51650-51662

HEALTH AND SAFETY CODE
SECTION 51650-51662




51650.  (a) (1) To be qualified for loan insurance, a borrower shall
be, or by reason of a loan insured pursuant to this part shall
become, the owner of a multifamily rental housing development or a
single-family residential structure for which an insured loan is
authorized, and shall be able to bear the usual expenses of
maintaining the housing development, development, or structure and
repay the loan.
   (2) To be qualified for loan insurance on a single-family
residential housing unit, the borrower shall also do either of the
following:
   (A) Qualify as a person or family of low or moderate income, as
that term is defined in Section 51603.
   (B) Until January 1, 2011, otherwise meet the requirements for
participation in an affordable housing program or product offered by
the Federal National Mortgage Association (Fannie Mae) or the Federal
Home Loan Mortgage Association (Freddie Mac).
   (3) The agency may, by resolution, establish additional
requirements that it deems necessary to accomplish the purposes of
this part.
   (b) For the purpose of increasing the efficiency and minimizing
the cost of the loan insurance program, the agency may insure or
issue commitments to insure loans upon the certification of an
officer of an approved lending institution that the borrower is
qualified for loan insurance according to eligibility requirements
specified by the agency.
   (c) No later than January 1, 2009, the agency shall report to the
chairs of the housing committees of the Senate and the Assembly on
the types of programs that were offered pursuant to subparagraph (B)
of paragraph (2) of subdivision (a).



51651.  (a) The agency shall specify the percentage of the
outstanding principal indebtedness that may be insured under this
part with respect to each category of loan authorized to be insured
under this part.
   (b) The agency may insure loans secured by mortgages or deeds of
trust of first or second priority.


51652.  Loans insured under this part shall meet all of the
following requirements:
   (a) The loans shall be made for a period acceptable to the agency
not to exceed 40 years.
   (b) The loans shall be subject to maximum loan amounts for each
category of loan authorized to be insured under this part.
   (c) The loans shall be secured by mortgages or deeds of trust, or
the loan shall be wholly or partially insured or guaranteed by an
agency or instrumentality of the United States, except for property
improvement loans under limits established by the agency.
   (d) The agency may establish loan-to-value limitations for each
category of loan and may set forth limitations on the further
encumbrance of structures and other real property securing loans, but
only to the extent necessary to prevent unreasonable impairment of
the agency's security. In no case involving refinancing and
rehabilitation shall the loan have a principal obligation in an
amount exceeding the sum of the estimated cost of rehabilitation, if
any, and the amount required to refinance existing indebtedness
secured by the property and settlement and closing costs incurred in
connection therewith.
   (e) Loans involving the rehabilitation of residential structures
shall have a principal obligation not exceeding an amount which, when
added to any outstanding indebtedness constituting a lien upon the
property securing the loan, creates a total outstanding indebtedness
which would be reasonably secured by a mortgage of first priority on
the property pursuant to subdivision (d), and as set forth by the
agency.
   (f) Loans involving refinancing may be insured only if refinancing
is necessary to permit a borrower to afford the cost of
rehabilitation, to lower his or her monthly debt-to-income payments,
minimize rent increases for occupants of the residential structure,
where the rents would otherwise exceed affordable rents due to the
expense of rehabilitation, or to achieve another purpose specified in
this division.
   (g) With respect to loans involving the rehabilitation of a
residential structure, the agency shall determine that the
rehabilitation is economically feasible. For purposes of this
subdivision, the economic feasibility of rehabilitation projects
involving commercial space in a mixed residential and commercial
structure shall be determined independently for any structure to be
rehabilitated for mixed residential and commercial uses.
   (h) For the purpose of increasing the efficiency and minimizing
the cost of the loan insurance program, the agency may insure, or
issue commitments to insure, loans, upon the certification of an
officer of an approved lending institution that the proposed
rehabilitation conforms to requirements specified by the agency
regarding economic feasibility.
   (i) The agency shall contract with the insured or the borrower, or
both, during the term of the insurance if the agency determines that
either or both of those contracts is necessary to maintain
residential rentals available to lower income households at
affordable rents.
   (j) Relocation payments shall be made to persons and families
displaced in making a site or residential structure available for
rehabilitation or construction financed by loans insured under this
part, and relocation advisory assistance provided to those persons,
as specified by Section 51063. Relocation payments for rehabilitation
or construction financed by loans insured by this part, shall also
be made to owners involuntarily displaced because of inability to
afford costs of compliance required pursuant to this part, but any
payment pursuant to Section 4623 of Title 42 of the United States
Code or Section 7263 of the Government Code shall be limited to the
reasonable costs of a replacement dwelling adequate to accommodate
the displaced person or family without regard to whether the dwelling
is otherwise comparable to the dwelling formerly occupied, less the
amount received from sale of the dwelling. Relocation payments may be
made from the proceeds of insured loans as authorized by the agency.
   (k) The residential structure for which a loan is insured pursuant
to this part shall be insured against loss due to fire and other
causes, as provided by the agency.
   ( l) Any other terms and conditions as the agency determines are
necessary to further the purposes of this part.



51653.  Notwithstanding any other provision of law, any rental
housing development which is financed from mortgages insured pursuant
to this part is exempt from both of the following:
   (a) Any local government prohibitions against condominium
conversion any time after 10 years from the date a certificate of
occupancy is issued. Any condominium conversion shall be made in
accordance with the requirements of Article 2.5 (commencing with
Section 66452.50) of Chapter 3 of Division 2 of Title 7 of the
Government Code.
   (b) Any rent control, except for units made available to lower
income households as provided pursuant to subdivision (b) of Section
51226.



51654.  The agency may provide insurance pursuant to this part for
all of the following:
   (a) Loans for residential structures that will be occupied
primarily by persons and families of low or moderate income.
   (b) Loans for privately or publicly financed rental housing
developments that will benefit lower income households. "Privately
financed rental housing development," as used in this subdivision,
includes rental housing developments financed by local public
entities, as defined in Section 50079.
   (c) Loans that otherwise meet the requirements for participation
in an affordable housing program or product offered by the Federal
National Mortgage Association (Fannie Mae) or the Federal Home Loan
Mortgage Association (Freddie Mac).



51655.  Subject to this part, the agency may insure or guarantee
loans made by qualified mortgage lenders for the purposes described
in Section 51320.


51656.  Notwithstanding any other provision of this part, the agency
may establish a program of insuring reverse mortgages as authorized
by resolution of the board.



51657.  (a) The agency shall establish, and may from time to time
revise, after public hearings, a schedule of insurance premium rates.
The premiums may vary according to the category of the loan and the
degree of risk related to the loan. Premiums shall be calculated in
an amount which, when added to the other revenues of the insurance
program, will be adequate to defray losses occasioned by defaults and
the operating expenses of the program, to repay amounts advanced to
the agency for purposes of this part, and gradually to expand the
insurance availability of the program. Approved lending institutions
shall remit premiums to the fund at intervals specified by the
agency.
   (b) The agency may prescribe other charges that it finds
necessary, including service charges and appraisal, inspection, and
other fees.



51658.  (a) The agency shall establish procedures to be followed by
approved lending institutions in the event of default on a loan
insured under this part. The agency may require that, prior to
submitting a claim, an approved lending institution shall foreclose
or exercise a power of sale and take possession of the property or
otherwise acquire title and possession of the property within the
time specified by the agency. The agency may, upon submission of the
claim, pursue one of the following alternatives:
   (1) Pay the approved lending institution the benefit of the
insurance.
   (2) Upon conveyance to the agency of all the right, title, and
interest of the approved lending institution in the foreclosed
property and the assignment of all claims of the approved lending
institution against the defaulting borrower to the agency, pay to the
qualified mortgage lender the sum of the unpaid principal balance of
the loan, foreclosure costs, accrued interest, and other costs
defined by contract.
   (3) Pay a partial claim prior to foreclosure by agreement with the
insured.
   (b) In any case in which the agency has insured only a portion of
the outstanding principal indebtedness of a loan, it may further
provide that not more than an equivalent percentage of the total
accrued interest and costs shall be payable by the agency pursuant to
this section in the event of a default.



51659.  In the event of a default on an insured loan not secured by
a first mortgage, the agency may, in lieu of proceeding under Section
51658, acquire the insured loan and any security therefor upon
payment to the approved lending institution of an amount equal to the
unpaid principal balance of the loan, accrued interest, and other
costs that the agency finds are fair, reasonable, and authorized.




51660.  The agency may initiate programs of coinsurance or
reinsurance with, and may procure reinsurance from, any state agency,
local agency, agency of the United States, or private mortgage
insurer in order to accomplish more effectively the purposes of this
part. The agency may coinsure or reinsure loans made or originated by
approved lending institutions which are otherwise insurable under
this part.



51661.  The agency may provide for, and require attendance at,
homeownership counseling and training courses as a condition to the
insurance of loans for the purchase or refinancing of residential
structures under this part.


51662.  The agency may commence any action to protect or enforce any
right conferred upon it by any law, mortgage, contract of insurance,
or any other agreement. The agency may bid for and purchase property
sold in satisfaction thereof at any foreclosure or other sale or may
otherwise acquire and take possession of that property.