One of the issues left from 2007 was the housing crisis. In 2008, the state, nation, and the world saw economic conditions worsen. More individuals lost their houses to foreclosure due to the sagging mortgage industry. In order to protect homeowners from being foreclosed on, the Legislature and the Executive branch took action to increase accountability in the real estate market, improving transparency standards in order to prevent abusive practices, and assist Californians to maintain homeownership. The Governor’s Office provided $69.5 million in permanent low-interest loans from Proposition 1C housing bonds, joined the OneCalifornia Foundation to provide a bridge loan fund for homeowners facing foreclosure in Oakland, launched a public awareness campaign to educate homeowners about options that could help them from losing their homes, made agreements with major loan servicers to streamline the loan modification process for subprime borrowers living in their homes, and established the Interdepartmental Task Force on Non-Traditional Mortgages to make a coordinated effort to deal with issues raised by subprime loans.
Legislative action included the enactment of SB 1137 (Perata) requiring lenders to contact homeowners and explore restructuring options before initiating the foreclosure process, providing tenants with double the amount of time now afforded to them to move from a foreclosed property and preventing neighborhoods from becoming rundown by requiring owners to maintain foreclosed properties; SB 870 (Ridley-Thomas) allowing the California Housing Finance Agency to move quickly, establishing a mortgage refinance program; SB 1065 (Correa) including the refinancing of home mortgages in the criteria for a city or county-administered home financing program; SB 1448 (Scott) increasing penalties for acting or advertising as a real estate broker or salesperson without a license; SB 1461 (Negrete-McLeod) requiring real estate agents to disclose their license numbers on all first point of contact marketing materials and property purchases starting July 2009; SB 1737 (Machado) allowing the Department of Real Estate to suspend or bar a person who has committed a violation of the Real Estate Law if the suspending or barring is in the best interest of the public; AB 69 (Lieu) mandating that all mortgage loan services report specific detailed data to their licensing agency concerning loan modifications; and AB 180 (Bass) providing a registration and bonding process for foreclosure consultants from entering into an agreement to assist any owner in the release of surplus funds after the trustee’s sale is conducted. However, the Governor did veto the following legislation relative to the real estate mortgage market: SB 1240 (Machado) requiring real estate brokers that make, arrange, or service residential mortgage loans on property containing one to four residential units to notify the Department of Real Estate within 30 days of entering the mortgage field and upon exiting that field, and requiring these brokers to file specified reports with the department on an annual or biannual basis, documenting their level of compliance with applicable law and regulation; AB 529 (Torrico) requiring a borrower to receive notice if their loan is scheduled to switch from an initial fixed rate to an adjustable rate, or set to reset to a fully amortizing loan; AB 1830 (Lieu) enacting duties, requirements, and prohibitions relating to higher priced mortgage loans; and AB 2586 (Torrico) providing a number of protections for tenants who face an eviction or other adverse action as a result of a foreclosure. On 10/3/03, President Bush signed HR 1424, the Emergency Economic Stabilization Act, allowing the United States Department of the Treasury to spend up to $700 billion to purchase distressed assets, especially mortgage-backed securities from the nation’s banks. The purpose of the plan is to purchase assets, reduce the uncertainty regarding the worth of remaining assets, and restore confidence in the credit markets, which is all aimed at stabilizing the economy. At the time of this writing, the Governor has called a Special Session of the Legislature in November of which one issue is to provide more assistance to keep Californians in their homes. His proposal is designed to bring down foreclosure rates by helping both borrowers and lenders modify existing home loans in ways that benefit both parties. Also, to prevent another mortgage crisis in the future, the Governor is prescribing changes to the way mortgages are brokered and originated to make lenders more accountable, guard against risky mortgages and prevent unsustainable bubbles from ever rising again.
One of the most significant pieces of legislation enacted into law this year was SB 375 (Steinberg) which makes major changes in land use and transportation policy. SB 375 marks the first time major environmental organizations, local governments, major homebuilders, and affordable housing advocates have agreed on a plan to account for California’s population growth and achieve AB 32 greenhouse gas emission reduction goals at the same time. Specifically, as it relates to housing, the legislation requires the regional transportation plans for regions of the state with a Metropolitan Planning Organization to adopt a Sustainable Communities Strategy as part of the regional transportation plan.
Other significant housing legislation enacted into law included SB 1055 (Machado) allowing taxpayers to exclude the forgiven mortgage debt from their income for state income tax purposes, bringing state law into conformity with federal law; SB 1107 (Correa) requiring mobilehome park management to allow a homeowner to install accommodations for the disabled; SB 1220 (Cedillo) allowing sponsors of supportive housing projects funded under the Multifamily Housing Program to restrict occupancy of a housing project to veterans if the project meets specified factors; SB 1234 (Correa) prohibiting the ownership or management of a mobilehome park from entering an enclosed accessory structure without the prior written consent of the resident, except in case of emergency or when the resident has abandoned the mobilehome or accessory structure; SB 1473 (Calderon) requiring cities and counties to collect a fee on building permit applicants to fund the development of building standards and educational efforts for “green buildings” by the Building Standards Commission and other state agencies, and building code enforcement education by local governments; SB 1495 (Kehoe) allowing a taxpayer to retain the disabled veterans’ property tax exemption in the case of a partial loss of the taxpayer’s home due to a misfortune or calamity, and a full or partial loss due to a major disaster for which the Governor has issued a proclamation of a state emergency; SB 1572 (Wyland) enacting the Veterans Bond Act of 2008, which was adopted by the voters at the 2008 General Election, providing $900 million in bonds for the Cal-Vet program; SB 1604 (Machado) requiring that any private insurance policy maintained by an escrow agent be applied as primary coverage in the event of a loss covered by both the private insurance and the Escrow Agents Fidelity Corporation; SB 1675 (Cox) providing the California Department of Veterans Affairs with the discretion to structure the terms and conditions of any authorized debt issuance as debentures, including Cal-Vet loans; AB 31 (De Leon) revitalizing communities by providing $400 million from Proposition 84 for new parks directed to those communities most in need; AB 2050 (Garcia) requiring, at the time of sale, all mobilehomes and manufactured homes to have a smoke alarm installed in each room designed for sleeping and to have all fuel-gas-burning water heaters seismically braced, anchored, or strapped; AB 2052 (Lieu) providing that a tenant who was a victim of domestic violence, sexual assault, or stalking, as defined, may terminate a rental agreement and be discharged from payment due, if specified conditions are met; AB 2188 (Arambula) eliminating the 1/1/09, sunset date on the authority of the Department of Housing and Community Development to set flexible funding caps for the state Community Development Block Grant awards to smaller communities; AB 2454 (Emmerson) increasing potential recovery for harmed consumers applying for the Department of Real Estate Recovery Account payments filed on or after 1/1/09, to $50,000 for any one transaction and $250,000 for any one licensee; AB 2604 (Torrico) allowing local agencies to defer the collection of developer fees up to the close of escrow, with the exception of school impact fees; AB 2494 (Caballero) establishing the Housing-Related Parks Program under the administration of the Department of Housing and Community Development to implement a portion of Proposition 1C (Housing and Emergency Trust Fund Act of 2006) funding; AB 2881 (Wolk) regulating residential transfer disclosures regarding agricultural activity; and AB 3005 ( Jones) requiring cities and counties to set lower traffic impact mitigation fees for specified transit-oriented housing developments unless the city or county makes a specified finding.
Vetoed housing legislation included: SB 127 (Kuehl) requiring delivery of transfer disclosure statements relating to the sale of real property, manufactured homes and mobilehomes before transfer of title as soon as practical, but no later than 10 calendar days after the execution of the purchase; SB 1386 (Lowenthal) requiring that a carbon monoxide alarm be installed in every dwelling intended for human occupancy that has a fossil fuel burning appliance, fireplace, or attached garage; AB 567 (Saldana) establishing the Office of the Common Interest Development Bureau; AB 725 (Lieber and DeVore) convening a working group to draft a uniform subsidized affordable housing application; AB 842 (Jones) requiring the Department of Housing and Community Development, when ranking applications for funding under the Infill Incentive Grant Program and the Transit Oriented Development Implementation Program, to award preference or priority to projects located in areas where the local or regional entity has adopted a general plan, transportation plan, or regional blueprint that will reduce the growth of vehicle miles traveled by at least 10%, and the project is consistent with that planning document; AB 952 (Mullin), requiring the board of directors of a homeowner association in a common interest development to provide an owner who is delinquent in paying his/her assessments a payment plan if there is an established need for a plan; AB 1366 (Portantino) making housing element compliance and submission of the housing element progress report a threshold requirement for various housing and infrastructure programs administered by the Department of Housing and Community Development; AB 1418 (Arambula) requiring the commissioner of Financial Institutions to develop a Credit Union Membership Investment Model that would serve as a framework for the Department of Financial Institutions to identify credit union best practices relating to community development; AB 2000 (Mendoza) allowing a local government that exceeds its regional housing need allocation share during a planning period to count the excess units towards meeting its share in the subsequent planning period; AB 2019 (Fuentes) allowing tenants who live in affected affordable housing units to bring an action in court to enforce the preservation right-of-first refusal law; AB 2733 (Brownley) requiring a seller of real property that is located within one quarter mile of an environmental hazard site to disclose that information to potential buyers; and AB 2878 (Anderson) increasing the homestead exemptions and requiring the Judicial Council to determine, at three-year intervals, the amount by which the exemption should be increased.
