California Housing Finance and Credit Act.

Senator Cortese's California Housing Finance and Credit Act establishes a state-backed loan insurance program to accelerate affordable housing construction by reducing financial risk for private lenders. The program, administered by the California Housing Finance Agency, would provide credit enhancements and insurance for both construction and permanent loans starting January 2027, pending voter approval of a related constitutional amendment.

The legislation creates the continuously appropriated California Housing Finance and Credit Fund to support loan insurance operations. Lenders participating in the program would pay insurance premiums capped at 2% of the loan value, with rates varying based on risk assessment. Upon loan default, the State Treasurer would issue debentures to lenders equal to the outstanding loan value, backed by the full faith and credit of California.

The Act mandates specific protections and procedures around defaults, including options for the Agency to acquire defaulted loans, manage properties, and pursue collections. Annual reports from the Agency and biannual analyses from the Legislative Analyst's Office would track program performance and loan portfolio status. The Governor must propose annual limits on the Agency's loan insurance authority through the state budget process to maintain appropriate risk levels and protect California's credit rating.

For housing developments financed through the program, workers must receive prevailing wages for their locality. The legislation also preserves borrower and lender autonomy in selecting professional services while establishing minimum qualifications for loan insurance eligibility.