California Senate Bill SB813 Amended / Bill

 BILL NUMBER: SB 813AMENDED 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.  ____ CORRECTIONS Text--Page 6. ____