BILL ANALYSIS
AB 304
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 304 (Mullin)
As Amended September 4, 2003
Majority vote
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|ASSEMBLY: |46-27|(May 8, 2003) |SENATE: |24-14|(September 9, |
| | | | | |2003) |
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Original Committee Reference: H. & C.D.
SUMMARY : Increases down payment assistance provided in the
Homeownership In Revitalization Areas Program (HIRAP) created by
Proposition 46 (Housing Bond) from three percent to six percent
of the home sales price; allows the California Housing Finance
Agency (CalHFA) to provide mortgage assistance to homebuyers
making more than 120% of the area median income if necessary, to
meet requirements for participation in an affordable housing
program offered by Fannie Mae and Freddie Mac; makes cleanup
amendments to various sections relating to CalHFA's mortgage
insurance program.
The Senate amendments :
1)Make reference to enabling legislation referred to in
Proposition 46 (Housing Bond of 2002).
2)Authorize the California Housing Finance Agency (CalHFA) to:
a) establish higher assistance levels for down payment
assistance to teachers and school personnel; and, b) make
$6.25 million of existing funds available for down payment
assistance loans to be made for up to six percent of the home
sale price to low-income first-time homebuyers under the
Homeownership in Revitalization Areas Program (HIRAP).
3)Allow CalHFA's mortgage insurance fund, until January 1, 2011,
to serve families making more than 120 percent of the area
median income (AMI), if necessary, to meet the requirements
for participation in an affordable housing program offered by
Fannie Mae and Freddie Mac.
4)Clarify that the $85 million, provided in the 2002 Housing
Bond for mortgage insurance, shall only be used to insure
loans for home purchases to borrowers with incomes of 120
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percent of AMI or less.
5)Require CalHFA to report to the Legislature by January 1, 2009
the types of programs offered by the authority noted in #3
above and the incomes of households served.
6)Provide that funds allocated to the mortgage insurance program
from Proposition 46 may only be used to insure households
earning less than 120% of AMI or multifamily rental housing
developments serving low and very low-income households.
7)Clarify that the Administrative Procedures Act does not apply
to CalHFA's development of mortgage insurance products.
8)Clarify that CalHFA may pledge funds from its general reserves
to support the Loan Insurance Fund without having to make an
actual loan.
9)Clarify that CalHFA is not subject to the Insurance Code.
10)Repeal the prohibition on providing mortgage insurance in
natural disaster areas.
11)Allow CalHFA to insure bonds related to affordable housing
development issued by entities other than the state or local
government.
12)Limit the maximum home sales price (with respect to CalHFA's
School Facilities Fee Program) to 100% of the area median
sales price in counties whose average sales price over the
previous five years exceeds Fannie Mae and Freddie Mac's
conforming loan limit.
AS PASSED BY THE ASSEMBLY , this bill increased down payment
assistance provided in the Homeownership In Revitalization Areas
Program (HIRAP) created by Proposition 46 (Housing Bond) from 3%
to 6% of the home sales price.
FISCAL EFFECT : Unknown
COMMENTS :
1)Downpayment Assistance: The California Homebuyer's
Downpayment Assistance Program (CHDAP) administered by CalHFA
provides downpayment assistance to first-time low- and
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moderate- income homebuyers.
This program offers a deferred-payment junior loan of an
amount up to three percent of the purchase price or appraised
value. Homebuyers are able to use these funds to help with
their downpayment and closing costs without the need to make
monthly payments on the loan. Interest will be calculated at
three percent simple interest. The assistance may be combined
with any CalHFA or non-CalHFA conventional or government first
mortgage loan.
In November 2002, the voters of California approved
Proposition 46 which will provide $2.1 billion in funds for
various low-income housing programs. The bond provides
resources to help fund the construction, rehabilitation and
preservation of affordable rental housing, emergency shelters
and homeless facilities, as well as funds that can be used to
provide downpayment assistance to low and moderate income
first-time homebuyers. Of that amount $117.5 million is
available for downpayment assistance.
HIRAP created by Proposition 46, provides deferred payment,
simple interest rate junior loans of an amount up to 3% of the
purchase price or appraised value, whichever is less.
Interest is currently calculated at 3 % simple interest. The
junior loan may be used for downpayment or closing costs and
may be combined with a CalHFA or non-CalHFA conventional or
government first mortgage loan.
HIRAP is intended for low income first-time homebuyers
anywhere in California. If homebuyers are using a CalHFA first
mortgage, they may combine the assistance with a CHAP loan,
and other downpayment assistance programs offered by local
government agencies and nonprofit organizations.
This bill would increase the assistance amount for HIRAP loans
from 3% to 6% of the purchase price of the home.
13)California Housing Loan Insurance Fund (CHLIF): CHLIF
provides mortgage insurance to low-and moderate-income
homebuyers who otherwise have difficulty acquiring mortgage
insurance. The insurance fund encourages lenders to make loans
to hard-to-serve borrowers and buyers with little or no money
for a downpayment and closing costs. It also assists lenders
by insuring loans for borrowers with past payment problems.
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Existing law provides that CalHFA may only guarantee loans to
borrowers making up to 120% of AMI. According to CalHFA,
there is a significant disparity between family income and
California home prices. As a result, the current CHLIF limits
need to be increased in order to better assist families in
purchasing a home, especially in high cost areas.
CalHFA seeks to add flexibility to the Loan Insurance Fund to
develop products that are consistent with current market
conditions. For example, both Government Sponsored
Enterprises (GSE) Fannie Mae and Freddie Mac currently utilize
140% of AMI throughout California for all their affordable
lending programs. According to CalHFA, in order to partner
with GSEs, on either existing or new programs, requires a
consistent AMI for implementation.
This bill will allow CalHFA to increase its mortgage insurance
income limits consistent with limits set by the GSEs in order
to partner with the GSEs.
Analysis Prepared by : Hubert Bower / H. & C.D. / (916)
319-2085
FN: 0003820