BILL NUMBER: SB 722 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Correa
FEBRUARY 18, 2011
An act to amend Sections 52013 and 52020 of the Health and Safety
Code, relating to housing.
LEGISLATIVE COUNSEL'S DIGEST
SB 722, as introduced, Correa. Home financing programs.
Existing law, for purposes of a home financing program, provides
that a city or county has specified powers and duties and may
administer a home financing program to acquire, contract, and enter
into advance commitments to acquire home mortgages, as defined, made
or owned by lending institutions at the purchase prices and upon
other terms and conditions as determined by the city or county.
Existing law includes the refinancing of home mortgages in the
criteria for establishing a maximum household income for the purposes
of a city- or county-administered home financing program. Existing
law would repeal these provisions on January 1, 2012.
This bill would revise the repeal dates so these provisions would
be repealed on January 1, 2017.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 52013 of the Health and Safety Code, as amended
by Section 116 of Chapter 140 of the Statutes of 2009, is amended to
read:
52013. (a) "Home mortgage" or "mortgage" means an
interest-bearing loan made as provided in this part to a mortgagor,
whether originated in the manner provided in subdivision (a) or (b)
of Section 52020 that 52020, which is
either of the following:
(1) Evidenced by a promissory note and secured by a mortgage, deed
of trust, or other security instrument on a home, and that
which may be, but is not required to be,
additionally secured by insurance on the payment of the note
note, for the purposes of purchasing,
constructing, or improving a home that meets any of the criteria
described in paragraphs (1) to (3), inclusive, of subdivision (b).
(2) Evidenced by a promissory note and secured by a mortgage, deed
of trust, or other security instrument on a home, and that
which is federally insured, federally
guaranteed, or eligible to be purchased by the Federal National
Mortgage Association or the Federal Home Loan and Mortgage
Corporation Corporation, for the purposes of
refinancing a home that meets the criteria described in paragraph (3)
of subdivision (b).
(b) The following criteria apply for the purposes of subdivision
(a):
(1) Is newly constructed or is being rehabilitated and that, in
either case, is located within an area or neighborhood in which the
city or county is conducting a housing rehabilitation or code
enforcement program, program; a
neighborhood preservation area or concentrated rehabilitation area
designated pursuant to this division,
division; an area for which federal funds are being made
available, available; or a residential
rehabilitation area as defined in Section 37912. However, a loan may
be made for the purchase of a newly constructed home anywhere within
the city or county if the purchase is in connection with a program
adopted by ordinance of the city or county the purpose of which is to
increase the housing supply.
(2) Is a home upon which no rehabilitation is being undertaken in
connection with any financing pursuant to this part, where the
purchaser will not be the first occupant and that is located within
the city or county making or purchasing the home mortgage.
(3) Is an existing home within the city or county making or
purchasing the home mortgage and the owner is, and will be, the
occupant of the house.
(c) This section shall remain in effect only until January 1,
2012 2017 , and as of that date is
repealed, unless a later enacted statute, that is enacted before
January 1, 2012 2017 , deletes or
extends that date.
SEC. 2. Section 52013 of the Health and Safety Code, as amended by
Section 117 of Chapter 140 of the Statutes of 2009, is amended to
read:
52013. (a) "Home mortgage" or "mortgage" means an
interest-bearing loan made as provided in this part to a mortgagor,
whether originated in the manner provided in subdivision (a) or (b)
of Section 52020 that is evidenced by a promissory note and secured
by a mortgage, deed of trust, or other security instrument on a home,
and that which may be, but
is not required to be be, additionally
secured by insurance on the payment of the note
note, for the purpose purposes
of purchasing, constructing, or improving a home that meets
either any of the following
criteria: criteria described in paragraphs (1) to (3),
inclusive, of subdivision (b).
(b) The following criteria apply for the purposes of subdivision
(a):
(1) Is newly constructed or is being rehabilitated and that, in
either case, is located within an area or neighborhood in which the
city or county is conducting a housing rehabilitation or code
enforcement program, program; a
neighborhood preservation area or concentrated rehabilitation area
designated pursuant to this division,
division; an area for which federal funds are being made
available, available; or a residential
rehabilitation area as defined in Section 37912. However, a loan may
be made for the purchase of a newly constructed home anywhere within
the city or county if the purchase is in connection with a program
adopted by ordinance of the city or county the purpose of which is to
increase the housing supply.
(2) Is a home upon which no rehabilitation is being undertaken in
connection with any financing pursuant to this part, where the
purchaser will not be the first occupant,
occupant and that is located within the city or county making
or purchasing the home mortgage.
(b) A "home mortgage" or "mortgage" shall not include a loan to a
mortgagor for the purpose of refinancing an existing obligation of
the mortgagor, unless substantial rehabilitation is to be undertaken
in connection with the loan.
(c) This section shall become operative January 1, 2012.
2017.
SEC. 3. Section 52020 of the Health and Safety Code, as amended by
Section 3 of Chapter 283 of the Statutes of 2008, is amended to
read:
52020. (a) For purposes of a home financing program authorized by
this part, a city or county has the following powers and duties:
(1) To acquire, contract, and enter into advance commitments to
acquire home mortgages made or owned by lending institutions at the
purchase prices and upon the other terms and conditions as shall be
determined by the city or county or other person as it may designate
as its agent, to make and execute contracts with lending institutions
for the origination and servicing of home mortgages, and to pay the
reasonable value of services rendered under those contracts. Prior to
executing any contract with a lending institution, a city or county
shall adopt regulations establishing criteria for qualification of
lending institutions eligible to originate and service home mortgages
under home financing programs authorized by this part and shall,
with respect to each home financing program, permit each qualified
lending institution that transacts business in the city or county the
opportunity to participate in the program on an equitable basis with
other participating lending institutions. Two or more cities in the
same county, a county and one or more cities within the county, or
two or more adjacent counties and any number of cities within those
counties may enter into an agreement to join or cooperate with one
another in the exercise jointly, or otherwise, of any or all of their
powers for the purpose of financing home mortgages pursuant to this
part with respect to property within the boundaries of any one or
more of the entities.
(2) To make loans to lending institutions under terms and
conditions that, in addition to other provisions as determined by the
city or county, require the lending institutions to use all of the
net proceeds thereof, directly or indirectly, for the making of home
mortgages in an aggregate principal amount equal to the amount of the
net proceeds.
(3) To establish, by rules or regulations, in resolutions relating
to any issuance of bonds, or in any documents relating to the
issuance, standards and requirements applicable to the purchase of
home mortgages or the making of loans to lending institutions as the
city or county deems necessary or desirable to effectuate the
purposes of this part, which may include without limitation any of
the following:
(A) The time within which lending institutions are required to
make commitments and disbursements for home mortgages.
(B) The location and other characteristics of homes to be financed
by home mortgages.
(C) The terms and conditions of home mortgages to be acquired.
(D) The amounts and types of any insurance coverage required on
homes, home mortgages, and bonds.
(E) The representations and warranties of lending institutions
confirming compliance with the standards and requirements.
(F) Restrictions as to interest rate and other terms of home
mortgages or the return realized therefrom by lending institutions.
(G) The type and amount of collateral security to be provided to
assure repayment of any loans from the city or county and to assure
repayment of bonds.
(H) Any other matters related to the purchase of home mortgages or
the making of loans to lending institutions as deemed relevant by
the city or county.
(4) To require from each lending institution from which home
mortgages are purchased or to which loans are made the submission of
evidence satisfactory to the city or county of the ability and
intention of the lending institution to make home mortgages, and the
submission, within the time specified by the city or county for
making disbursements for home mortgages, of evidence satisfactory to
the city or county of the making of home mortgages and of compliance
with any standards and requirements established by it.
(b) Each city or county that finances housing pursuant to this
part shall designate a person or entity to administer the program.
(c) Each city or county that finances housing pursuant to this
part shall adopt regulations establishing criteria for qualification
of persons and families, which may differ among different cities or
counties to reflect varying economic and housing conditions. In
developing these criteria, factors similar to the following shall be
taken into consideration:
(1) The amount of the income of the person or family that is
available for housing needs.
(2) The size of the household.
(3) The costs and condition of available housing.
(4) The eligibility of the persons or families for federal housing
assistance of any type.
(d) (1) Criteria for qualification of persons and families
pursuant to this section shall include a maximum household income,
which maximum shall not exceed the following:
(A) One hundred twenty percent of the median household income for
mortgages made for improving a home, for refinancing a home, or for
homes where the purchaser will be the first occupant. Upon the resale
of a home for which financing was originally provided under this
paragraph, the maximum income of persons and families also shall be
120 percent of the median household income.
(B) One hundred twenty percent of the median household income for
mortgages where the purchaser will not be the first occupant.
However, the city or county shall ensure that no less than 50 percent
of the funds allocated for home mortgages where the purchaser will
not be the first occupant shall be for households whose income does
not exceed 80 percent of that median household income. However, the
legislative body of the city or county may, by resolution, increase
this income limitation to 90 percent of median household income if
the legislative body finds that there are insufficient numbers of
creditworthy persons whose income does not exceed 80 percent of
median household income. The resolution is final and conclusive as to
the findings required by this paragraph.
(C) One hundred fifty percent of the median household income for
mortgages made for improving a home, for refinancing a home, or for
homes where the purchaser will be the first occupant in any city, the
entire area of which, or in any county in which a portion of the
county, is designated by the United States Department of Commerce,
Economic Development Administration as a special impact area within a
Title IV redevelopment area, pursuant to Section 401 of the federal
Public Works and Economic Development Act of 1965, as amended, and
that is eligible for Urban Development Action Grant funds under the
current distress standards established for cities and counties by the
Secretary of the United States Department of Housing and Urban
Development pursuant to Section 119 of the Housing and Community
Development Act of 1974, if the homes purchased, refinanced, or
improved are situated within the boundaries of a special impact area
as defined by the Economic Development Administration, and that
designation is in effect on the date of sale of revenue bonds issued
under this part.
(2) As used in this subdivision, "median household income" means
the highest of (A) statewide median household income, (B) countywide
median household income, or (C) median family income for an area, as
determined by the United States Department of Housing and Urban
Development, with respect to either a standard metropolitan
statistical area or an area outside of a standard metropolitan
statistical area.
(e) (1) Subdivision (d) shall not apply with respect to home
finance programs funded with amounts made available by the issuance
of revenue bonds that, for federal tax law purposes, are bonds
refunding qualified mortgage bonds issued before January 1, 1987, and
that satisfy the requirements of subdivision (a) of Section 1313 of
the federal Tax Reform Act of 1986. With respect to these programs,
the maximum household income for qualification of persons and
families pursuant to this section shall be the following:
(A) One hundred fifty percent of the median household income for
mortgages made for improving a home or for homes where the purchaser
will be the first occupant. Upon the resale of a home for which
financing was originally provided under this paragraph, the maximum
income of persons and families also shall be 150 percent of the
median household income. For purposes of this paragraph, a mortgage
made for improving a home includes a home improvement loan as defined
in Section 143 of Title 26 of the United States Code.
(B) One hundred twenty percent of the median household income
where the purchaser will not be the first occupant. However, the city
or county shall ensure that no less than 20 percent of the funds
allocated for home mortgages where the purchaser will not be the
first occupant shall be for households whose income does not exceed
110 percent of that median household income. However, the legislative
body of the city or county may, by resolution, increase this income
limitation to 120 percent of the median household income if the
legislative body finds that there are insufficient numbers of
creditworthy persons whose income does not exceed 110 percent of the
median household income. The resolution is final and conclusive as to
the findings required by this paragraph. However, the finding shall
not be made by the legislative body before six months from the date
mortgages were first made under the program and only if participating
lenders have entered into an agreement with the city, county, or
city and county that lenders will advertise at least monthly the
availability of funds and will forfeit one-quarter of their
origination fees if they are unable to use 20 percent of the funds to
make mortgages to households whose income does not exceed 110
percent of the median income.
(C) One hundred fifty percent of the median household income for
mortgages made for improving a home or for homes where the purchaser
will be the first occupant in any city, the entire area of which, or
in any county in which a portion of the county, is designated by the
United States Department of Commerce, Economic Development
Administration as a special impact area within a Title IV
redevelopment area, pursuant to Section 401 of the federal Public
Works and Economic Development Act of 1965, as amended, and that is
eligible for Urban Development Action Grant funds under the current
distress standards established for cities and counties by the
Secretary of the United States Department of Housing and Urban
Development pursuant to Section 119 of the Housing and Community
Development Act of 1974, if the homes purchased or improved are
situated within the boundaries of a special impact area as defined by
the Economic Development Administration, and that designation is in
effect on the date of sale of revenue bonds issued under this part.
(2) As used in this subdivision, "median household income" means
the highest of (A) statewide median household income, (B) countywide
median household income, or (C) median family income for an area, as
determined by the United States Department of Housing and Urban
Development, with respect to either a standard metropolitan
statistical area or an area outside of a standard metropolitan
statistical area.
(f) Each city or county that finances housing pursuant to this
part shall require each mortgagor under the program to certify his or
her intention to occupy the home for a minimum of two years after
receiving a home mortgage, with appropriate exceptions in hardship
cases determined by the city or county.
(g) Each city and county may do any and all things necessary to
carry out the purposes and exercise the powers expressly granted by
this part.
(h) This section shall remain in effect only until January 1,
2012 2017 , and as of that date is
repealed, unless a later enacted statute, that is enacted before
January 1, 2012 2017 , deletes or
extends that date.
SEC. 4. Section 52020 of the Health and Safety Code, as added by
Section 4 or Chapter 283 of the Statutes of 2008, is amended to read:
52020. (a) For purposes of a home financing program authorized by
this part, a city or county has the following powers and duties:
(1) To acquire, contract, and enter into advance commitments to
acquire home mortgages made or owned by lending institutions at the
purchase prices and upon the other terms and conditions as shall be
determined by the city or county or other person as it may designate
as its agent, to make and execute contracts with lending institutions
for the origination and servicing of home mortgages, and to pay the
reasonable value of services rendered under those contracts. Prior to
executing any contract with a lending institution, a city or county
shall adopt regulations establishing criteria for qualification of
lending institutions eligible to originate and service home mortgages
under home financing programs authorized by this part and shall,
with respect to each home financing program, permit each qualified
lending institution that transacts business in the city or county the
opportunity to participate in the program on an equitable basis with
other participating lending institutions. Two or more cities in the
same county, a county and one or more cities within the county, or
two or more adjacent counties and any number of cities within those
counties may enter into an agreement to join or cooperate with one
another in the exercise jointly, or otherwise, of any or all of their
powers for the purpose of financing home mortgages pursuant to this
part with respect to property within the boundaries of any one or
more of the entities.
(2) To make loans to lending institutions under terms and
conditions that, in addition to other provisions as determined by the
city or county, require the lending institutions to use all of the
net proceeds thereof, directly or indirectly, for the making of home
mortgages in an aggregate principal amount equal to the amount of the
net proceeds.
(3) To establish, by rules or regulations, in resolutions relating
to any issuance of bonds, or in any documents relating to the
issuance, standards and requirements applicable to the purchase of
home mortgages or the making of loans to lending institutions as the
city or county deems necessary or desirable to effectuate the
purposes of this part, which may include without limitation any of
the following:
(A) The time within which lending institutions are required to
make commitments and disbursements for home mortgages.
(B) The location and other characteristics of homes to be financed
by home mortgages.
(C) The terms and conditions of home mortgages to be acquired.
(D) The amounts and types of any insurance coverage required on
homes, home mortgages, and bonds.
(E) The representations and warranties of lending institutions
confirming compliance with the standards and requirements.
(F) Restrictions as to interest rate and other terms of home
mortgages or the return realized therefrom by lending institutions.
(G) The type and amount of collateral security to be provided to
assure repayment of any loans from the city or county and to assure
repayment of bonds.
(H) Any other matters related to the purchase of home mortgages or
the making of loans to lending institutions as deemed relevant by
the city or county.
(4) To require from each lending institution from which home
mortgages are purchased or to which loans are made the submission of
evidence satisfactory to the city or county of the ability and
intention of the lending institution to make home mortgages, and the
submission, within the time specified by the city or county for
making disbursements for home mortgages, of evidence satisfactory to
the city or county of the making of home mortgages and of compliance
with any standards and requirements established by it.
(b) Each city or county that finances housing pursuant to this
part shall designate a person or entity to administer the program.
(c) Each city or county that finances housing pursuant to this
part shall adopt regulations establishing criteria for qualification
of persons and families, which may differ among different cities or
counties to reflect varying economic and housing conditions. In
developing these criteria, factors similar to the following shall be
taken into consideration:
(1) The amount of the income of the person or family that is
available for housing needs.
(2) The size of the household.
(3) The costs and condition of available housing.
(4) The eligibility of the persons or families for federal housing
assistance of any type.
(d) (1) Criteria for qualification of persons and families
pursuant to this section shall include a maximum household income,
which maximum shall not exceed the following:
(A) One hundred twenty percent of the median household income for
mortgages made for improving a home or for homes where the purchaser
will be the first occupant. Upon the resale of a home for which
financing was originally provided under this paragraph, the maximum
income of persons and families also shall be 120 percent of the
median household income.
(B) One hundred twenty percent of the median household income for
mortgages where the purchaser will not be the first occupant.
However, the city or county shall ensure that no less than 50 percent
of the funds allocated for home mortgages where the purchaser will
not be the first occupant shall be for households whose income does
not exceed 80 percent of that median household income. However, the
legislative body of the city or county may, by resolution, increase
this income limitation to 90 percent of median household income if
the legislative body finds that there are insufficient numbers of
creditworthy persons whose income does not exceed 80 percent of
median household income. The resolution is final and conclusive as to
the findings required by this paragraph.
(C) One hundred fifty percent of the median household income for
mortgages made for improving a home or for homes where the purchaser
will be the first occupant in any city, the entire area of which, or
in any county in which a portion of the county, is designated by the
United States Department of Commerce, Economic Development
Administration as a special impact area within a Title IV
redevelopment area, pursuant to Section 401 of the federal Public
Works and Economic Development Act of 1965, as amended, and that is
eligible for Urban Development Action Grant funds under the current
distress standards established for cities and counties by the
Secretary of the United States Department of Housing and Urban
Development pursuant to Section 119 of the Housing and Community
Development Act of 1974, if the homes purchased or improved are
situated within the boundaries of a special impact area as defined by
the Economic Development Administration, and that designation is in
effect on the date of sale of revenue bonds issued under this part.
(2) As used in this subdivision, "median household income" means
the highest of (A) statewide median household income, (B) countywide
median household income, or (C) median family income for an area, as
determined by the United States Department of Housing and Urban
Development, with respect to either a standard metropolitan
statistical area or an area outside of a standard metropolitan
statistical area.
(e) (1) Subdivision (d) shall not apply with respect to home
finance programs funded with amounts made available by the issuance
of revenue bonds that, for federal tax law purposes, are bonds
refunding qualified mortgage bonds issued before January 1, 1987, and
that satisfy the requirements of subdivision (a) of Section 1313 of
the federal Tax Reform Act of 1986. With respect to these programs,
the maximum household income for qualification of persons and
families pursuant to this section shall be the following:
(A) One hundred fifty percent of the median household income for
mortgages made for improving a home or for homes where the purchaser
will be the first occupant. Upon the resale of a home for which
financing was originally provided under this paragraph, the maximum
income of persons and families also shall be 150 percent of the
median household income. For purposes of this paragraph, a mortgage
made for improving a home includes a home improvement loan as defined
in Section 143 of Title 26 of the United States Code.
(B) One hundred twenty percent of the median household income
where the purchaser will not be the first occupant. However, the city
or county shall ensure that no less than 20 percent of the funds
allocated for home mortgages where the purchaser will not be the
first occupant shall be for households whose income does not exceed
110 percent of that median household income. However, the legislative
body of the city or county may, by resolution, increase this income
limitation to 120 percent of the median household income if the
legislative body finds that there are insufficient numbers of
creditworthy persons whose income does not exceed 110 percent of the
median household income. The resolution is final and conclusive as to
the findings required by this paragraph. However, the finding shall
not be made by the legislative body before six months from the date
mortgages were first made under the program and only if participating
lenders have entered into an agreement with the city, county, or
city and county that lenders will advertise at least monthly the
availability of funds and will forfeit one-quarter of their
origination fees if they are unable to use 20 percent of the funds to
make mortgages to households whose income does not exceed 110
percent of the median income.
(C) One hundred fifty percent of the median household income for
mortgages made for improving a home or for homes where the purchaser
will be the first occupant in any city, the entire area of which, or
in any county in which a portion of the county, is designated by the
United States Department of Commerce, Economic Development
Administration as a special impact area within a Title IV
redevelopment area, pursuant to Section 401 of the federal Public
Works and Economic Development Act of 1965, as amended, and that is
eligible for Urban Development Action Grant funds under the current
distress standards established for cities and counties by the
Secretary of the United States Department of Housing and Urban
Development pursuant to Section 119 of the Housing and Community
Development Act of 1974, if the homes purchased or improved are
situated within the boundaries of a special impact area as defined by
the Economic Development Administration, and that designation is in
effect on the date of sale of revenue bonds issued under this part.
(2) As used in this subdivision, "median household income" means
the highest of (A) statewide median household income, (B) countywide
median household income, or (C) median family income for an area, as
determined by the United States Department of Housing and Urban
Development, with respect to either a standard metropolitan
statistical area or an area outside of a standard metropolitan
statistical area.
(f) Each city or county that finances housing pursuant to this
part shall require each mortgagor under the program to certify his or
her intention to occupy the home for a minimum of two years after
receiving a home mortgage, with appropriate exceptions in hardship
cases determined by the city or county.
(g) Each city and county may do any and all things necessary to
carry out the purposes and exercise the powers expressly granted by
this part.
(h) This section shall become operative January 1, 2012.
2017.