BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1551| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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: CONTINUED AB 1551 Page 2 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. CONTINUED AB 1551 Page 3 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 **** END **** CONTINUED