BILL ANALYSIS Ó
AB 2282
Page 1
ASSEMBLY THIRD READING
AB
2282 (Calderon)
As Amended May 31, 2016
Majority vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Housing |4-2 |Chiu, Chau, Lopez, |Steinorth, Beth |
| | |Mullin |Gaines |
| | | | |
|----------------+-----+----------------------+--------------------|
|Banking |7-4 |Dababneh, Bonilla, |Travis Allen, |
| | |Brown, Chau, Low, |Gatto, Hadley, Kim |
| | |Ridley-Thomas, Mark | |
| | |Stone | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |14-6 |Gonzalez, Bloom, |Bigelow, Chang, |
| | |Bonilla, Bonta, |Gallagher, Jones, |
| | |Calderon, Daly, |Obernolte, Wagner |
| | |Eggman, Eduardo | |
| | |Garcia, Roger | |
| | |Hernández, Holden, | |
| | |Quirk, Santiago, | |
| | |Weber, Wood | |
| | | | |
| | | | |
AB 2282
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SUMMARY: Requires the Department of Business Oversight (DBO) to
create a report on the activities of large-scale buy-to-rent
investors and their impact on the real estate market, and
prohibits a homeowner from selling their home to a buy-to-rent
investor for 15 days when the home is not a short sale or a
foreclosure. Specifically, this bill:
1)Requires DBO, on or before January 1, 2018, to submit to the
Governor and the Legislature a report that includes but is not
limited to the following:
a) Information regarding how many large-scale buy-to-rent
investors own property in the state for the purpose of
renting the property and which regions of the state their
investment activity is occurring;
b) The number, density, and percentage of single-family
homes each large-scale buy-to-rent investor owns;
c) An analysis of the potential impacts their investments
are having on the local real estate market, including the
price of homes, the ability of individual home buyers,
specifically those who need financing, to compete against
the large-scale buy-to-rent investors;
d) The length of time large-scale buy-to-rent investors are
holding their property as a rental; and
e) How many homes large-scale buy-to-rent investors are
selling each year.
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1)Allows DBO to hire an independent third party or obtain
assistance from another state department to analyze the
information necessary to complete the report.
2)Prohibits a large-scale buy-to-rent investor from placing a
bid on a normal sale of a single-family home that is not a
short sale, foreclosure sale, or real estate owned property
for a period of no less than 15 days after the home has been
placed on the real estate market.
3)Defines a "large-scale buy-to-rent investor" to mean a
publically traded company devoted to holding and managing
single-family home rental properties, either on behalf of
clients or for itself, and which owns more than 100
single-family homes during a calendar year.
4)Repeals or makes the reporting requirement in this bill
inoperative four years after the bill is enacted or four years
after the due date of the report.
5)Requires the report created by DBO to be submitted to the
Secretary of the Senate, Chief Clerk of the Assembly, and
Legislative Counsel.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, minor costs, likely in the low tens of thousands of
dollars to compile information and produce a report.
COMMENTS:
AB 2282
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During the foreclosure crisis companies like Blackstone
purchased homes in foreclosure or short sales. These companies
rent these homes and securitize the rental income. According to
their representative, Blackstone owns 10,000 to 12,000 rental
homes in California. Blackstone is buying homes in conventional
sales and their rate of home acquisition is about 300 per month
nationwide. It is not clear how many of that 300 are in
California.
This bill would require DBO to analyze the activities of
large-scale buy-to-rent investors and provide a report to the
Governor and Legislature that describes how many large-scale
buy-to-rent investors there are in the state, how many
properties they own, and where they are located. Large-scale
buy-to-rent investors are defined as publicly traded companies
devoted to holding and managing single-family home rental
properties that own more than 100 single family homes during the
calendar year. DBO would need to determine the impact of these
companies on homebuyers, specifically those who would need a
mortgage and are not paying cash for a home, to compete against
large-scale by-to-rent investors.
This bill would also prevent a large-scale buy-to-rent investor
from bidding on a home sale that is not a short sale or a
foreclosure for at least 15 days from the time the home is
placed on the market.
Purpose of this bill: According to the author, "Over the last
few years, institutional investors, such as Blackstone, have
bought up billions of dollars-worth of single-family homes.
Instead of renovating and reselling them or just waiting [f]or
the real estate market to recover, they have converted these
properties into permanent rental homes. Of the five largest
metropolitan areas in the [United States] U S where
concentration of this type of investment is highest, three of
them reside in California: Los Angeles, Riverside, and
AB 2282
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Sacramento. At the time, the vast majority of these purchases
were foreclosures or short sales; however, purchases of homes
coming from natural sales have recently increased. The CEO of
Colony American Homes, which is one of the largest single-family
landlords in the country, said it himself 'the first phase was
distressed homes, the second phase is acquiring homes in a more
regular way.'
"In October 2013, an institutional investor created the first
triple-A-rated, mortgage? backed security supported by revenue
from single-family rental properties. The emergence of a new
form of mortgage-backed securities tied to single-family rentals
is certain to have an impact on the housing market, communities,
and tenants. A mortgage-backed security is created by pooling
assets together and then selling interests in that pool to
investors, who then receive regular payments from the asset
pool. This process provides access to a much larger pool of
investors than would otherwise be feasible, increasing liquidity
and generally providing a less expensive source of funding than
traditional borrowing from banks or private investors.
"While institutional investors only represent a fraction of
those in the housing market - midsized companies and small
mom-and-pop investors who own less than 10 properties have
historically been far more prevalent in most markets
-securitization is likely to shift this balance. That being
said, one institutional investor, Blackstone, has already become
the largest single-family home owner in the country. In fact,
some analysts predict the funding of single-family rental
acquisitions through securitization will likely become a
dominant model quickly, and thus, continuing to shrink the
already short supply of homes? Families already have a difficult
time trying to save up enough money for a down payment, having
to compete against an institutional investor who has the
financial backing of big banks and pension funds, just isn't
fair from both a monetary standpoint and technological."
AB 2282
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Analysis Prepared by:
Lisa Engel / H. & C.D. / (961) 319-2085 FN:
0003248