Bill Text: CA AB1551 | 2011-2012 | Regular Session | Chaptered
Bill Title: Housing.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Passed) 2012-09-25 - Chaptered by Secretary of State - Chapter 555, Statutes of 2012. [AB1551 Detail]
Download: California-2011-AB1551-Chaptered.html
BILL NUMBER: AB 1551 CHAPTERED
BILL TEXT
CHAPTER 555
FILED WITH SECRETARY OF STATE SEPTEMBER 25, 2012
APPROVED BY GOVERNOR SEPTEMBER 25, 2012
PASSED THE SENATE AUGUST 31, 2012
PASSED THE ASSEMBLY AUGUST 31, 2012
AMENDED IN SENATE AUGUST 22, 2012
AMENDED IN SENATE JULY 5, 2012
INTRODUCED BY Assembly Member Torres
(Principal coauthor: Senator DeSaulnier)
JANUARY 26, 2012
An act to amend Sections 50650.3, 51345, and 51505 of the Health
and Safety Code, relating to housing, and declaring the urgency
thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 1551, Torres. Housing.
Existing law establishes the CalHome Program, administered by the
Department of Housing and Community Development, to enable low- and
very low income households to become or remain homeowners. Existing
law requires the department, under the program, to provide grant or
loan funds to local public agencies or nonprofit corporations for
specified purposes relating to the promotion of home ownership.
Existing law requires that financial assistance provided to
individual households be in the form of deferred payment loans,
repayable upon sale or transfer of the homes, when they cease to be
owner-occupied, or upon the loan maturity date.
This bill would, notwithstanding any other law, authorize the
department to permit the downpayment assistance loan to be
subordinated to refinancing if it determines that the borrower and
the proposed subordination meet certain requirements.
Existing law requires the California Housing Finance Agency to
administer the California Homebuyer's Downpayment Assistance Program
for the purpose of assisting first-time low- and moderate-income
homebuyers utilizing existing mortgage financing. Existing law
authorizes a borrower to refinance a mortgage under specified
circumstances. Existing law authorizes the agency, in its discretion,
to permit a downpayment assistance loan to be subordinated to
refinancing if it determines that certain criteria have been met.
Existing law authorizes the agency to permit subordination on those
terms and conditions as it determines are reasonable.
Existing law requires the California Housing Finance Agency to
administer the Home Purchase Assistance Program for the purpose of
assisting first-time homebuyers utilizing existing mortgage
financing. Existing law also requires the agency to administer the
Extra Credit Teacher Home Purchase Program, as specified, and any
other school personnel home ownership assistance program that is set
forth by the California Debt Limit Allocation Committee.
This bill would further extend the authority of the agency to
permit a downpayment assistance loan made under any of those programs
to be subordinated to refinancing, subject to certain criteria and
under terms and conditions as the agency determines are reasonable,
unless the borrower has sufficient equity to repay the loan.
This bill would declare that it is to take effect immediately as
an urgency statute.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 50650.3 of the Health and Safety Code is
amended to read:
50650.3. (a) Funds appropriated for purposes of this chapter
shall be used to enable low- and very low income households to become
or remain homeowners. Funds shall be provided by the department to
local public agencies or nonprofit corporations as either of the
following:
(1) Grants for programs that assist individual households.
(2) Loans that assist development projects involving multiple home
ownership units, including single-family subdivisions.
(b) (1) Grant funds may be used for first-time homebuyer
downpayment assistance, home rehabilitation, including the
installation or retrofit of ignition resistant exterior components on
existing manufactured homes, mobilehomes, and accessory structures
required pursuant to Article 2.3 (commencing with Section 4200) of
Subchapter 2 of Chapter 3 of Division 1 of Title 25 of the California
Code of Regulations, homebuyer counseling, home acquisition and
rehabilitation, or self-help mortgage assistance programs, or for
technical assistance for self-help and shared housing home ownership.
(2) Home rehabilitation funding for the purpose of installing
ignition resistant components on manufactured homes, mobilehomes, or
accessory structures pursuant to this subdivision shall not be
conditioned upon the rehabilitation of additional or unrelated home
components unless that rehabilitation is required pursuant to Article
2.3 (commencing with Section 4200) of Subchapter 2 of Chapter 3 of
Division 1 of Title 25 of the California Code of Regulations. In
administering funding for this purpose, local public agencies and
nonprofit corporations may consider the condition and age of the
manufactured home or mobilehome, including whether the home was
constructed on or after June 15, 1976, in accordance with federal
standards and whether the available funds could be more effectively
used to replace the manufactured home or mobilehome.
(c) (1) Except as provided in subdivision (e), loan funds may be
used for purchase of real property, site development, predevelopment,
and construction period expenses incurred on home ownership
development projects, and permanent financing for mutual housing or
cooperative developments. Upon completion of construction, the
department may convert project loans into grants for programs of
assistance to individual homeowners. Except as provided in paragraph
(2), financial assistance provided to individual households shall be
in the form of deferred payment loans, repayable upon sale or
transfer of the homes, when they cease to be owner-occupied, or upon
the loan maturity date. Financial assistance may be provided in the
form of a secured forgivable loan to an individual household to
rehabilitate, repair, or replace manufactured housing located in a
mobilehome park and not permanently affixed to a foundation. The loan
shall be due and payable in 20 years, with 10 percent of the
original principal to be forgiven annually for each additional year
beyond the 10th year that the home is owned and continuously occupied
by the borrower. Not more than 10 percent of the funds available for
the purposes of this chapter in a fiscal year shall be used for
financial assistance in the form of secured forgivable loans.
(2) Notwithstanding any other law, the department may, in its
discretion, permit the downpayment assistance loan to be subordinated
to refinancing if it determines that the borrower has demonstrated
hardship, subordination is required to avoid foreclosure, and the new
loan meets the department's underwriting requirements. The
department may permit subordination on those terms and conditions as
it determines are reasonable, however subordination shall not be
permitted if the borrower has sufficient equity to repay the loan.
(d) All loan repayments shall be used for activities allowed under
this section, and shall be governed by a reuse plan approved by the
department. Those reuse plans may provide for loan servicing by the
grant recipient or a third-party local government agency or nonprofit
corporation.
(e) Notwithstanding subdivision (c), loans provided pursuant to
the CalHome Program Disaster Assistance for Imperial County that have
been made for the purpose of rehabilitation, reconstruction, or
replacement of lower income owner-occupied manufactured homes shall
be due and payable in 10 years, with 20 percent of the original
principal to be forgiven annually for each additional year beyond the
fifth year that the manufactured home is owned and continuously
occupied by the borrower.
SEC. 2. Section 51345 of the Health and Safety Code is amended to
read:
51345. (a) The agency shall administer a home purchase assistance
program in accordance with this chapter. The purpose of the home
purchase assistance program is to assist first-time homebuyers to
utilize existing mortgage financing available pursuant to this part
or Division 4 (commencing with Section 800) of the Military and
Veterans Code with the additional financial resources made available
pursuant to Part 8 (commencing with Section 53130).
(b) Home purchase assistance under this chapter shall include, but
not be limited to: (1) an interest rate subsidy to reduce the
interest rate, (2) a deferred-payment, low-interest, second-mortgage
loan to reduce the principal and interest payments, and (3)
downpayment assistance to make financing affordable to first-time
homebuyers.
(c) In no case shall the interest rate subsidy reduce the
effective interest rate to the borrower below 3 percent per annum,
nor shall the deferred-payment, low-interest, second mortgage loan
exceed 49 percent of the total debt financing necessary to purchase
the home.
(d) The amount of home purchase assistance shall be a second
mortgage loan secured by a deed of trust of second priority to the
primary financing provided by the agency or the Department of
Veterans Affairs. The term of the home purchase assistance shall not
exceed the term of the primary loan.
(e) (1) Except as provided in paragraph (2), the amount of home
purchase assistance shall be due and payable at the end of the term,
upon the sale of the home, or upon refinancing. The borrower may
refinance the mortgages on the home if the principal of and accrued
interest on the second mortgage loan securing the home purchase
assistance are repaid in full. All repayments shall be deposited in
the fund.
(2) The agency may, in its discretion, permit the downpayment
assistance loan to be subordinated to refinancing if it determines
that the borrower has demonstrated hardship, subordination is
required to avoid foreclosure, and the new loan meets the agency's
underwriting requirements. The agency may permit subordination on
those terms and conditions as it determines are reasonable, but
subordination is not permitted if the borrower has sufficient equity
to repay the loan.
SEC. 3. Section 51505 of the Health and Safety Code is amended to
read:
51505. (a) In addition to the downpayment assistance program
authorized by Section 51504, and notwithstanding any provision of
Section 51504 to the contrary, the agency shall provide downpayment
assistance from the funds set aside pursuant to subparagraph (D) of
paragraph (7) of subdivision (a) of Section 53533 for the purposes of
the portion of the Extra Credit Teacher Home Purchase Program
provided for in subdivision (g) of Section 8869.84 of the Government
Code and any other school personnel home ownership assistance
programs as set forth by the California Debt Limit Allocation
Committee, as operated by the agency. Notwithstanding the foregoing,
the agency may, but is not required to, provide downpayment
assistance pursuant to this section to any local issuer participating
in the Extra Credit Teacher Home Purchase Program and any other
school personnel home ownership assistance programs as set forth by
the California Debt Limit Allocation Committee.
(b) (1) Downpayment assistance for purposes of this section shall
be subject to, and shall meet the requirements of, the Extra Credit
Teacher Home Purchase Program and any other school personnel home
ownership programs as set forth by the California Debt Limit
Allocation Committee, and shall include, but not be limited to,
deferred payment, low interest rate loans.
(2) Except as provided in paragraph (3), payment of principal and
interest is deferred until the time that the home is sold or
refinanced.
(3) The agency may, in its discretion, permit the downpayment
assistance loan to be subordinated to refinancing if it determines
that the borrower has demonstrated hardship, subordination is
required to avoid foreclosure, and the new loan meets the agency's
underwriting requirements. The agency may permit subordination on
those terms and conditions as it determines are reasonable, but
subordination is not permitted if the borrower has sufficient equity
to repay the loan.
(4) This downpayment assistance shall meet the requirements of
subdivisions (d) and (e) of Section 51504.
(c) Loans made pursuant to this section may include a provision
whereby interest, principal, or both, of the loan is forgiven upon
conditions to be established by the agency, or any other provision
designed to carry out the purposes of the Extra Credit Teacher Home
Purchase Program and any other school personnel home ownership
programs as set forth by the California Debt Limit Allocation
Committee.
(d) Downpayment assistance pursuant to this section shall not
exceed the greater of seven thousand five hundred dollars ($7,500) or
3 percent of the home sales price. However, the agency may, with the
concurrence of the California Debt Limit Allocation Committee,
establish higher assistance limits where necessary to ensure
sufficient assistance to allow program participation in high cost
areas.
SEC. 4. This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
In order for underwater homeowners to participate in the federal
Home Affordable Refinance Program (HARP) at the earliest possible
time, it is necessary that this act take effect immediately.
