Amended in Senate May 28, 2013

Amended in Assembly April 9, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 984

Introduced by Assembly Members Chau and Gordon

February 22, 2013

An act to amend Sections 50901, 50902, begin delete and 51502 of end delete begin insert 51175, and 51504 of, and to add Section end insert begin insert 51065 end insert begin insert .1 to, end insert the Health and Safety Code, relating to the California Housing Finance Agency begin insert , and declaring the urgency thereof, to take effect immediately end insert .

LEGISLATIVE COUNSEL’S DIGEST

AB 984, as amended, Chau. The California Housing Finance Agency.

Existing law provides that there is the California Housing Finance Agency in the Department of Housing and Community Development administered by an 11-member board of directors that includes various state officers and 6 members appointed by the Governor.

This bill would add the Secretary of Veterans Affairs to the board. The bill would also increase the number of members appointed by the Governor to 7 and require that at least one member appointed by the Governor have specific knowledge of bonds and related financial instruments, interest rate swaps, and risk management. begin insert The bill would specify, notwithstanding other provisions of the bill, that these provisions relating to the membership of the board would not become effective until January 1, 2014. end insert

begin delete

Existing law, the California Homebuyer’s Assistance Program, requires the agency to administer a downpayment assistance program, as specified.

end delete begin delete

This bill would make a technical, nonsubstantive change to those provisions.

end delete begin insert

Existing law authorizes the agency, among other things, to make or undertake commitments to make development loans, construction loans, mortgage loans, and property improvement loans to housing sponsors to finance housing developments, as specified.

end insert begin insert

This bill would authorize the agency to make grants to buyers of residential structures combined with first mortgage loans financed by the agency to be used in conjunction with the Federal Housing Administration (FHA) Energy Efficient Mortgage Program, for the purpose of making repairs or improvements to increase energy efficiency in the home, as specified.

end insert begin insert

Existing law provides that the agency shall not, except as provided, make construction loans or mortgage loans for the purpose of financing owner-occupied residential structures unless those loans are made through a qualified mortgage lender.

end insert begin insert

This bill would instead provide that the agency shall not make construction loans or first mortgage loans, except as provided, as specified above.

end insert begin insert

Existing law requires the agency to administer the California Homebuyer’s Downpayment Assistance Program for the purpose of providing downpayment assistance to first-time low- and moderate-income home buyers. Existing law requires that the amount of the downpayment assistance shall be due and payable at the end of the term, or upon sale of or refinancing of the home, except that the agency may, in its discretion, permit the downpayment assistance to be subordinated to refinancing, as specified.

end insert begin insert

This bill would also provide that the downpayment assistance shall not be due and payable upon sale of the home if the first mortgage loan is insured by the FHA, transferred to the FHA, or the requirement is otherwise contrary to federal regulations, as specified.

end insert begin insert

This bill would declare that it is to take effect immediately as an urgency statute.

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Vote:  begin delete majority end delete begin insert ²⁄₃ end insert . Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 50901 of the Health and Safety Code, as
amended by Section 21 of Chapter 147 of the Statutes of 2012, is
amended to read:

50901.  

The agency shall be administered by a board of directors
consisting of 13 voting members, including a chairperson selected
by the Governor from among his or her appointees. The begin delete Treasurer, end delete
begin insert Treasurer; end insert the Secretary of Business, Consumer Services, and
begin delete Housing, end delete begin insert Housing; end insert the Director of Housing and Community
begin delete Development, end delete begin insert Development; end insert and the Secretary of Veterans Affairs,
or their designees, shall be members, in addition to seven members
appointed by the Governor, one member appointed by the Speaker
of the Assembly, and one member appointed by the Senate
Committee on Rules. The Director of Finance, the Director of
Planning and Research, and the executive director of the agency
shall serve as nonvoting ex officio members of the board.

SEC. 2.  

Section 50902 of the Health and Safety Code is
amended to read:

50902.  

(a) Appointed members of the board shall be able
persons broadly reflective of the economic, cultural, and social
diversity of the state, including ethnic minorities and women.
However, it is not intended that formulas or specific ratios be
applied in order to achieve that diversity.

(b) The Governor shall select four of his or her seven appointees
from among the following categories: (1) an elected official of a
city or county engaged in the planning or implementation of a
housing, housing-assistance, or housing-rehabilitation program;
(2) a person experienced in residential real estate in the savings
and loan, mortgage banking, or commercial banking industry; (3)
a person experienced as a builder of residential housing; (4) a
person experienced in organized labor in the residential
construction industry; (5) a person experienced in the management
of rental or cooperative housing occupied by lower income
households; (6) a person experienced in manufactured housing
finance and development; and (7) a person representing the public.
Not more than one person from each category may serve on the
board at any one time, except that two members may be appointed
by the Governor to represent the public.

(c) The Governor shall also appoint two members who are
residents of rental or cooperative housing financed by the agency
or who are persons experienced in counseling, assisting, or
representing tenants.

(d) At least one of the members appointed by the Governor shall
be a resident of a rural or nonmetropolitan area.

(e) At least one of the members appointed by the Governor shall
have specific knowledge of bonds and related financial instruments,
interest rate swaps, and risk management.

(f) The Senate Committee on Rules and the Speaker of the
Assembly shall each appoint a person representing the public.

The term of members of the board shall be six years. Any person
appointed to fill a vacancy on the board shall serve only for the
remainder of the unexpired term. Members of the board shall,
subject to continued qualification, be eligible for reappointment.
If a member of the board ceases to meet the qualifications specified
in this section, the membership of that person on the board shall
be terminated.

begin delete

SEC. 3.  

Section 51502 of the Health and Safety Code is
amended to read:

51502.  

The purpose of the California Homebuyer’s
Downpayment Assistance Program is to assist first-time low- and
moderate-income homebuyers using existing mortgage financing.

end delete

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 51065.1 is added to the end insert begin insert Health and Safety
Code end insert begin insert , to read: end insert

begin insert

begin insert 51065.1. end insert   

The agency may make grants to buyers of residential
structures combined with first mortgage loans financed by the
agency to be used in conjunction with the FHA Energy Efficient
Mortgage Program, for the purpose of making repairs or
improvements to increase energy efficiency in the home. Grants
authorized by this section shall not be made with proceeds from
the sale of bonds. Any such grant, and any costs directly associated
with it, shall be funded through revenues realized by the agency
from the grantee’s first mortgage loan, or securities backed by it,
except that the agency may provide short-term interim funding of
the grant to facilitate the transaction.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 51175 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

51175.  

Except as provided in this article, the agency shall not
make construction loans or begin insert first end insert mortgage loans for the purpose
of financing owner-occupied residential structures unless begin delete such end delete
begin insert those end insert loans are made through a qualified mortgage lender.

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 51504 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

51504.  

(a) The agency shall administer a downpayment
assistance program that includes, but is not limited to, all of the
following:

(1) Downpayment assistance shall include, but not be limited
to, a deferred-payment, low-interest, junior mortgage loan to reduce
the principal and interest payments and make financing affordable
to first-time low- and moderate-income home buyers.

(2) (A) Except as provided in subparagraph (B) or (C), the
amount of downpayment assistance shall not exceed 3 percent of
the home sale price.

(B) The amount of downpayment assistance for a new home
within an infill opportunity zone, as defined in Section 65088.1
of the Government Code, a transit village development district, as
defined in Section 65460.4 of the Government Code, or a
transit-oriented development specific plan area, as defined in
paragraph (6), shall not exceed 5 percent of the purchase price or
the appraised value, whichever amount is less, of the new home.
The borrower of the downpayment assistance shall provide the
lender originating the loan with a certification from the local
government agency administering the infill opportunity zone, the
transit village development district, or the transit-oriented
development specific plan area that states that the property involved
in the loan transaction is within the boundaries of either the infill
opportunity zone, the transit village development district, or the
transit-oriented development specific plan area.

(C) Notwithstanding paragraph (1), the agency may, but is not
required to, provide downpayment assistance that does not exceed
6 percent of the home sale price to first-time low-income home
buyers who, as documented to the agency by a nonprofit
organization that is certified and funded to provide home ownership
counseling by a federally funded national nonprofit corporation,
are purchasing a residence in a community revitalization area
targeted by the nonprofit organization as a neighborhood in need
of economic stimulation, renovation, and rehabilitation through
efforts that include increased home ownership opportunities for
low-income families. The agency shall not use more than six
million dollars ($6,000,000) in funds made available pursuant to
Section 53533 for the purposes of this paragraph.

(3) The amount of the downpayment assistance shall be secured
by a deed of trust in a junior position to the primary financing
provided. The term of the loan for the downpayment assistance
shall not exceed the term of the primary loan.

(4) (A) Except as provided in begin delete subparagraph (B), end delete begin insert subparagraphs
(B) and (C), end insert the amount of the downpayment assistance shall be
due and payable at the end of the term or upon sale of or
refinancing of the home. The borrower may refinance the
mortgages on the home provided that the principal and accrued
interest on the junior mortgage loan securing the downpayment
assistance are repaid in full. All repayments shall be made to the
agency to be reallocated for the purposes of this chapter.

(B) 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.

begin insert

(C) The amount of the downpayment assistance shall not be due
and payable upon sale of the home if the first mortgage loan is
insured by the Federal Housing Administration (FHA) or if the
first mortgage loan is, or has been, transferred to the FHA, or if
the requirement is otherwise contrary to regulations of the United
States Department of Housing and Urban Development governing
FHA insured first mortgage loans.

end insert

(5) The agency may use up to 5 percent of the funds appropriated
by the Legislature for purposes of this chapter to administer this
program.

(6) For purposes of this section, “transit-oriented development
specific plan area” means a specific plan that meets the criteria set
forth in Section 65451 of the Government Code, is centered around
a rail or light-rail station, ferry terminal, bus hub, or bus transfer
station, and is intended to achieve a higher density use of land that
facilitates use of the transit station.

(b) In addition to the downpayment assistance program
authorized by subdivision (a), the agency may, at its discretion,
use not more than seventy-five million dollars ($75,000,000) of
the funds available pursuant to this chapter to finance the
acquisition of land and the construction and development of
for-sale residential structures, through short-term loans pursuant
to its authority pursuant to Section 51100. However, the agency
shall make downpayment assistance provided pursuant to paragraph
(1), subparagraphs (A) and (B) of paragraph (2), and paragraphs
(3) to (5), inclusive, of subdivision (a) the priority use for these
funds. A loan made pursuant to this section is not subject to Article
4 (commencing with Section 51175) of Chapter 5.

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begin insert SEC. 6. end insert   

end insert

begin insert Notwithstanding Section 7, Sections 1 and 2 of this act
shall not become effective until January 1, 2014. end insert

begin insert

begin insert SEC. 7. end insert   

end insert begin insert

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:

end insert begin insert

In order to allow the California Housing Finance Agency to
continue to combine its downpayment assistance with first
mortgage loans insured by the Federal Housing Administration
after June 2013, it is necessary that this act take effect immediately.

end insert