BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1551|
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THIRD READING
Bill No: AB 1551
Author: Torres (D)
Amended: 8/22/12 in Senate
Vote: 27 - Urgency
PRIOR VOTES NOT RELEVANT
SUBJECT : Housing
SOURCE : Author
DIGEST : This bill allows the California Housing Finance
Agency (CalHFA) under the Home Purchase Assistance and
Extra Credit Teacher Programs and the Department of Housing
and Community Development (HCD) under the CalHome Program
to subordinate a second mortgage under certain conditions.
ANALYSIS :
Existing law:
1. Establishes the CalHome Program, administered by HCD, to
enable low and very low income households to become or
remain homeowners, and requires HCD, under the program,
to provide grant or loan funds to local public agencies
or nonprofit corporations for specified purposes
relating to the promotion of home ownership. Requires
that financial assistance provided to individual
households be in the form of deferred payment loans,
repayable upon sale or transfer of the homes, when they
CONTINUED
AB 1551
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cease to be owner-occupied, or upon the loan maturity
date.
2. Requires CalHFA to administer the California Homebuyer's
Downpayment Assistance Program for the purpose of
assisting first-time low- and moderate-income homebuyers
utilizing existing mortgage financing, and authorizes a
borrower to refinance a mortgage under specified
circumstances.
3. Authorizes CalHFA, in its discretion, to permit a
downpayment assistance loan to be subordinated to
refinancing if it determines that certain criteria have
been met.
4. Authorizes CalHFA to permit subordination on those terms
and conditions as it determines are reasonable.
5. Requires the CalHFA to administer the Home Purchase
Assistance Program for the purpose of assisting
first-time homebuyers utilizing existing mortgage
financing, and administer the Extra Credit Teacher Home
Purchase Program, as specified, and any other school
personnel home ownership assistance program that is set
forth by the California Debt Limit Allocation Committee.
This bill:
1. Allows HCD under the CalHome Program and CalHFA under
the Home Purchase Assistance and Extra Credit Teacher
Programs to permit downpayment assistance loans to be
subordinated to refinancing if it determines that the
borrower has demonstrated hardship, subordination is
required to avoid foreclosure, and the new loan meets
its underwriting requirements.
2. Allows HCD and CalHFA permit subordination on those
terms and conditions as it determines are reasonable,
however this bill prohibits subordination if the
borrower has sufficient equity to repay the loan.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
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JJA:k 8/23/12 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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