Section 51345.

(a) The agency shall administer a home purchase assistance program in accordance with this chapter. The purpose of the home purchase assistance program is to assist first-time homebuyers to utilize existing mortgage financing available pursuant to this part or Division 4 (commencing with Section 800) of the Military and Veterans Code with the additional financial resources made available pursuant to Part 8 (commencing with Section 53130).

(b) Home purchase assistance under this chapter shall include, but not be limited to: (1) an interest rate subsidy to reduce the interest rate, (2) a deferred-payment, low-interest, second-mortgage loan to reduce the principal and interest payments, and (3) downpayment assistance to make financing affordable to first-time homebuyers.

(c) In no case shall the interest rate subsidy reduce the effective interest rate to the borrower below 3 percent per annum, nor shall the deferred-payment, low-interest, second mortgage loan exceed 49 percent of the total debt financing necessary to purchase the home.

(d) The amount of home purchase assistance shall be a second mortgage loan secured by a deed of trust of second priority to the primary financing provided by the agency or the Department of Veterans Affairs. The term of the home purchase assistance shall not exceed the term of the primary loan.

(e) (1) Except as provided in paragraph (2), the amount of home purchase assistance shall be due and payable at the end of the term, upon the sale of the home, or upon refinancing. The borrower may refinance the mortgages on the home if the principal of and accrued interest on the second mortgage loan securing the home purchase assistance are repaid in full. All repayments shall be deposited in the fund.

(2) The agency may, in its discretion, permit the downpayment assistance loan to be subordinated to refinancing if it determines that the borrower has demonstrated hardship, subordination is required to avoid foreclosure, and the new loan meets the agency's underwriting requirements. The agency may permit subordination on those terms and conditions as it determines are reasonable, but subordination is not permitted if the borrower has sufficient equity to repay the loan.

(Amended by Stats. 2012, Ch. 555, Sec. 2. Effective September 25, 2012.)