(1) As used in this section: (a) "Qualifying applicant" means a non-profit entity or a partnership of non-profit entities that provides or purchases subordinate shared appreciation loans. (b) "Qualifying mortgage loan" means a mortgage loan that is originated, purchased, or serviced by a private financial institution or sold to a government-sponsored enterprise, if: (i) the loan conforms to the borrower's income, property eligibility, and credit standards; (ii) the loan is secured by a recorded deed of trust or other instrument securing a mortgage loan and constituting a lien on real property in the county in which the home is located; and (iii) the loan is an amortizing first mortgage loan. (c) (i) "Subordinate shared appreciation loan" means a loan that does not exceed $150,000, and that: (A) is secured by an owner-occupied residential property for which the borrower agrees to repay the principal borrowed plus a proportionate share of the home price appreciation during the term of the loan; (B) has flexible repayment terms in accordance with applicable state and federal laws; (C) is non-interest bearing and has no set monthly payment obligation; (D) does not impose a shared appreciation repayment percentage obligation that exceeds the percentage of the home value represented by the amount borrowed at origination; (E) does not have a combined loan-to-value ratio that exceeds 105%; (F) does not impose a prepayment fee or penalty; and (G) is subordinate to a first mortgage loan. (ii) "Subordinate shared appreciation loan" includes a loan to a qualifying borrower for the purpose of assisting the borrower in the purchase of construction liability insurance for a condominium project as established in rule by the Utah Housing Corporation in accordance with Section 63H-8-502. (d) "Subordinate shared appreciation loan program" means the loan program created in this section. (2) There is created the subordinate shared appreciation loan program administered by the department. (3) Subject to appropriations from the Legislature, the department shall distribute program funds to a qualifying applicant that: (a) completes an application; and (b) meets the requirements described under Subsection (1)(b)(i) or (1)(b)(ii). (4) The executive director may make rules in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, to carry out the purposes of this section. (5) (a) Subject to the provisions of Subsection (9), program funds shall only be used for a qualifying residential unit, as that term is defined in Section 63H-8-501. (b) Program funds shall only be distributed in conjunction with matching private funding that is no less than a 75% private funds and 25% program funds split. (c) A recipient of a subordinate shared appreciation loan may use the funds for the same purposes described in Section 63H-8-502. (6) If a subordinate shared appreciation loan on the qualifying residential unit is refinanced or sold, state funds, including associated fees, used to secure the mortgage loan shall be returned to the qualifying applicant. (7) The department may, in cooperation with the Utah Housing Corporation, promote the program to qualifying applicants to support the first-time homebuyer assistance program under Title 63H, Chapter 8, Part 5, First-Time Homebuyer Assistance Program. (8) The department shall include in the annual report required by Section 35A-1-109 the following information: (a) the number of approved loans under the program; (b) the total dollar amount of program funds loaned and the corresponding private matching funds; (c) the total dollar amount of funds reinvested into the program; (d) the total dollar amount of payoff and, if applicable, default of active loans; and (e) the approximate dollar value of the total number of loans provided under the program based upon the current home price index. (9) The executive director may expend up to 5% of the revenues of the program, including any appropriation to the program, to offset department administrative expenses. (10) The department may not accept applications for the program after September 1, 2025. Renumbered 7/1/2026
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