Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) CalHome Program loans shall be secured by the property or leasehold interest, as applicable.
(b) The lien securing repayment of the CalHome Program loan shall be subject only to liens, encumbrances and other matters of record reviewed and approved by the Recipient responsible for underwriting the CalHome Program loan.
(c) Homeowner/Homebuyer CalHome Program loans shall have the following terms and conditions:
(1) principal and interest payments shall be deferred for the term of the CalHome Program loan;
(2) loans shall be repayable upon sale or transfer of the property, when the property ceases to be owner-occupied, or upon the CalHome Program loan maturity date; However, if it is determined by the recipient that repayment of the CalHome Program loan at the maturity date causes a hardship to the borrower, the recipient has two other options. They are:
(A) Amending the note and deed of trust to defer repayment of the amount due at loan maturity, that is the original principal and the accrued interest, for up to an additional 30 years (at 0% additional interest), this may be offered one time, or;
(B) Converting the debt at loan maturity, that is the original principal balance and any accrued interest, to an amortized loan, repayable in 15 years at 0% additional interest.
(3) loans are not assumable;
(4) the following transfers of interest shall not require the repayment of the CalHome Program loan:
(A) transfer to a surviving joint tenant by devise, descent, or operation of law on the death of a joint tenant;
(B) a transfer, in which the transferee is a person who occupies or will occupy the property, which is:
(i) a transfer where the spouse becomes an owner of the property;
(ii) a transfer resulting from a decree of dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement by which the spouse becomes an owner of the property; or
(iii) a transfer into an inter vivos trust in which the borrower is and remains the beneficiary and occupant of the property;
(5) the term for first-time homebuyer mortgage assistance CalHome Program loans shall be thirty (30) years with the following exception: when United States Department of Agriculture, Rural Housing Service (USDA-RHS) 502 mortgage loans are in first lien position, the term shall be the term of the 502 mortgage (30 to 38 years);
(6) the term for owner-occupied rehabilitation CalHome Program loans shall be a maximum of thirty (30) years as determined by the Recipient; and
(7) a borrower may pay the CalHome Program loan amount, in part or in whole, at any time without penalty.
(d) All CalHome assistance to individual households shall be made in the form of a loan. Recipients may make CalHome Program loans bearing simple interest up to three percent per annum, and may allow forgiveness of all or a portion of the accrued interest as part of its local program design. Loan principal shall not be forgiven, except as allowed by statute. In lieu of making loans bearing a fixed rate of interest, recipients may instead charge contingent deferred interest in the form of shared net appreciation as set forth in subsection (e).
(e) Shared net appreciation is allowed, only as follows:
(1) gross appreciation is calculated by subtracting the original sales price from the current sales price or the current appraised value if the loan accelerating event is other than sale of the property;
(2) net appreciation is calculated by subtracting the seller's applicable closing costs, seller's cash contribution in the original purchase transaction, the value of seller's sweat equity, if applicable, and the documented value of capital improvements from the gross appreciation amount;
(3) the recipient may only claim repayment of the principal, interest and a portion of the net appreciation. That maximum portion of the net appreciation which may be claimed by the recipient is equal to the percentage of the value of the residence financed by the CalHome Program loan. That is, if the loan equals twenty percent (20%) of the initial value of the residence, a maximum of twenty percent (20%) of the appreciation may be charged by recipient.
(f) In any loan transaction where the CalHome Program loan is the only subsidy, the borrower cannot be restricted from selling the home at its fair market value at any time.
1. New section filed 9-29-2003; operative 9-29-2003 pursuant to Government Code section 11343.4 (Register 2003, No. 40).
Note: Authority cited: Sections 50406(n) and 50650.2, Health and Safety Code. Reference: Sections 50650.3(b) and 50650.7, Health and Safety Code.
