BILL ANALYSIS Ó
AB 2280
Page 1
Date of Hearing: April 20, 2016
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
David Chiu, Chair
AB 2280
(Ridley-Thomas) - As Introduced February 18, 2016
SUBJECT: California Housing Finance Agency: program
eligibility requirements: changes
SUMMARY: Prohibits the California Housing Finance Agency
(CalHFA) from changing the eligibility requirements for a
housing or lending program that the agency administrates without
providing participating parties notice of the change prior to
the change taking effect. Specifically, this bill:
1)Prohibits CalHFA from changing the eligibility requirements
for a housing or lending program that the agency administers,
however that program may be characterized, without providing a
lender or other party participating in the program notice of
the change at least five business days prior to the change
taking effect.
2)Requires a notification of the change to be provided by means
of a program bulletin posted on the CalHFA Internet Web site
at the earliest practicable time.
3)Provides the agency may change eligibility requirements
without the five-business-day notification period if the
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executive director makes a determination that both of the
following are true:
a. The change in eligibility is required by federal
law.
b. The agency will lose federal funding if the
eligibility requirements are subject to the
five-business-day notification period.
4)Provides the board of directors may change eligibility
requirements by majority vote without regard to the
five-business-day notification period.
5)Requires CalHFA to require, as a condition of participation in
one of its housing or lending programs, its lenders or other
participating parties to have protocols that provide for
timely notification to their representative of changes to
program eligibility requirements.
EXISTING LAW:
1)Provides that CalHFA is administered by a board of directors
and is supervised on a day-to-day basis by an executive
director. (Health & Safety Code 50901, 50908)
2)Provides that the primary purpose of CalHFA is to meet the
housing needs of persons and families of low or moderate
income. (Health & Safety Code 50950)
3)Authorizes CalHFA to make loans to housing sponsors for
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housing developments and to qualified mortgage lenders, among
others. (Health & Safety Code 51050)
FISCAL EFFECT: Unknown
COMMENTS:
One of the larger programs that CalHFA operates is the
California Homeowner Downpayment Assistance Program (CHDAP)
which provides homebuyers between 3% and 6% in downpayment
assistance secured as a second mortgage on the home. The program
operates as a revolving loan and when a home is sold CalHFA is
repaid allowing the funds to go to another homebuyer. There is
approximately $150 million available in CHDAP at this time. The
program can provide downpayments to individuals that make up to
120% of the area median income (AMI) and just recently raised
its income limits to 140% of AMI in high cost areas. CalHFA
operates independently of the state General Fund and derives the
funding for its downpayment assistance program from the sale of
bonds.
Due to variable market considerations and bondholder
requirements CalHFA is required to modify aspects of CHDAP and
other housing programs, such as income eligibility criteria, in
some cases with little warning. When time allows, CalHFA
currently uses program bulletins to notify participating lenders
in advance of upcoming program changes. The agency also posts
the information on its website. The agency is in the process of
creating a written policy regarding program change notifications
for stakeholders. It should be noted, however, that CalHFA does
not work directly with prospective homebuyers, but rather with
lending institutions. Therefore, lending institutions are the
primary audience for program change notifications.
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Purpose of the bill: According to the author, this "bill is
needed to provide certainty to potential homeowners who
participate in programs like CHDAP. The bill serves these
individuals by increasing their confidence in these complex
programs because they can determine acquisitions costs without
the fear of eligibility requirements being changed without their
knowledge. If changes in a program are made after a prospective
home buyer has entered into a contract to purchase a home, the
bill helps those individuals secure other means of financing as
soon as possible. Also, directing the public to the agency's
website will reinforce the details of the program administered
by the agency in order to foster improved comprehension of the
down payment assistance process."
Staff comments: Established in 1975, CalHFA was chartered as
the state's affordable housing bank to make below market-rate
loans for single-family and multi-family housing through the
sale of tax-exempt bonds. CalHFA is a self-supporting entity
and its debts, including those related to the compensation and
retirement costs of its employees are separate from the State of
California. Investor capital, through the sale of bonds,
provides the agency's source of revenue, not taxpayers'
proceeds. Existing statutes and bond indentures state that the
agency's debts are not a debt or liability of the state or any
political subdivision thereof and are not backed by the faith
and credit of the State of California. The committee may wish to
consider that to the extent that compliance with the proposed
measure would interfere with CalHFA's ability to effectively
control risk or comply with bondholder agreements, the state's
current liability protection may be jeopardized. Proposed
amendments to AB 2280 would codify CalHFA's existing
notification process while reducing the measure's impact on
CalHFA's ability to quickly implement program changes when
obligated to do so by financial or regulatory considerations.
Committee amendments:
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1) On page 2, line 18 strike out "(a)"
2) On page 2, line 18, strike out "shall not" and insert
"shall, within five business days of making a"
3) On page 2, line 18, after "change" insert "to"
4) On page 2, line 24, strike out "50172)," and insert
"50172) of"
5) On page 2, line 24, strike out "without providing" and
insert "provide"
6) On page 2, strike out line 26 and insert "change unless
providing that notice within five business days would
impose an undue burden on the agency."
7) On page 2, line 27, strike out "shall" and insert "may"
8) On page 2 strike out lines 28-33, inclusive and strike
out page 3
REGISTERED SUPPORT / OPPOSITION:
AB 2280
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Support
None on File
Opposition
None on File
Analysis Prepared by:Ken Spence / H. & C.D. / (916) 319-2085,
Ken Spence / H. & C.D. / (961) 319-2085