BILL NUMBER: SB 813 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY SEPTEMBER 4, 2009
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 deferred payment future value
loan 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 authorize, for the
purposes of each of the above programs, a grant or loan for an
individual household to include a future value grant
repayment or loan, respectively, deferred payment
future value loan 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 programs its provisions through
guidelines exempt from a specified provision of existing law.
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 programs expires on January 1, 2014.
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 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 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 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) An alternative unconventional means of securing loans by
utilizing future increases in value when market conditions stabilize
may be employed for 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 may include a future value grant repayment due
on sale or transfer, except as provided herein, or when the
50517.12. (a) For purposes
of this chapter, funds available pursuant to contracts entered into
by the department and a grantee on or before July 1, 2009 may be
used, with the approval of and subject to conditions established by
the department, to provide an individual household with a deferred
payment future value loan due on sale or transfer, or when the
property ceases to be owner-occupied. The outstanding balance of the
grant loan shall be payable only from
the increase in the home value, calculated as the difference between
the following:
(1) The appraised value at the time that the grant
loan made pursuant to this chapter is made to
the buyer.
(2) The appraised value at the time repayment is due.
(b) Both All of the following shall
apply to the amount of future value grant repayment
deferred payment future value 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 grant Joe
Serna, Jr. loan is made to the buyer.
(2) The amount of each grant shall not exceed
the difference between total development costs
the total development cost of the home as approved by the
department and the appraised value of the home at the time of the
original sale.
(3) If the home buyer is credited with sweat equity towards the
purchase price of the home, the amount of sweat equity shall not
exceed 10 percent of the purchase price of the home.
(4) The interest rate on the loan shall be equal to the interest
rate of the standard loan otherwise made pursuant to this chapter.
(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 may approve both future grant
repayment the deferred payment future value
loan 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 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 may include a future value payment loan due on
sale or transfer, except as provided herein, or when the property
50650.8. (a) For purposes
of this chapter, funds available pursuant to contracts entered into
by the department and a grantee on or before July 1, 2009 may be
used, with the approval of and subject to conditions established by
the department, to provide an individual household with a deferred
payment future value loan due on sale or transfer, 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
value, calculated as the difference between the following:
(1) The appraised value at the time that the CalHome loan is 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 future value payment loan deferred payment future
value 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 future value payment loan
shall not exceed the difference between the total
development costs cost of the home as
approved by the department and the appraised value of the home at the
time of the original sale.
(3) If the home buyer is credited with sweat equity towards the
purchase price of the home, the amount of sweat equity shall not
exceed 10 percent of the purchase price of the home.
(4) The interest rate on the loan shall be equal to the interest
rate of the standard loan otherwise made pursuant to this chapter.
(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 may approve the future value
payment deferred payment future value 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 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 may include a future value payment loan due on
sale or transfer, except as provided herein, or when the property
50862.6. (a) For purposes
of this chapter, funds available pursuant to contracts entered into
by the department and a grantee on or before July 1, 2009 may be
used, with the approval of and subject to conditions established b
y the department, to provide an individual household with
a deferred payment future value loan due on sale or transfer, 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 value, calculated as the difference between the following:
(1) The appraised value at the time that the BEGIN loan is made to
the buyer.
(2) The appraised value at the time repayment is due.
(b) Both All of the following shall
apply to the amount of the future value payment loan
deferred payment future value 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 future value loan shall
not exceed the difference between the total development
costs cost of the home as approved by the
department and the appraised value of the home at the time of the
original sale.
(3) If the home buyer is credited with sweat equity towards the
purchase price of the home, the amount of sweat equity shall not
exceed 10 percent of the purchase price of the home.
(4) The interest rate on the loan shall be equal to the interest
rate of the standard loan otherwise made pursuant to this chapter.
(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 may approve both future value
payment deferred payment future value 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 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 may include a future value payment loan due on
sale or transfer, except as provided herein, or when the property
50896.4. (a) For purposes
of this chapter, funds available pursuant to contracts entered into
by the department and a grantee on or before July 1, 2009 may be
used, with the approval of and subject to conditions established by
the department, to provide an individual household with a deferred
payment future value loan due on sale or transfer, 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
value, calculated as the difference between the following:
(1) The appraised value at the time that the HOME loan is made to
the buyer.
(2) The appraised value at the time repayment is due.
(b) Both All of the following shall
apply to the amount of the future value payment loan
deferred payment future value 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 future value payment loan
shall not exceed the difference between the total
development costs cost of the home as
approved by the department and the appraised value at the time of the
original sale.
(3) If the home buyer is credited with sweat equity towards the
purchase price of the home, the amount of sweat equity shall not
exceed 10 percent of the purchase price of the home.
(4) The interest rate on the loan shall be equal to the interest
rate of the standard loan otherwise made pursuant to this chapter.
(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 may approve both the future value
payment deferred payment future value 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 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 programs authorized by
Sections 2, 3, 4, and 5 of this act through 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 guidelines
with the grantees and housing sponsors. In developing
these 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 housing goals and objectives of Section 1 of this act.
The department shall programs in Sections 2, 3, 4, and
5 of this act, the department may 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 programs established
by this act may apply to any existing contract 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 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) 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.
(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.