Amended in Senate June 18, 2013

Amended in Senate May 28, 2013

Amended in Assembly April 9, 2013

California Legislature—2013–14 Regular Session

Assembly BillNo. 984


Introduced by Assembly Members Chau and Gordon

February 22, 2013


An act to amend Sections 50901, 50902, 51175, and 51504 of, and to add Section 51065.1 to, the Health and Safety Code, relating to the California Housing Finance Agency, and declaring the urgency thereof, to take effect immediately.

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. 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.

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.

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.

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.

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

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.

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.

begin insert

This bill would incorporate additional changes to Section 51504 of the Health and Safety Code made by this bill and AB 637, to take effect if both bills are chaptered and this bill is chaptered last.

end insert

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

Vote: 23. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

P2    1

SECTION 1.  

Section 50901 of the Health and Safety Code, as
2amended by Section 21 of Chapter 147 of the Statutes of 2012, is
3amended to read:

P3    1

50901.  

The agency shall be administered by a board of directors
2consisting of 13 voting members, including a chairperson selected
3by the Governor from among his or her appointees. The Treasurer;
4the Secretary of Business, Consumer Services, and Housing; the
5Director of Housing and Community Development; and the
6Secretary of Veterans Affairs, or their designees, shall be members,
7in addition to seven members appointed by the Governor, one
8member appointed by the Speaker of the Assembly, and one
9member appointed by the Senate Committee on Rules. The Director
10of Finance, the Director of Planning and Research, and the
11executive director of the agency shall serve as nonvoting ex officio
12members of the board.

13

SEC. 2.  

Section 50902 of the Health and Safety Code is
14amended to read:

15

50902.  

(a) Appointed members of the board shall be able
16persons broadly reflective of the economic, cultural, and social
17diversity of the state, including ethnic minorities and women.
18However, it is not intended that formulas or specific ratios be
19applied in order to achieve that diversity.

20(b) The Governor shall select four of his or her seven appointees
21from among the following categories: (1) an elected official of a
22city or county engaged in the planning or implementation of a
23housing, housing-assistance, or housing-rehabilitation program;
24(2) a person experienced in residential real estate in the savings
25and loan, mortgage banking, or commercial banking industry; (3)
26a person experienced as a builder of residential housing; (4) a
27person experienced in organized labor in the residential
28construction industry; (5) a person experienced in the management
29of rental or cooperative housing occupied by lower income
30households; (6) a person experienced in manufactured housing
31finance and development; and (7) a person representing the public.
32Not more than one person from each category may serve on the
33board at any one time, except that two members may be appointed
34by the Governor to represent the public.

35(c) The Governor shall also appoint two members who are
36residents of rental or cooperative housing financed by the agency
37or who are persons experienced in counseling, assisting, or
38representing tenants.

39(d) At least one of the members appointed by the Governor shall
40be a resident of a rural or nonmetropolitan area.

P4    1(e) At least one of the members appointed by the Governor shall
2have specific knowledge of bonds and related financial instruments,
3interest rate swaps, and risk management.

4(f) The Senate Committee on Rules and the Speaker of the
5Assembly shall each appoint a person representing the public.

6The term of members of the board shall be six years. Any person
7appointed to fill a vacancy on the board shall serve only for the
8remainder of the unexpired term. Members of the board shall,
9subject to continued qualification, be eligible for reappointment.
10If a member of the board ceases to meet the qualifications specified
11in this section, the membership of that person on the board shall
12be terminated.

13

SEC. 3.  

Section 51065.1 is added to the Health and Safety
14Code
, to read:

15

51065.1.  

The agency may make grants to buyers of residential
16structures combined with first mortgage loans financed by the
17agency to be used in conjunction with the FHA Energy Efficient
18Mortgage Program, for the purpose of making repairs or
19improvements to increase energy efficiency in the home. Grants
20authorized by this section shall not be made with proceeds from
21the sale of bonds. Any such grant, and any costs directly associated
22with it, shall be funded through revenues realized by the agency
23from the grantee’s first mortgage loan, or securities backed by it,
24except that the agency may provide short-term interim funding of
25the grant to facilitate the transaction.

26

SEC. 4.  

Section 51175 of the Health and Safety Code is
27amended to read:

28

51175.  

Except as provided in this article, the agency shall not
29make construction loans or first mortgage loans for the purpose
30of financing owner-occupied residential structures unless those
31loans are made through a qualified mortgage lender.

32

SEC. 5.  

Section 51504 of the Health and Safety Code is
33amended to read:

34

51504.  

(a) The agency shall administer a downpayment
35assistance program that includes, but is not limited to, all of the
36following:

37(1) Downpayment assistance shall include, but not be limited
38to, a deferred-payment, low-interest, junior mortgage loan to reduce
39the principal and interest payments and make financing affordable
40to first-time low- and moderate-income home buyers.

P5    1(2) (A) Except as provided in subparagraph (B) or (C), the
2amount of downpayment assistance shall not exceed 3 percent of
3the home sale price.

4(B) The amount of downpayment assistance for a new home
5within an infill opportunity zone, as defined in Section 65088.1
6of the Government Code, a transit village development district, as
7defined in Section 65460.4 of the Government Code, or a
8transit-oriented development specific plan area, as defined in
9paragraph (6), shall not exceed 5 percent of the purchase price or
10the appraised value, whichever amount is less, of the new home.
11The borrower of the downpayment assistance shall provide the
12lender originating the loan with a certification from the local
13government agency administering the infill opportunity zone, the
14transit village development district, or the transit-oriented
15development specific plan area that states that the property involved
16in the loan transaction is within the boundaries of either the infill
17opportunity zone, the transit village development district, or the
18transit-oriented development specific plan area.

19(C) Notwithstanding paragraph (1), the agency may, but is not
20required to, provide downpayment assistance that does not exceed
216 percent of the home sale price to first-time low-income home
22buyers who, as documented to the agency by a nonprofit
23organization that is certified and funded to provide home ownership
24counseling by a federally funded national nonprofit corporation,
25are purchasing a residence in a community revitalization area
26targeted by the nonprofit organization as a neighborhood in need
27of economic stimulation, renovation, and rehabilitation through
28efforts that include increased home ownership opportunities for
29low-income families. The agency shall not use more than six
30million dollars ($6,000,000) in funds made available pursuant to
31Section 53533 for the purposes of this paragraph.

32(3) The amount of the downpayment assistance shall be secured
33by a deed of trust in a junior position to the primary financing
34provided. The term of the loan for the downpayment assistance
35shall not exceed the term of the primary loan.

36(4) (A) Except as provided in subparagraphs (B) and (C), the
37amount of the downpayment assistance shall be due and payable
38at the end of the term or upon sale of or refinancing of the home.
39The borrower may refinance the mortgages on the home provided
40that the principal and accrued interest on the junior mortgage loan
P6    1securing the downpayment assistance are repaid in full. All
2repayments shall be made to the agency to be reallocated for the
3purposes of this chapter.

4(B) The agency may, in its discretion, permit the downpayment
5assistance loan to be subordinated to refinancing if it determines
6that the borrower has demonstrated hardship, subordination is
7required to avoid foreclosure, and the new loan meets the agency’s
8underwriting requirements. The agency may permit subordination
9on those terms and conditions as it determines are reasonable.

10(C) The amount of the downpayment assistance shall not be
11due and payable upon sale of the home if the first mortgage loan
12is insured by the Federal Housing Administration (FHA) or if the
13first mortgage loan is, or has been, transferred to the FHA, or if
14the requirement is otherwise contrary to regulations of the United
15States Department of Housing and Urban Development governing
16FHA insured first mortgage loans.

17(5) The agency may use up to 5 percent of the funds appropriated
18by the Legislature for purposes of this chapter to administer this
19program.

20(6) For purposes of this section, “transit-oriented development
21specific plan area” means a specific plan that meets the criteria set
22forth in Section 65451 of the Government Code, is centered around
23a rail or light-rail station, ferry terminal, bus hub, or bus transfer
24station, and is intended to achieve a higher density use of land that
25facilitates use of the transit station.

26(b) In addition to the downpayment assistance program
27authorized by subdivision (a), the agency may, at its discretion,
28use not more than seventy-five million dollars ($75,000,000) of
29the funds available pursuant to this chapter to finance the
30acquisition of land and the construction and development of
31for-sale residential structures, through short-term loans pursuant
32to its authority pursuant to Section 51100. However, the agency
33shall make downpayment assistance provided pursuant to paragraph
34(1), subparagraphs (A) and (B) of paragraph (2), and paragraphs
35(3) to (5), inclusive, of subdivision (a) the priority use for these
36funds. A loan made pursuant to this section is not subject to Article
374 (commencing with Section 51175) of Chapter 5.

38begin insert

begin insertSEC. 5.5.end insert  

end insert

begin insertSection 51504 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
39amended to read:end insert

P7    1

51504.  

(a) The agency shall administer a downpayment
2assistance program that includes, but is not limited to, all of the
3following:

4(1) Downpayment assistance shall include, but not be limited
5to, a deferred-payment, low-interest, junior mortgage loan to reduce
6the principal and interest payments and make financing affordable
7to first-time low- and moderate-income home buyers.

8(2) (A) Except as provided in subparagraph (B) or (C), the
9amount of downpayment assistance shall not exceed 3 percent of
10the home sale price.

11(B) The amount of downpayment assistance for a new home
12within an infill opportunity zone, as defined in Section 65088.1
13of the Government Code, a transit village development district, as
14defined in Section 65460.4 of the Government Code, or a
15transit-oriented development specific plan area, as defined in
16paragraph (6), shall not exceed 5 percent of the purchase price or
17the appraised value, whichever amount is less, of the new home.
18The borrower of the downpayment assistance shall provide the
19lender originating the loan with a certification from the local
20government agency administering the infill opportunity zone, the
21transit village development district, or the transit-oriented
22development specific plan area that states that the property involved
23in the loan transaction is within the boundaries of either the infill
24opportunity zone, the transit village development district, or the
25transit-oriented development specific plan area.

26(C) Notwithstanding paragraph (1), the agency may, but is not
27required to, provide downpayment assistance that does not exceed
286 percent of the home sale price to first-time low-income home
29buyers who, as documented to the agency by a nonprofit
30organization that is certified and funded to provide home ownership
31counseling by a federally funded national nonprofit corporation,
32are purchasing a residence in a community revitalization area
33targeted by the nonprofit organization as a neighborhood in need
34of economic stimulation, renovation, and rehabilitation through
35efforts that include increased home ownership opportunities for
36low-income families. The agency shall not use more than six
37million dollars ($6,000,000) in funds made available pursuant to
38Section 53533 for the purposes of this paragraph.

39(3) The amount of the downpayment assistance shall be secured
40by a deed of trust in a junior position to the primary financing
P8    1provided. The term of the loan for the downpayment assistance
2shall not exceed the term of the primary loan.

3(4) (A) Except as provided inbegin delete subparagraph (B),end deletebegin insert subparagraphs
4(B) and (C),end insert
the amount of the downpayment assistance shall be
5due and payable at the end of the term or upon sale of or
6refinancing of the home. The borrower may refinance the
7mortgages on the home provided that the principal and accrued
8interest on the junior mortgage loan securing the downpayment
9assistance are repaid in full. All repayments shall be made to the
10agency to be reallocated for the purposes of this chapter.

11(B) The agency may, in its discretion, permit the downpayment
12assistance loan to be subordinated to refinancing if it determines
13that the borrower has demonstrated hardship, subordination is
14required to avoid foreclosure, and the new loan meets the agency’s
15underwriting requirements. The agency may permit subordination
16on those terms and conditions as it determines are reasonable.

begin insert

17(C) The amount of the downpayment assistance shall not be due
18and payable upon sale of the home if the first mortgage loan is
19insured by the Federal Housing Administration (FHA) or if the
20first mortgage loan is, or has been, transferred to the FHA, or if
21the requirement is otherwise contrary to regulations of the United
22States Department of Housing and Urban Development governing
23FHA insured first mortgage loans.

end insert

24(5) The agency may use up to 5 percent of the funds appropriated
25by the Legislature for purposes of this chapter to administer this
26program.

27(6) For purposes of this section, “transit-oriented development
28specific plan area” means a specific plan that meets the criteria set
29forth in Section 65451 of the Government Code, is centered around
30a rail or light-rail station, ferry terminal, bus hub, or bus transfer
31station, and is intended to achieve a higher density use of land that
32facilitates use of the transit station.

33(b) In addition to the downpayment assistance program
34authorized by subdivision (a), the agency may, at its discretion,
35use not more than seventy-five million dollars ($75,000,000) of
36the funds available pursuant to this chapter to finance the
37acquisition of land and the construction and development ofbegin insert end insert
38begin inserthousing developments, as defined in Section 50073.5, andend insert for-sale
39residential structures, through short-term loans pursuant to its
40authority pursuant to Section 51100. However, the agency shall
P9    1make downpayment assistance provided pursuant to paragraph
2(1), subparagraphs (A) and (B) of paragraph (2), and paragraphs
3(3) to (5), inclusive, of subdivision (a) the priority use for these
4funds. A loan made pursuant to this section is not subject to Article
54 (commencing with Section 51175) of Chapter 5.

6begin insert

begin insertSEC. 6.end insert  

end insert
begin insert

Section 5.5 of this bill incorporates amendments to
7Section 51504 of the Health and Safety Code proposed by both
8this bill and Assembly Bill 637. It shall only become operative if
9(1) both bills are enacted and become effective on or before
10January 1, 2014, but this bill becomes operative first, (2) each bill
11amends Section 51504 of the Health and Safety Code, and (3) this
12bill is enacted after Assembly Bill 637, in which case Section 51504
13of the Health and Safety Code, as amended by Section 5 of this
14bill, shall remain operative only until the operative date of
15Assembly Bill 637, at which time Section 5.5 of this bill shall
16become operative.

end insert
17

begin deleteSEC. 6.end delete
18begin insertSEC. 7.end insert  

Notwithstanding Sectionbegin delete 7end deletebegin insert 8end insert, Sections 1 and 2 of this
19act shall not become effective until January 1, 2014.

20

begin deleteSEC. 7.end delete
21begin insertSEC. 8.end insert  

This act is an urgency statute necessary for the
22immediate preservation of the public peace, health, or safety within
23the meaning of Article IV of the Constitution and shall go into
24immediate effect. The facts constituting the necessity are:

25In order to allow the California Housing Finance Agency to
26continue to combine its downpayment assistance with first
27mortgage loans insured by the Federal Housing Administration
28after June 2013, it is necessary that this act take effect immediately.



O

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