BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                  AB 1551|
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                                 THIRD READING


          Bill No:  AB 1551
          Author:   Torres (D)
          Amended:  8/22/12 in Senate
          Vote:     27 - Urgency

           
          PRIOR VOTES NOT RELEVANT

           SENATE TRANSPORTATION & HOUSING COMM.  :  7-0, 8/28/12
          AYES:  DeSaulnier, Gaines, Harman, Kehoe, Lowenthal, Rubio, 
            Simitian
          NO VOTE RECORDED:  Pavley, Wyland

           SENATE APPROPRIATIONS COMMITTEE :  6-0, 8/29/12
          AYES:  Kehoe, Walters, Alquist, Dutton, Price, Steinberg
          NO VOTE RECORDED:  Lieu


           SUBJECT  :    Housing

           SOURCE  :     Author


           DIGEST  :    This bill allows the California Housing Finance 
          Agency (CalHFA) under the Home Purchase Assistance and 
          Extra Credit Teacher Programs and the Department of Housing 
          and Community Development (HCD) under the CalHome Program 
          to subordinate a second mortgage under certain conditions.

           ANALYSIS  :    

          Existing law:

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                                                               AB 1551
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          1. Establishes the CalHome Program, administered by HCD, to 
             enable low and very low income households to become or 
             remain homeowners, and requires HCD, 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.  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.

          2. Requires CalHFA 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, and authorizes a 
             borrower to refinance a mortgage under specified 
             circumstances. 

          3. Authorizes CalHFA, in its discretion, to permit a 
             downpayment assistance loan to be subordinated to 
             refinancing if it determines that certain criteria have 
             been met.

          4. Authorizes CalHFA to permit subordination on those terms 
             and conditions as it determines are reasonable.

          5. Requires the CalHFA to administer the Home Purchase 
             Assistance Program for the purpose of assisting 
             first-time homebuyers utilizing existing mortgage 
             financing, and 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:

          1. Allows HCD under the CalHome Program and CalHFA under 
             the Home Purchase Assistance and Extra Credit Teacher 
             Programs to permit downpayment assistance loans 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 
             its underwriting requirements. 

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                                                               AB 1551
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          2. Allows HCD and CalHFA permit subordination on those 
             terms and conditions as it determines are reasonable, 
             however this bill prohibits subordination if the 
             borrower has sufficient equity to repay the loan.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes   
          Local:  No

             Potential delays in loan repayments in future years, 
             the impacts of which would likely be offset by reduced 
             risk that state-financed loans would be extinguished 
             during a foreclosure (various funds).

             Minor administrative costs to CalHFA and HCD (various 
             funds).


          JJA:k  8/30/12   Senate Floor Analyses 

                       SUPPORT/OPPOSITION:  NONE RECEIVED

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