Speaking before the annual Texas Housing Conference Monday, Texas Lt. Governor David Dewhurst pledged that the Texas Legislature would double or triple the Texas Housing Trust Fund.
Last session the Lt. Governor, at the urging of Senator Eddie Lucio and members of Housing Texas, led the successful effort to secure an added $5.8 million per year. The Texas Department of Housing and Community Affairs, in it’s budget request for FY 2009-2010 has requested $20 million per year.
Texas housers have long sought a state commitment of $50 million per year for the housing trust fund. The houser’s goal has been to identify a reliable and dedicated source of revenue for the fund instead of relying on annual appropriations from the state’s general revenue.
Reforms within the Texas Department of Housing and Community Affairs (TDHCA) have sped up the expenditure of housing trust funds. According to the department of all funds available, including loan repayments, only $1.3 million remains to be programed.
The principal use of the fund has been to make loans through the Texas Bootstrap Owner-Builder Housing program. This program allows the lowest income Texans to borrow up to $30,000 interest free to build a home in which they themselves provide at least 60 percent of the labor. The program has historically worked largely in the colonias of South and West Texas. Lately, Habitat for Humanity chapters across Texas have become major users of the program.
The Lt. Governor told the housing conference that he supported the Bootstrap program noting, “we don’t build enough Bootstrap homes.”
In a testament to the remarkable effectiveness of the program, TDHCA has never had to foreclose on a single loan from the housing trust fund. While the borrowers are among some of the lowest income families in the state, the 3 month+ delinquency rate of the loans is less than 5 1/2 percent. The bulk of those loans is from a pool of loans made to extremely low-income families to refinance existing contract for deeds, not Bootstrap the self-help housing builders.
Nevertheless, even including the contract for deed refinancings, the Texas Housing Trust Fund loan portfolio is quite impressive during these during these times of record mortgage defaults. In comparison, FHA loans 3+ months delinquent stand at 5.59 percent, and subprime loans are at 16.42 percent. TDHCA believes that an upcoming effort to work more aggressively with delinquent borrowers can substantially reduce even this relatively low delinquency rate of Housing Trust Fund loans.
The Texas Housing Trust Fund is demonstrably a good investment for the State of Texas. It seems that the Lt. Governor recognizes that fact.
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