BILL NUMBER: SB 813 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY AUGUST 31, 2009
AMENDED IN ASSEMBLY AUGUST 17, 2009
AMENDED IN ASSEMBLY JULY 14, 2009
AMENDED IN ASSEMBLY JULY 1, 2009
AMENDED IN SENATE MAY 12, 2009
INTRODUCED BY Senator Kehoe
FEBRUARY 27, 2009
An act to add Sections 50517.12, 50650.8, 50862.6, and 50896.4 to
the Health and Safety Code, relating to community development.
LEGISLATIVE COUNSEL'S DIGEST
SB 813, as amended, Kehoe. Community development: grant and loan
securitization pilot programs.
Under existing law, there are programs providing assistance for,
among other things, multifamily housing, emergency housing,
farmworker housing, home ownership for very low and low-income
households, and downpayment assistance for first-time home buyers
administered by the Department of Housing and Community Development.
The Joe Serna, Jr. Farmworker Housing Grant Program provides grants
and loans for the construction or rehabilitation of housing for
agricultural employees and their families or for the acquisition of
manufactured housing to address and remedy the impacts of
displacement of farmworker families. The CalHome Program provides
grants and loans to enable low- and very low income households to
become or remain homeowners. The Building Equity and Growth in
Neighborhoods (BEGIN) Program is established to make grants and loans
to be used for downpayment assistance to qualifying first-time home
buyers of low- and moderate-incomes purchasing newly constructed
homes in a BEGIN project. Existing federal law establishes the HOME
Investment Partnership Act, which allocated funds to states and local
governments to eligible states to, among other things, expand the
supply of affordable housing. The department is the state agency
responsible for the state's allocation of HOME funds.
This bill would make legislative findings and declarations
relating to the securitization of second mortgage loans
with funds made available by the department. The bill would
require authorize , for the purposes of each of
the above programs, a grant or loan for an individual household
in a mutual self-help housing program to include a
deferred payment future value grant
repayment or loan, respectively, due on sale or transfer,
or when the property ceases to be owner-occupied, as specified. The
bill would require the department to implement the special grant and
loan securitization pilot programs through
regulation guidelines exempt from a
specified provision of existing law. The bill would specify
that the pilot programs apply only to specified counties, except that
the department may include, in its discretion, other counties in the
pilot programs. The bill would authorize the
department to make use of future value securitization for loans and
grants . The bill would provide that the authority
for the special grant and loan securitization pilot
programs expire expires on
January 1, 2014.
The bill would also make legislative findings and declarations as
to the necessity of a special statute.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) Many first-time homeowners assisted by nonprofit
corporations to achieve home ownership through mutual self-help
construction have been challenged by a combination of costs
of land purchased before current market conditions arose, low
appraised values of proposed homes due to foreclosures and related
economic conditions, and the costs of land, government fees, and
construction.
(b) These nonprofit corporations and potential
homeowners are eligible for financial assistance under the Joe Serna,
Jr. Farmworker Housing Grant, CalHome, Building Equity and Growth in
Neighborhoods (BEGIN), and HOME programs administered by the
Department of Housing and Community Development.
(c) As a result of present current
market conditions, financing to pay all costs often exceeds the
depressed level of current home values. Therefore, neither adequate
construction lending nor sufficient permanent financing can be
obtained.
(d) Authorizing an alternative but financially sound means of
securing second mortgage loans made with funds available through the
Department of Housing and Community Development would provide housing
for hard-working households , and low- and
moderate-income first-time home buyers, stimulate the
construction labor and materials industry, and improve neighborhoods
and areas with empty lots.
(e) Because self-help first-time home buyers usually remain in
their homes for extended periods of time, an alternative
(e) An alternative unconventional
means of securing loans by utilizing future increases in value when
market conditions stabilize should may
be employed for at least five up to four
years in order to allow for orderly resumption and continuation of
these first-time homeowner programs.
SEC. 2. Section 50517.12 is added to the Health and Safety Code,
to read:
50517.12. (a) For purposes of this chapter, a grant for an
individual household in a mutual self-help housing program
shall include a deferred payment grant due on sale or transfer,
except individual household may include a future value
grant repayment due on sale or transfer, except as provided
herein, or when the property ceases to be owner-occupied. The
outstanding balance of the grant shall be payable only from the
increase in the home's equity home value
, calculated as the difference between the following:
(1) The appraised value at the time that the grant made pursuant
to this chapter is recorded made to the buyer
.
(2) The appraised value at the time repayment is due.
(b) Both of the following shall apply to the amount of
the deferred payment grant future value grant
repayment specified in subdivision (a):
(1) The amount shall not be considered by a lender or other source
of financing in calculating the loan-to-value ratio of the financing
on the property at the time the grant is made to the buyer
.
(2) The amount of each grant shall not exceed the difference
between the loan secured by a first deed of trust and the
total development cost, which shall include an amount attributable to
sweat equity as approved by the department, for that grant.
between total development costs as approved by the
department and the appraised value of the home at the time of the
original sale.
(c) If necessary to achieve the housing cost payments required by
this chapter in order for a household to qualify for a first
mortgage, the department shall approve both the deferred
payment grant may approve both future grant repayment
authorized by this section and grants or loans otherwise
authorized by this chapter. However, the latter grants or loans shall
not be secured only by the increase in equity
future value but, instead, shall be payable upon sale or
transfer after satisfaction of other approved liens on the property.
SEC. 3. Section 50650.8 is added to the Health and Safety Code, to
read:
50650.8. (a) For purposes of this chapter, a loan for an
individual household in a mutual self-help housing program shall
include a deferred payment loan due on sale or transfer, except as
individual household may include a future value
payment loan due on sale or transfer, except as provided
herein, or when the property ceases to be owner-occupied. The
outstanding balance of the loan shall be payable only from the
increase in the home's equity value ,
calculated as the difference between the following:
(1) The appraised value at the time that the CalHome loan is
recorded made to the buyer .
(2) The appraised value at the time repayment is due.
(b) Both of the following shall apply to the amount of the
deferred future value payment loan
specified in subdivision (a):
(1) The amount shall not be considered by a lender or other source
of financing in calculating the loan-to-value ratio of the financing
on the property at the time the CalHome loan is made to the
buyer .
(2) The amount of each deferred future
value payment loan shall not exceed the difference
between the loan secured by a first deed of trust and the total
development cost, which shall include an amount attributable to sweat
equity as approved by the department, for that loan.
the difference between the total development costs as approved by the
department and the appraised value of the home
at the time of the original sale.
(c) If necessary to achieve the housing cost payments required by
this chapter in order for a household to qualify for a first
mortgage, the department shall approve the deferred
may approve the future value payment loan
authorized by this section and loans otherwise authorized by this
chapter. However, the latter loans shall not be secured only by the
increase in equity future value but,
instead, shall be payable upon sale or transfer after satisfaction of
other approved liens on the property.
SEC. 4. Section 50862.6 is added to the Health and Safety Code, to
read:
50862.6. (a) For purposes of this chapter, a loan for an
individual household in a mutual self-help housing program
shall include a deferred may include a
future value payment loan due on sale or transfer, except as
provided herein, or when the property ceases to be owner-occupied.
The outstanding balance of the loan shall be payable only from the
increase in the home's equity value ,
calculated as the difference between the following:
(1) The appraised value at the time that the BEGIN loan is
recorded made to the buyer .
(2) The appraised value at the time repayment is due.
(b) Both of the following shall apply to the amount of the
deferred future value payment loan
specified in subdivision (a):
(1) The amount shall not be considered by a lender or other source
of financing in calculating the loan-to-value ratio of the financing
on the property at the time the BEGIN loan is made to the buyer
.
(2) The amount of each deferred payment loan shall not exceed the
difference between the loan secured by a first deed of trust and the
total development cost, which shall include an amount attributable to
sweat equity as approved by the department, for that loan.
(2) The amount of each future value loan shall not exceed the
difference between the total development costs as approved by the
department and the appraised value of the home at the time of the
original sale.
(c) If necessary to achieve the housing cost payments required by
this chapter in order for a household to qualify for a first
mortgage, the department shall approve both the deferred
may approve both future value payment loan
authorized by this section and loans otherwise authorized by this
chapter. However, the latter loans shall not be secured only by the
increase in equity future value but,
instead, shall be payable upon sale or transfer after satisfaction of
other approved liens on the property.
SEC. 5. Section 50896.4 is added to the Health and Safety Code, to
read:
50896.4. (a) For purposes of this chapter, a loan for an
individual household in a mutual self-help housing program
shall include a deferred may include a future value
payment loan due on sale or transfer, except as provided
herein, or when the property ceases to be owner-occupied. The
outstanding balance of the loan shall be payable only from the
increase in the home's equity value ,
calculated as the difference between the following:
(1) The appraised value at the time that the HOME loan is
recorded made to the buyer .
(2) The appraised value at the time repayment is due.
(b) Both of the following shall apply to the amount of the
deferred future value payment loan
specified in subdivision (a):
(1) The amount shall not be considered by a lender or other source
of financing in calculating the loan-to-value ratio of the financing
on the property at the time the HOME loan is made to the buyer
.
(2) The amount of each deferred payment loan shall not exceed the
difference between the loan secured by a first deed of trust and the
total development cost, which shall include an amount attributable to
sweat equity as approved by the department, for that loan.
(2) The amount of each future value payment loan shall not exceed
the difference between the total development costs as approved by the
department and the appraised value at the time of the original sale.
(c) If necessary to achieve the housing cost payments required by
this chapter in order for a household to qualify for a first
mortgage, the department shall approve both the deferred
may approve both the future value payment loan
authorized by this section and loans otherwise authorized by this
chapter. However, the latter loans shall not be secured only by the
increase in equity future value but,
instead, shall be payable upon sale or transfer after satisfaction of
other approved liens on the property.
SEC. 6. (a) The Department of Housing and Community Development
shall implement the special grant and loan securitization
pilot programs authorized by Sections 2, 3, 4, and 5 of
this act through regulations guidelines
that shall be exempt from Chapter 3.5 (commencing with Section 11340)
of Part 1 of Title 2 of the Government Code, following at least one
consultation with the program sponsors who will receive, and
represent the homeowners benefiting from, the special grants and
loans authorized by this act. In developing these
regulations guidelines and related transactional
documents and implementing the programs in Sections 2, 3, 4, and 5,
the department also may utilize other forms of securitization that
achieve the self-help housing goals and objectives
of Section 1 of this act. The department shall require
sufficient concessions and writedowns by the developer or local
government in order to make the project feasible.
(b) The special grant and loan securitization pilot
programs established by this act shall
may apply to any existing contract with a local
government or nonprofit entity for funds under the Joe
Serna, Jr. Farmworker Housing Grant Program (Chapter 3.2 (commencing
with Section 50517.5) of Part 2 of Division 31 of the Health and
Safety Code), CalHome Program (Chapter 6 (commencing with Section
50650) of Part 2 of Division 31 of the Health and Safety Code),
Building Equity and Growth in Neighborhoods (BEGIN) Program (Chapter
14.5 (commencing with Section 50860) of Part 2 of Division 31 of the
Health and Safety Code), or HOME program (Chapter 16 (commencing with
Section 50896) of Part 2 of Division 31 of the Health and Safety
Code) and shall may authorize homeowner
loans or grants with funds that have not yet been expended from
those contracts for mortgage, grant, or take-out financing on behalf
of eligible households.
(c) (1) The special grant and loan securitization pilot programs
authorized by Sections 2, 3, 4, and 5 of this act shall only apply to
Butte County, Merced County, Riverside County, Santa Clara County,
Sonoma County, and Yuba County.
(2) Notwithstanding paragraph (1), the Department of Housing and
Community Development may, in its discretion, include other counties
in the special grant and loan securitization pilot programs in order
to allow self-help housing projects to continue.
(c) The department may make use of future value securitization for
loans or grants based upon an assessment of the need for its use.
The department may also limit the use of future value securitization
to loans in housing developments in which it has already made
financial commitments and may require concessions from developers or
local governments to permit use of future value securitization.
(d) The department may secure a portion of a grant or loan using
future value securitization and another portion directly by current
value, depending on the actual amount to which cost exceeds current
value. The department may recognize sweat equity, in the case of a
mutual self-help development, or the cash downpayment, as senior to
the amount secured by future valuation to the extent required by
first mortgage lenders.
(e) The department shall at all times have full discretion
regarding the use of future value securitization and to establish
guidelines regarding its use.
(d)
(f) The authority for the special grant and loan
securitization pilot programs authorized by this act shall expire on
January 1, 2014, unless a later enacted statute, that is enacted
before January 1, 2014, deletes or extends that date.
SEC. 7. The Legislature finds and declares that
there are unique circumstances concerning the housing needs in Butte
County, Merced County, Riverside County, Santa Clara County, Sonoma
County, and Yuba County necessitating the enactment of the procedures
contained in this act. It is therefore declared that a general law
cannot be made applicable within the meaning of Section 16 of Article
IV of the California Constitution, and that the enactment of this
act as a special law is necessary.
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