Today's Law As Amended

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AB-69 Help Homeowners Add New Housing Program: accessory dwelling unit financing.(2019-2020)

As Amends the Law Today

 The Legislature finds and declares all of the following:
(a) Over the last few years, the state has lowered the regulatory barriers that have historically prevented homeowners from developing additional housing units, such as accessory dwelling units and junior accessory dwelling units, on their single-family home properties. As a result, construction of these units has increased by 50 percent and added much needed housing. In the City of Los Angeles, the number of permits for accessory dwelling unit construction has soared by nearly 3,500 percent from 2016 to 2018, inclusive.
(b) However, the construction of these additional units remains limited in many areas of the state due to a lack of financing options for the cost of construction if a homeowner lacks significant appreciated equity within their residence to refinance or sufficient income to increase their loan balances.
(c) Far too many homeowners, even those with strong credit scores, documented income, and favorable loan-to-value ratios, cannot readily access federal government-backed mortgages to finance the costs of building additional units because mortgage products currently require tenants in place and a year or more of documented rental income.
(d) Addressing this gap in the marketplace and allowing existing mortgage lenders to offer construction bridge loans would enable homeowners to take advantage of historically low mortgage interest rates that will likely be available during the next several years.
(e) It is the intent of the Legislature to establish a state-backed lending mechanism to encourage banks, credit unions, and other mortgage originators to make construction loans to homeowners to bridge existing federally backed loans.

SEC. 2.

 Chapter 12 (commencing with Section 51515) is added to Part 3 of Division 31 of the Health and Safety Code, to read:

CHAPTER  12. Help Homeowners Add New Housing Program
 This chapter shall be known, and may be cited, as the Help Homeowners Add New Housing Program.
 For purposes of this chapter:
(a) “Homeowner” means an owner of a single-family residential property that does not own more than three residential properties that consist of one to four units.
(b) “Program” means the program established pursuant to subdivision (a) of Section 51517.
 (a) The Treasurer’s office shall, within six months of the effective date of this chapter, establish and administer the Help Homeowners Add New Housing Program pursuant to this chapter. The purpose of the program is to assist homeowners in qualifying for loans to construct additional housing units on their property, including accessory dwelling units and junior accessory dwelling units.
(b) The Treasurer shall consult with the Department of Housing and Community Development and the California Housing Financing Agency in establishing and administering the program. The Treasurer may also consult with private lenders in developing the program.
 (a) The Treasurer shall develop the program in a manner that complies with all of the following:
(1) The program shall provide partial loan guarantees and other credit enhancements for residential property owners in order to induce private lenders to issue loans for the construction of additional dwelling units, which will then be rented out to tenants.
(2) The program shall require the state to partner with private lenders that have a history of originating federally backed construction loans or loans for accessory dwelling units.
(3) The program shall require that originating lenders retain a percentage of risk in the amount determined by the Treasurer.
(4) The program shall charge premiums, fees, and interest sufficient to cover the administrative costs of the program and the risk of defaults associated with the program.
(5) The program shall require an applicant to be the owner and occupant of the existing primary residence.
(6) The program shall be designed to add 50,000 additional housing units of single-family properties within five years.
(b) In developing the program the Treasurer shall establish all of the following:
(1) Minimum criteria for a homeowner to participate in the program based on income, credit worthiness, home equity, potential rental income of the proposed dwelling unit, and any other criteria deemed relevant by the Treasurer.
(2) Minimum criteria for an originating lender to participate in the program based on the lender’s history of originating federally backed construction loans or loans for accessory dwelling units.
(3) The maximum percentage of the actual loss guaranteed by the state under the program.
(4) A premium structure to adequately cover the administrative costs of the program and the risk of defaults associated with the program.
 (a) The Help Homeowners Add New Housing Account is hereby established within the California Housing Finance Fund. Notwithstanding Section 13340 of the Government Code, the moneys in the account are continuously appropriated, without regard to fiscal year, for purposes of this chapter. The Treasurer may pledge any or all of the moneys in the account as security for payment of the principal of, and interest on, and redemption premiums on, any debt issued pursuant to this chapter. All moneys accruing pursuant to this chapter from whatever source shall be deposited in the account.
(b) (1) The agency, in coordination with the Treasurer, shall issue revenue bonds in a principal amount determined by the Treasurer to be necessary to provide sufficient funding for the purposes of this chapter.
(2) Except as otherwise provided in this section, the revenue bonds issued shall be issued pursuant to Chapter 7.
(c) (1) Notwithstanding Sections 51352 and 51374, bonds issued under this chapter do not constitute a debt or liability of the state or of any political subdivision thereof and do not constitute a pledge of the full faith and credit of the state or any of its political subdivisions, but are payable solely from the funds provided therefor under this chapter. This subdivision shall in no way preclude bond guarantees or enhancements pursuant to this chapter. All the bonds shall contain on the face thereof a statement to the following effect:
“Neither the full faith and credit nor the taxing power of the State of California is pledged to the payment of the principal of, or interest on, this bond.”
(2) The issuance of bonds under this chapter shall not directly or indirectly or contingently obligate the state or any political subdivision thereof to levy or to pledge any form of taxation therefor or to make any appropriation for their payment. Nothing in this section shall prevent, or be construed to prevent, the agency from pledging the full faith and credit of the Help Homeowners Add New Housing Account to the payment of bonds or issuance of bonds authorized pursuant to this chapter.
(d) The limitation set forth in Section 51350 on the amount of the agency’s bonds which may be concurrently outstanding, including any changes to, expansions of, or additions to, such limitations, shall not apply to bonds issued pursuant to this section. Bonds specified in this section shall not be included or considered when applying the limitation on amount of bonds specified in subdivision (c) of Section 51350.