Can a Texas county pay a month's mortgage for a low-income resident who is about to lose their home to foreclosure?

Texas AG Opinion JM-964: When a County Can Pay Your Mortgage

Plain-English summary

A family a few days from losing their home to foreclosure is in almost the same spot as a family a few days from eviction, and Texas counties running emergency aid programs treat the two situations alike. This opinion confirmed that a county may make a one-month mortgage payment on behalf of an indigent resident, the same way it can cover a month's rent, as part of a state-approved emergency relief program.

The authority comes from chapter 34 of the Human Resources Code. Under that law, the Texas Department of Human Services funds local programs that give temporary emergency help to needy individuals and families, splitting the cost between local dollars and matching state dollars. A county's commissioners court applies for a grant, submits a plan that spells out who qualifies and what help will be offered, and then runs the program. The statute lists the kinds of help allowed, including utilities, food, housing, and clothing. The Department's own rule fills in the housing details: mass shelter, one month of emergency rent to stop an eviction, and one month of mortgage assistance to stop an eviction or foreclosure.

The county attorney's real worry was constitutional. The Texas Constitution, in article III, sections 51 and 52, forbids government from handing public money to private individuals for private purposes. If the county writes a check to a mortgage lender to save one family's house, is that a private gift dressed up as public aid? The Attorney General said no. Texas courts have long held that spending which accomplishes a legitimate public purpose is lawful even if some private party also benefits. The leading case, Housing Authority v. Higginbotham, upheld slum clearance and low-rent housing as proper public purposes back in 1940. Preventing homelessness fits the same mold. The obvious social costs of homelessness, family instability, strain on other welfare programs, make keeping people housed a matter of real public concern, not a private favor. That a landlord or a bank ends up with a payment does not change the public character of the spending.

Two guardrails matter. First, the eligibility floor: a county cannot set the bar so high that it excludes the people the program is meant to reach. The statute forbids setting eligibility below 75 percent of the federal poverty level, and the opinion made clear that a person does not have to be completely destitute to qualify. Second, the controls: a public expenditure that benefits an individual is only constitutional if the program is built to keep the money aimed at its public purpose. Chapter 34 does that through its grant requirements, mandatory plans, eligibility rules, limits on administrative costs, auditing, and reporting. Because those controls are in place, the mortgage payments pass constitutional muster. The opinion also cautioned that each program is judged on its own facts, so whether a specific expenditure is allowed still depends on how it is structured.

Currency note

This opinion was issued in 1988. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Chapter 34 of the Human Resources Code and the administrative rules governing emergency relief programs have been revised since 1988, and the Texas Department of Human Services itself was later reorganized into successor health and human services agencies. The eligibility thresholds, the split between local and state funding, and the specific services a county may offer may all differ today. The constitutional analysis under article III, sections 51 and 52, remains the general framework for judging public expenditures that benefit private parties, but the leading cases and later Attorney General opinions should be checked for current application. Anyone administering or relying on a county emergency assistance program today should consult the current statutes and rules rather than the versions cited here.

Who this opinion affected (as of 1988)

County commissioners courts: The opinion confirmed a county could include one-month mortgage assistance in a chapter 34 emergency relief program without running afoul of the constitution.

Indigent homeowners facing foreclosure: The opinion recognized that emergency aid could reach homeowners on the verge of losing their homes, not only renters facing eviction.

Program administrators: The opinion stressed that the spending is only lawful when the program keeps controls in place to ensure the money serves its public purpose.

Common questions

Could a county actually pay someone's mortgage?
Yes, for one month, to prevent eviction or foreclosure, as part of a state-approved emergency relief program under chapter 34 of the Human Resources Code. The Attorney General treated a one-month mortgage payment like a one-month rent payment.

Did you have to already be homeless to get help?
No. The opinion explained that homelessness was not a prerequisite. Preventing homelessness was a primary purpose of the statute, so help could go to a family on the verge of eviction or foreclosure.

Isn't giving public money to help pay a private debt unconstitutional?
Not when it serves a public purpose. The Attorney General relied on cases like Housing Authority v. Higginbotham to conclude that reducing homelessness is a legitimate public purpose, and that incidental benefit to a landlord or lender does not make the spending an unconstitutional private gift.

How poor did you have to be to qualify?
You did not have to be totally destitute. The statute barred counties from setting the eligibility level below 75 percent of the federal poverty level, and the opinion said the legislature did not intend to require complete destitution.

Background and statutory framework

Counties in Texas are limited to exercising powers specifically conferred on them by statute or the constitution, but they have broad discretion in exercising express powers (Canales v. Laughlin, 214 S.W.2d 451 (Tex. 1948)). The statutory authority for the expenditure at issue is chapter 34 of the Human Resources Code, which requires the Texas Department of Human Services to establish a fund to assist local communities in meeting the needs of individuals and families for temporary emergency relief. The services are funded 50 percent with local funds and 50 percent with matching state funds. A county commissioners court may apply for a grant to administer the program and must submit a plan describing the target population, eligibility criteria, the nature and scope of benefits, methods of administration, and a budget with the sources of local matching funds. The Department adopts rules establishing criteria for qualifying for a grant-in-aid and develops standards permitting all counties to participate.

The purpose clause (section 34.001) states that economic and demographic changes have created rapid increases in the number of needy persons who are homeless or without other necessities, that local governments and nonprofit organizations are unable to meet the increased burden, and that the intent of the chapter is to serve a public purpose by providing state money to match local and federal money for emergency relief. Section 34.007 sets procedures for eligibility, frequency, and duration of benefits; a county may not set the eligibility level at less than 75 percent of the federal poverty level, and assistance may include the provision of utilities, food, housing, and clothing. Pursuant to section 34.004, the Department adopted a rule (40 T.A.C. section 10.4304(b)) authorizing housing services including mass shelter (purchasing cots and blankets and renting space), emergency rent (paying for one month only to prevent eviction and provide housing for the homeless), and mortgage assistance (paying for one month only to prevent eviction or foreclosure).

The opinion concluded that chapter 34 authorizes temporary emergency housing assistance, that homelessness is not a prerequisite, and that a one-month mortgage payment is not significantly different from a rent payment for a family on the verge of homelessness through eviction or foreclosure. Indigents do not need to be totally impoverished before assistance may be provided (see Attorney General Opinion O-2474 (1940)). It is not an invalid delegation of legislative authority to grant an administrative body the right to make rules to put completed laws into effect (Housing Authority v. Higginbotham, 143 S.W.2d 79 (Tex. 1940)).

On the constitutional question, article III, section 52 provides that, except as otherwise provided, the legislature shall have no power to authorize any county, city, town, or other political subdivision to lend its credit or to grant public money or a thing of value in aid of any individual, association, or corporation; article III, section 51 places a similar prohibition on direct legislative grants. The intent of those provisions is to prevent the application of public funds to private purposes (Byrd v. City of Dallas, 6 S.W.2d 738, 740 (Tex. 1928)), but expenditures made for the direct accomplishment of legitimate public purposes are not unlawful simply because private business may benefit (Barrington v. Cokinos, 338 S.W.2d 133, 140 (Tex. 1960)). The final determination of what is a proper public purpose is a question for the courts, but a legislative declaration of public purpose is given great weight and will not be overturned absent a court finding of arbitrariness or lack of due process (Higginbotham, 143 S.W.2d at 83; State v. City of Austin, 331 S.W.2d 737, 743 (Tex. 1960); Attorney General Opinion JM-805 (1987)).

In Higginbotham, the supreme court held that the purposes served by the Texas Housing Authorities Law, clearance of slums and construction of low-rent housing, are proper purposes for which public funds may be used. The stated purpose of diminishing the adverse impact of homelessness in section 34.001 is similar, and those purposes are not rendered impermissible because personal gain to a private individual results (Davis v. City of Lubbock, 326 S.W.2d 699 (Tex. 1959)). A government entity may contract with a private institution or another political subdivision to provide public programs for proper public purposes (Attorney General Opinion JM-65 (1983)), and whether a particular expenditure benefiting an individual is permissible must be determined case by case (compare Attorney General Opinion JM-103 (1983) with Attorney General Opinion MW-22 (1979)). To be constitutionally permissible, an expenditure of public funds must be for a public purpose and must include controls to ensure the public purpose is carried out (see Attorney General Opinions MW-373 (1981); MW-423 (1982); JM-157 (1984); JM-768 (1987)). Chapter 34 meets both requirements: a public purpose is served by providing temporary emergency assistance to needy families, and controls such as the grant-in-aid evidence requirement, the detailed plan, restrictions on administrative costs, auditing, and reporting ensure the funds carry out that purpose.

Citations

Statutory and constitutional authority:

• Chapter 34, Human Resources Code (emergency relief program for needy individuals and families)
• Section 34.001, Human Resources Code (findings and statement of public purpose)
• Section 34.004, Human Resources Code (Department rules; grant-in-aid criteria)
• Section 34.007, Human Resources Code (eligibility, benefits including housing)
• Article 3, sections 51 and 52, Texas Constitution (prohibition on public funds for private purposes)
• 40 T.A.C. section 10.4304 (housing assistance rule: mass shelter, emergency rent, mortgage assistance)

Cases:

• Canales v. Laughlin, 214 S.W.2d 451 (Tex. 1948) (counties exercise conferred powers with broad discretion)
• Housing Authority v. Higginbotham, 143 S.W.2d 79 (Tex. 1940) (slum clearance and low-rent housing are proper public purposes)
• Byrd v. City of Dallas, 6 S.W.2d 738 (Tex. 1928) (article III intent to prevent public funds for private purposes)
• Barrington v. Cokinos, 338 S.W.2d 133 (Tex. 1960) (public-purpose expenditure lawful despite incidental private benefit)
• State v. City of Austin, 331 S.W.2d 737 (Tex. 1960) (legislative public-purpose determination given great weight)
• Davis v. City of Lubbock, 326 S.W.2d 699 (Tex. 1959) (private gain does not defeat a public purpose)

Prior Attorney General opinions referenced: O-2474 (1940); JM-65 (1983); JM-103 (1983); MW-22 (1979); MW-373 (1981); MW-423 (1982); JM-157 (1984); JM-768 (1987); JM-805 (1987); JM-942 (1988).

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-964
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1988/jm0964.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor OCR errors may remain; the linked PDF is authoritative.

THE ATTORNEY GENERAL OF TEXAS

October 7, 1988

Honorable Tim Curry
Criminal District Attorney
200 West Belknap Street
Fort Worth, Texas 76196

Opinion No. JM-964

Re: Authority of a county to make mortgage payments on behalf of its indigent residents (RQ-1413)

Dear Mr. Curry:

You ask whether counties may make mortgage payments on behalf of their indigent residents. Your question is prompted by an administrative rule adopted by the Texas Department of Human Services pursuant to chapter 34 of the Human Resources Code. Two issues must be considered: whether the county has statutory authority to provide such financial assistance and whether such statutory authority is consistent with provisions of the Texas Constitution that require public funds to be spent for public purposes. Attorney General Opinion JM-942 (1988).

Counties in Texas are limited to exercising those powers that are specifically conferred on them by statute or the constitution, but they have broad discretion in exercising express powers. Canales v. Laughlin, 214 S.W.2d 451 (Tex. 1948). The statutory authority for the expenditure about which you inquire is found in chapter 34 of the Human Resources Code. That chapter requires the Texas Department of Human Services (the Department) to establish a fund to assist local communities in meeting the needs of individuals and families for temporary emergency relief. Hum. Res. Code section 34.003(a).

The services are funded 50 percent with local funds and 50 percent with matching state funds. The statute authorizes a county commissioners court to apply for a grant to administer the program on behalf of the county. Id. sections 34.002-04. The county must submit to the Department a plan for providing emergency relief, which must include a description of the target population, eligibility criteria to receive services, the nature and scope of benefits to be provided, methods of administration, and a budget that contains the sources of local matching funds. Section 34.006(a), (b). The Department shall adopt rules establishing criteria for determining whether a county or other applicant qualifies for a grant-in-aid. Id. section 34.004(d). The Department is also required to develop standards and procedures for the program that permit all counties in the state to participate. Id. section 34.004(f).

The statute is intended to enable local governments to aid needy individuals, including homeless persons. The legislature has acknowledged that local government and nonprofit programs are presently overburdened and that the inability to adequately assist homeless and needy residents causes family, social, and economic instability, as set out in the purpose clause of chapter 34.

(a) The legislature finds that:

(1) economic and demographic changes have created rapid increases in the number of needy persons who are homeless or without other necessities of basic existence;

(2) local governments and nonprofit service organizations are unable to meet the increased financial burden caused by those changes in various areas of the state; and

(3) the dramatic nature of the emergency relief needs in various localities has contributed to family instability and threatened the social and economic stability of those communities.

(b) The intent of this chapter is to serve a public purpose and the goals of the state by providing state money to match local and any federal money available to provide emergency relief to needy persons.

Hum. Res. Code section 34.001.

Section 34.007 establishes procedures and guidelines for counties to follow in determining eligibility and the frequency and duration of benefits under the program. A county may not set the eligibility level at "less than 75 percent of the federal poverty level based on the Federal Office of Management and Budget Poverty Index in effect at the time the plan is submitted to the Department." Id. section 34.007(c). Assistance "may include the provision of utilities, food, housing and clothing to needy persons." Id. section 34.007(d) (emphasis added). Pursuant to section 34.004 of chapter 34, the Department adopted the following rules for provision of housing assistance under the program:

[T]he [county, other political subdivision, or non-profit corporation] may deliver the following services:

(1) mass shelter -- purchasing cots and blankets and renting space;

(2) emergency rent -- paying for one month only to prevent eviction and to provide housing for the homeless;

(3) mortgage assistance -- paying for one month only to prevent eviction or foreclosure . . . .

40 T.A.C. section 10.4304(b).

Chapter 34 authorizes the provision of temporary, emergency housing assistance. Homelessness is not a prerequisite to assistance. Rather, prevention of homelessness and promotion of stability are primary purposes of the statute's enactment. These purposes are served by the provision of one month's mortgage assistance to a person or family on the verge of homelessness through eviction or foreclosure on their home. This form of assistance allows the family time to take measures to prevent eviction or foreclosure or to find other housing. We do not see that making a mortgage payment is significantly different from making a rent payment for individuals in this situation.

Indigents do not need to be totally impoverished before assistance may be provided. Attorney General Opinion O-2474 (1940). The legislature, in enacting chapter 34, clearly did not intend that a family must be totally destitute in order to qualify for housing assistance. Instead, one specific restriction the legislature places on the administration of the program is that the eligibility requirement cannot be set lower than at 75 percent of the poverty level established by federal guidelines.

"It is not an invalid delegation of legislative authority to grant to an administrative body the right to make rules to put into effect completed laws." Housing Authority v. Higginbotham, 143 S.W.2d 79, 87 (Tex. 1940). The Department rule allowing counties to make mortgage payments on behalf of indigent residents directly achieves the stated goal of chapter 34 of the Human Resources Code.

The statutory authority of chapter 34, to be valid, must be consistent with provisions of the Texas Constitution prohibiting expenditures of public funds for private purposes. Article 3, section 52, of the Texas Constitution provides:

(a) Except as otherwise provided by this section, the Legislature shall have no power to authorize any county, city, town or other political corporation or subdivision of the State to lend its credit or to grant public money or thing of value in aid of, or to any individual, association or corporation whatsoever, or to become a stockholder in such corporation, association or company.

Article 3, section 51 places a similar prohibition on direct legislative grants to individuals or corporations for private purposes. In our opinion, the expenditure of state and county funds for the purpose of making a single mortgage payment on behalf of an indigent resident is constitutionally permissible.

The intent of the provisions of article 3, sections 51 and 52 is to "prevent the application of public funds to private purposes." Byrd v. City of Dallas, 6 S.W.2d 738, 740 (Tex. 1928). On the other hand, expenditures made for the direct accomplishment of legitimate public purposes are not unlawful simply because private business may benefit. Barrington v. Cokinos, 338 S.W.2d 133, 140 (Tex. 1960).

The final determination of what is a proper public purpose is a question for the courts; a legislative declaration of public purpose is to be given great weight. Higginbotham, 143 S.W.2d 79, 83 (Tex. 1940). The legislative determination will not be overturned absent a court finding of arbitrariness or lack of due process. State v. City of Austin, 331 S.W.2d 737, 743 (Tex. 1960); Attorney General Opinion JM-805 (1987).

In Higginbotham, supra, the supreme court held that the purposes served by the Texas Housing Authorities Law, clearance of slums and construction of low-rent housing, are proper purposes for which use of public funds may be authorized. 143 S.W.2d 79 at 85. The stated purpose of diminishing the adverse impact of homelessness articulated in section 34.001 of the Human Resources Code is similar to the legislative statement of purpose considered by the Higginbotham court. See id. at 81, 82. The purposes served by slum clearance and housing development are not rendered constitutionally impermissible because personal gain to some private individual results. Davis v. City of Lubbock, 326 S.W.2d 699 (Tex. 1959). Thus, we do not believe the purposes stated in chapter 34 are per se unconstitutional merely because a property owner or financial institution might ultimately benefit from the receipt of one rent or mortgage payment.

A government entity may contract with a private institution or another political subdivision in order to provide for public or governmental programs for proper public purposes. Attorney General Opinion JM-65 (1983). Whether a particular expenditure which benefits an individual is permissible under the constitution must be determined on a case-by-case basis. Compare Attorney General Opinion JM-103 (1983) (permitting a county to contract for the operation of a recreation center to be used by elderly residents) with Attorney General Opinion MW-22 (1979) (concluding that authorization of utility bill payments on behalf of elderly persons violates the constitution). In order to be constitutionally permissible, an expenditure of public funds must be for a public purpose and must include controls to ensure that the public purpose is carried out. See Attorney General Opinions MW-373 (1981); MW-423 (1982); JM-157 (1984); JM-768 (1987). The expenditures authorized by chapter 34 meet both these requirements.

A public purpose is served when temporary emergency assistance is provided to needy families and individuals living in the community. The obvious societal costs of homelessness make housing development and housing assistance of particular public concern. Expenditures made pursuant to chapter 34 appear likely to produce savings in existing social welfare and housing programs.

Controls established by chapter 34 ensure that funds authorized by the statute will be used to carry out the public purpose expressed by the legislature. Counties may receive a grant-in-aid only if they provide evidence showing a need for assistance in accordance with the Department's rules. Hum. Res. Code section 34.004(c). The counties must also provide a detailed plan for providing emergency relief. Id. section 34.006(a), (b). Restrictions on administrative costs, auditing provisions, and reporting requirements also help ensure that the public purpose justifying the emergency assistance program will be carried out.

SUMMARY

A county may make mortgage payments on behalf of indigent residents to prevent eviction or foreclosure as part of a temporary emergency relief program for needy persons approved by the Department of Human Services under chapter 34 of the Human Resources Code.

Very truly yours,

JIM MATTOX
Attorney General of Texas

MARY KELLER
First Assistant Attorney General

LOU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Karen C. Gladney
Assistant Attorney General