BILL NUMBER: SJR 19	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Correa
   (Coauthor: Assembly Member Dababneh)

                        MARCH 10, 2014

   Relative to high-cost loan limits.


	LEGISLATIVE COUNSEL'S DIGEST


   SJR 19, as introduced, Correa. High-cost loan limits.
   This measure would express the Legislature's opposition to
reduction of the current national and high-cost conforming loan
limits for Fannie Mae and Freddie Mac by the Federal Housing Finance
Agency (FHFA) and would urge the FHFA not to implement any
reductions. This measure also would urge the President and Congress
of the United States to join California in opposing any reduction of
the national and high-cost conforming loan limits.
   Fiscal committee: no.



   WHEREAS, Since 1980, Congress has provided in statute for
"high-cost" conforming loan limits so residents in states where the
cost of housing is higher than the national average may still gain
access to safe and affordable mortgages; and
   WHEREAS, In 2006, the California Legislature passed a joint
resolution that memorializes the President and Congress of the United
States to recognize California is a high-cost area for purposes of
purchasing a home and should be considered the same status as other
high-cost areas; and
   WHEREAS, In 2008, the California Legislature passed a joint
resolution to memorialize its opposition to any reduction in
high-cost loan limits in California; and
   WHEREAS, In 2008, the Economic Stimulus Act of 2008 created a
temporary increase in mortgage loan limits and allowed for areas in
California to be recognized as high cost, and
   WHEREAS, In July 2008, Congress passed The Housing and Economic
Recovery Act of 2008, which established the current law and formula
for determining loan limits, set the high-cost loan limit formula,
made permanent in statute language that allows for areas in
California to be recognized as high cost, and contained language
prohibiting the reduction of conforming loan limits; and
   WHEREAS, In September 2008, Fannie Mae and Freddie Mac were placed
under conservatorship of the Federal Housing Finance Agency (FHFA);
and
   WHEREAS, In January 2012, following the expiration of the Economic
Stimulus Act of 2008, Fannie Mae and Freddie Mac high-cost loan
limits were reduced from $729,750 back to the 2006 value of $625,500;
and
   WHEREAS, In December 2013, the FHFA issued a request for comments
on a proposal to lower the conforming loan limits for Fannie Mae and
Freddie Mac by an additional $25,000 in select high-cost areas
including California; and
   WHEREAS, California has over 25 million residents that will be
adversely affected by the proposed regular and high-cost loan limit
reductions; and
   WHEREAS, Nine counties in California have a median home price
above the proposed reduced cap on high-cost loan limits; and
   WHEREAS, FHFA data indicates that over 36,000 loans originated in
California could be adversely affected by the proposed loan limit
reduction; and
   WHEREAS, California housing markets are only beginning to recover
from a sustained negative market, and continue to lag behind the pace
of recovery being experienced by the rest of the nation; and
   WHEREAS, Current high-cost loan limits allow California homebuyers
the same access to safe and affordable mortgage capital as
homebuyers in states with lower home prices; and
   WHEREAS, The adverse effect of lowering the loan limits will have
a negative impact on California homebuyers that will ripple through
the housing market and the larger economy; now, therefore, be it
   Resolved by the Senate and the Assembly of the State of
California, jointly, That the Legislature opposes any reduction of
the current national and high-cost conforming loan limits for Fannie
Mae and Freddie Mac by the FHFA, and urges the FHFA not to implement
any reductions; and be it further
   Resolved, That the Legislature urges the President and Congress of
the United States to join California in opposing any reduction of
the national and high-cost conforming loan limits; and be it further
   Resolved, That the Secretary of the Senate transmit copies of this
resolution to the President and Vice President of the United States,
to the Speaker of the House of Representatives, to the Majority
Leader of the Senate, to each Senator and Representative from
California in the Congress of the United States, to the Secretary of
the Treasury, and to the Director of the Federal Housing Finance
Agency.