California Residential Mortgage Insurance Act.

Senator Cortese's California Residential Mortgage Insurance Act establishes a state-backed loan insurance program to accelerate affordable multifamily housing development by reducing lender risk. The program, administered by the California Housing Finance Agency, would insure construction and permanent loans while offering credit enhancements for qualified affordable housing projects.

The legislation creates the California Residential Mortgage Insurance Fund to provide loan insurance and credit support. Lenders participating in the program pay one-time premium charges capped at 2% of the total loan value, with revenues deposited into the dedicated fund. The fund operates without direct state cost, as premium revenues cover both insurance obligations and administrative expenses.

Under the program's default provisions, the state issues debentures to lenders if borrowers default on insured loans, with the fund serving as primary obligor. The agency gains authority to acquire and manage defaulted properties, pursue collections, and cure defaults through direct payments when deemed appropriate. Annual agency reports and biannual Legislative Analyst's Office evaluations monitor program performance and outcomes.

The act takes effect in January 2027, contingent on voter approval of a related constitutional amendment. This timing allows the agency to establish administrative processes and underwriting criteria before implementation begins.