BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2280


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          Date of Hearing:  May 25, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          2280 (Ridley-Thomas) - As Amended April 21, 2016


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          |Policy       |Housing and Community          |Vote:|6 - 1        |
          |Committee:   |Development                    |     |             |
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          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


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          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.    






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            Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081