Bill Text: CA SB388 | 2011-2012 | Regular Session | Amended
Bill Title: Redevelopment: Emergency Refunding Bonds.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2012-01-31 - Returned to Secretary of Senate pursuant to Joint Rule 56. [SB388 Detail]
Download: California-2011-SB388-Amended.html
BILL NUMBER: SB 388 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 22, 2011
INTRODUCED BY Senator Gaines
FEBRUARY 15, 2011
An act to amend Section 2945 of the Civil Code, relating
to mortgages. An act to amend Section 34162 of the
Health and Safety Code, relating to redevelopment, and
declaring the urgency thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 388, as amended, Gaines. Mortgage foreclosure
consultants. Redevelopment: Emergency Refunding Bonds.
Existing law suspends various activities of redevelopment agencies
and prohibits the agencies from incurring indebtedness, including,
but not limited to, issuing or selling bonds, for a specified period.
Notwithstanding this provision of law, existing law authorizes an
agency to issue Emergency Refunding Bonds only where the issuance is
the only means available to the agency to avoid default on
outstanding agency bonds, and if other conditions are met.
This bill would additionally authorize an agency to issue
Emergency Refunding Bonds if issuance is the only means available to
the agency to avoid a default on lines of credit obtained from a
financial institution. The bill would modify the other conditions of
issuance accordingly.
This bill would declare that it is to take effect immediately as
an urgency statute.
Existing law generally regulates mortgage foreclosure consultants,
as defined. Existing law states that it is the intent of the
Legislature in those regulatory provisions to require that
foreclosure consultant service agreements be expressed in writing, to
safeguard the public against deceit and financial hardship, to
permit rescission of foreclosure consultation contracts, to prohibit
representations that tend to mislead, and to encourage fair dealing
in the rendition of foreclosure services.
This bill would make a technical, nonsubstantive change to that
provision.
Vote: majority 2/3 . Appropriation:
no. Fiscal committee: no. State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 34162 of the Health
and Safety Code is amended to read:
34162. (a) Notwithstanding Part 1 (commencing with Section
33000), Part 1.5 (commencing with Section 34000), Part 1.6
(commencing with Section 34050), and Part 1.7 (commencing with
Section 34100), or any other law, commencing on the effective date of
this act, an agency shall be unauthorized and shall not take any
action to incur indebtedness, including, but not limited to, any of
the following:
(1) Issue or sell bonds, for any purpose, regardless of the source
of repayment of the bonds. As used in this section, the term "bonds,"
includes, but is not limited to, any bonds, notes, bond anticipation
notes, interim certificates, debentures, certificates of
participation, refunding bonds, or other obligations issued by an
agency pursuant to Part 1 (commencing with Section 33000), and
Section 53583 of the Government Code, pursuant to any charter city
authority or any revenue bond law.
(2) Incur indebtedness payable from prohibited sources of
repayment, which include, but are not limited to, income and revenues
of an agency's redevelopment projects, taxes allocated to the
agency, taxes imposed by the agency pursuant to Section 7280.5 of the
Revenue and Taxation Code, assessments imposed by the agency, loan
repayments made to the agency pursuant to Section 33746, fees or
charges imposed by the agency, other revenues of the agency, and any
contributions or other financial assistance from the state or federal
government.
(3) Refund, restructure, or refinance indebtedness or obligations
that existed as of January 1, 2011, including, but not limited to,
any of the following:
(A) Refund bonds previously issued by the agency or by another
political subdivision of the state, including, but not limited to,
those issued by a city, a housing authority, or a nonprofit
corporation acting on behalf of a city or a housing authority.
(B) Exercise the right of optional redemption of any of its
outstanding bonds or elect to purchase any of its own outstanding
bonds.
(C) Modify or amend the terms and conditions, payment schedules,
amortization or maturity dates of any of the agency's bonds or other
obligations that are outstanding or exist as of January 1, 2011.
(4) Take out or accept loans or advances, for any purpose, from
the state or the federal government, any other public agency, or any
private lending institution, or from any other source. For purposes
of this section, the term "loans" include, but are not limited to,
agreements with the community or any other entity for the purpose of
refinancing a redevelopment project and moneys advanced to the agency
by the community or any other entity for the expenses of
redevelopment planning, expenses for dissemination of redevelopment
information, other administrative expenses, and overhead of the
agency.
(5) Execute trust deeds or mortgages on any real or personal
property owned or acquired by it.
(6) Pledge or encumber, for any purpose, any of its revenues or
assets. As used in this part, an agency's "revenues and assets"
include, but are not limited to, agency tax revenues, redevelopment
project revenues, other agency revenues, deeds of trust and mortgages
held by the agency, rents, fees, charges, moneys, accounts
receivable, contracts rights, and other rights to payment of whatever
kind or other real or personal property. As used in this part, to
"pledge or encumber" means to make a commitment of, by the grant of a
lien on and a security interest in, an agency's revenues or assets,
whether by resolution, indenture, trust agreement, loan agreement,
lease, installment sale agreement, reimbursement agreement, mortgage,
deed of trust, pledge agreement, or similar agreement in which the
pledge is provided for or created.
(b) Any actions taken that conflict with this section are void
from the outset and shall have no force or effect.
(c) Notwithstanding subdivision (a), a redevelopment agency may
issue refunding bonds, which are referred to in this part as
Emergency Refunding Bonds, only where all of the following conditions
are met:
(1) The issuance of Emergency Refunding Bonds is the only means
available to the agency to avoid a default on outstanding agency
bonds or lines of credit obtained from a financial institution
.
(2) Both the county treasurer and the Treasurer have approved the
issuance of Emergency Refunding Bonds.
(3) Emergency Refunding Bonds are issued only to provide funds for
any single debt service payment that is due prior to October 1,
2011, and that is more than 20 percent larger than a level debt
service payment would be for that bond , or, in the case of a
line of credit obtained from a financial institution, for which the
line of credit expires prior to October 1, 2011, and payment is due
.
(4) The principal amount of outstanding agency bonds is not
increased , except if Emergency Refunding Bonds are issued for
the purpose of paying off a line of credit as allowed pursuant to
paragraph (3) and, in that case, only in an amount that corresponds
to the amount of the line of credit payment, as well as the costs of
issuance of the Emergency Refunding Bonds and a reserve fund for the
Emergency Refunding Bonds .
SEC. 2. This act is an urgency statute necessary
for the immediate preservation of the public peace, health, or safety
within the meaning of Article IV of the Constitution and shall go
into immediate effect. The facts constituting the necessity are:
In order to avoid redevelopment agency default on lines of credit
obtained from a financial institution, it is necessary that this act
take effect immediately.
SECTION 1. Section 2945 of the Civil Code is
amended to read:
2945. (a) The Legislature finds and declares that homeowners
whose residences are in foreclosure are subject to fraud, deception,
harassment, and unfair dealing by foreclosure consultants from the
time a Notice of Default is recorded pursuant to Section 2924 until
the time surplus funds from any foreclosure sale are distributed to
the homeowner or his or her successor. Foreclosure consultants
represent that they can assist homeowners who have defaulted on
obligations secured by their residences. These foreclosure
consultants, however, often charge high fees, the payment of which is
often secured by a deed of trust on the residence to be saved, and
perform no service or essentially a worthless service. Homeowners,
relying on the foreclosure consultants' promises of help, take no
other action, are diverted from lawful businesses that could render
beneficial services, and often lose their homes, sometimes to the
foreclosure consultants who purchase homes at a fraction of their
value before the sale. Vulnerable homeowners are increasingly relying
on the services of foreclosure consultants who advise the homeowner
that the foreclosure consultant can obtain the remaining funds from
the foreclosure sale if the homeowner executes an assignment of the
surplus, a deed, or a power of attorney in favor of the foreclosure
consultant. This results in the homeowner paying an exorbitant fee
for a service when the homeowner could have obtained the remaining
funds from the trustee's sale from the trustee directly for minimal
cost if the homeowner had consulted legal counsel or had sufficient
time to receive notices from the trustee pursuant to Section 2924j
regarding how and where to make a claim for excess proceeds.
(b) The Legislature further finds and declares that foreclosure
consultants have a significant impact on the economy of this state
and on the welfare of its citizens.
(c) The intent and purposes of this article are the following:
(1) To require that foreclosure consultant service agreements be
expressed in writing; to safeguard the public against deceit and
financial hardship; to permit rescission of foreclosure consultation
contracts; to prohibit representations that tend to mislead; and to
encourage fair dealing in the rendition of foreclosure services.
(2) The provisions of this article shall be liberally construed to
effectuate this intent and to achieve these purposes.
