidiary, subordinated, independent or affiliated entity thereto or established thereby in accordance with this chapter, may, establish a program to insure new residential mortgages and participations therein made or acquired by the MHFA under section five A or made by mortgage lenders as a condition to the receipt of a loan from the MHFA under section five A and also to insure conventional mortgage loans to resident owners made for purposes of acquisition, construction and rehabilitation of owner-occupied residential housing for persons and families of low and moderate income.

Such sums as may be appropriated or otherwise acquired or received by the MHFA may be used for the purpose of establishing a Mortgage Insurance Fund administered by the MHFA or otherwise held and applied as security for or in payment of the MHFA's insurance obligations under this section. Such sums, to the extent necessary, may be applied to the payment of (i) claims made by mortgage lenders who have made new residential mortgages as a condition to the receipt of a loan from the MHFA under section five A and which new residential mortgages are in default, (ii) claims made by lenders of conventional mortgage loans, in default, made to resident owners for purposes of acquisition, construction and rehabilitation of owner-occupied residential housing for persons and families of low and moderate income and (iii) new residential mortgages heretofore or hereafter made or acquired by the MHFA under section five A. MHFA's insurance obligations under this section may be reinsured with such agencies or instrumentalities of the commonwealth or the United States or with foreign insurance companies qualified to do business in the commonwealth as MHFA shall select. Claims shall be made against the mortgage insurance fund in accordance with procedures established by MHFA. Pursuant to this section, and to rules and regulations adopted by it, MHFA may have at any time a total amount of net insurance risk outstanding not in excess of the amount contained in the fund multiplied by thirty. At such times as premiums and other sources of income to the fund provide adequate protection against potential losses, MHFA shall, to the extent it deems it prudent, return to the General Fund of the commonwealth from the Mortgage Insurance Fund all or a portion of such funds as may have been appropriated to such fund by the commonwealth.

SECTION<< 20. The definition of "Rental housing project" of section 25 of chapter 23B of the General Laws, as appearing in the 1988 Official Edition, is hereby amended by adding the following sentence:-

Rental housing project shall also include such cooperative housing projects as have the characteristics of rental housing rather than homeownership by reason of limitations on equity realizable by shareholders on resale, or such other features as may be defined in guidelines published for the program.

SECTION 21. Section 9 of chapter 121A of the General Laws, as so appearing, is hereby amended by adding the following paragraph:-

Regarding residential housing projects, the preceding limitations on repayments and dividends shall not apply whenever the United States Department of Housing and Urban Development hereinafter referred to as HUD or the Massachusetts Housing Finance Agency, hereinafter referred to as MHFA allows a change in the allowable distribution or other measure to increase the rate of return on investment, as defined by HUD or MHFA, for projects assisted by HUD or MHFA, subject to the approval of the department of community affairs.

SECTION 22. Clause (e) of section 18C of said chapter 121A, as so appearing, is hereby amended by striking out, in line 37, the word "corporation;" and inserting in place thereof the following:- corporation. Regarding residential housing projects, the preceding limitations on dividends shall not apply whenever the United States Department of Housing and Urban Development, hereinafter referred to as HUD or the Massachusetts Housing Finance Agency, hereinafter referred to as MHFA allows a change in the allowable distribution or other measure to increase the rate of return on investment, as defined by HUD or MHFA, for projects assisted by HUD or MHFA, subject to the approval of the department of community affairs.