BILL ANALYSIS Ó AB 2280 Page 1 Date of Hearing: May 25, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2280 (Ridley-Thomas) - As Amended April 21, 2016 ----------------------------------------------------------------- |Policy |Housing and Community |Vote:|6 - 1 | |Committee: |Development | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill requires the California Housing Finance Agency (CalHFA), within five business days of making a change to the eligibility requirements for a housing or lending program that the agency administers, to provide participating parties notice of the change unless providing that notice within five business days would impose an undue burden on the agency. The bill authorizes the notice to be provided by a program bulletin. The affected programs include, but are not limited to, the California Homebuyer's Downpayment Assistance Program (CHDAP) and the Mortgage Credit Certificate Program. FISCAL EFFECT: AB 2280 Page 2 No state cost. CalHFA indicates that any expenses they incur will be covered within the 5% administrative allowance granted under the affected programs. Staff notes that CalHFA operates independently of the state General Fund and derives the funding for its downpayment assistance program from the sale of bonds. COMMENTS: 1)Purpose. 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." 2)Background. 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. 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. AB 2280 Page 3 Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081