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F I S C A L I M P A C T R E P O R T

SPONSOR Cote

ORIGINAL DATE

LAST UPDATED

1/31/2008

HB 487

SHORT TITLE

Purchase Low-Income Mortgage Loans

SB

ANALYST Leger

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

$5,000.0 Non-recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico Mortgage Finance Authority (MFA)

SUMMARY

Synopsis of Bill

House Bill 487 appropriates $5 million from the general fund to the Department of Finance and

Administration (DFA) for disbursement to MFA for the purpose of supplementing the partners’

fund to purchase mortgage loans made to low-income homeowners in New Mexico.

FISCAL IMPLICATIONS

The appropriation of $5 million contained in this bill is a non-recurring expense to the general

fund. Any unexpended or unencumbered balance remaining at the end of a fiscal year shall not

revert.

SIGNIFICANT ISSUES

According to MFA, throughout New Mexico are non-profit organizations, tribal organizations

and public housing agencies that typically rely on donations of cash, building materials, land and

legal services and government funding to support their homeownership assistance efforts. Often,

such as in the case of Habitat for Humanity affiliates, homes are constructed or rehabilitated by

community volunteers and homebuyer sweat equity. In addition, such organizations counsel

homebuyers prior to purchase, provide mortgage loans to finance the purchase, and maintain on-

House Bill 487 – Page

2

going relationships with the homeowners by servicing the loans and providing continued coun-

seling. However, because their efforts are supported through fund raising activities, the number

of homes they can produce and sell to very low-income households is extremely limited.

In 1992, the MFA established the PARTNERS Program. Using specially restricted monies from

the refunding of a single-family mortgage revenue bond issue and it’s own General fund, MFA

served as a secondary market by purchasing mortgage loans made by program participants to

very low-income homebuyers. This arrangement allowed participating organizations to recycle

their funds and increase their production of affordable homeownership units.

PERFORMANCE IMPLICATIONS

MFA reports that under the PARTNERS Program, MFA has purchased 182 loans totaling

$10,679,214.68 as of January 1, 2008, with an average loan amount of $56,239.50. $5,000,000

in funding, with that average loan amount, would provide approximately 90 homes to low-

income households.

ADMINISTRATIVE IMPLICATIONS

No more than five percent of the cost of each loan shall be retained by MFA for administrative

expenses.

JLL/mt