The California Senate Transportation and Housing Committee on Tuesday unanimously approved SB 447, which would prohibit the California Housing Finance Agency from foreclosing on borrowers who are renting their homes out and are current on their mortgages
CalHFA had agreed in November to temporarily stop foreclosing on those homeowners. Homeowners who purchase their homes through the agency are barred from renting them out, to prevent investors from misusing the program designed to provide affordable loans for potential homeowners. The housing crunch has left many borrowers unable to sell their homes if circumstances force them to move.
The agency, afraid of jeopardizing its tax-exempt status, had been foreclosing on homeowners who rented out homes financed by CalHFA, whether they were behind on their payments or not, according to a recent report by the Senate office of oversight and outcomes.
The agency plans to consider revising its policy at its board of director’s meeting slated for the end of the month.
“These CalHFA borrowers are not speculators and are not taking advantage of the system. They are upside down and are simply trying to meet their obligation and avoid foreclosure,” said Sen. Mark DeSaulnier, D-Concord. “When homeowners are compelled to move because of life events … and they continue to pay their mortgages rather than go into default, they should be applauded, not foreclosed upon.”
SB 447 will provide clear guidance to block these foreclosures if CalHFA believes statutory authority is needed, DeSaulnier said.