For the purpose of providing disaster relief to those owners of owner-occupied dwellings that were damaged or destroyed as a result of a natural disaster defined by Section 8680.3 of the Government Code, resulting in a state of emergency proclaimed by the Governor pursuant to Section 8625 of the Government Code, financial assistance may be provided to disaster victims as prescribed in this chapter under the following special conditions, which shall prevail over conflicting provisions of this chapter and administrative regulations:
(a) (1) The loans shall be provided in any city, county, or city and county proclaimed by the Governor to be in a state of disaster: (A) to persons who do not qualify for loan assistance from an agency of the United States for repair of the damage caused by a natural disaster, (B) to the extent that federally provided or assisted financing may be insufficient to accomplish the necessary repair, and (C) to the extent required to enable the recipient to obtain and afford loan assistance from an agency of the United States to finance the necessary repair.
(2) The loans shall be made only to households that are victims of a natural disaster and only to the extent that other federal and state resources, private insurance proceeds, or private institutional lending sources, are not available or do not provide the assistance or coverage needed to rehabilitate or
reconstruct their homes.
(3) This subdivision shall not be construed to prevent the processing of a loan application once a person or household has received loan approval from a federal, state, or private institutional lending source, nor shall this subdivision be construed to prevent the funding of short-term loans until other federal, state, or private loan proceeds become available.
(4) In allocating grants and loans, the department shall in no event provide a loan to a family with an annual income in excess of 150 percent of statewide median income, adjusted for family size. This paragraph shall apply to any disaster that occurs on or after January 18, 1994.
(b) (1) The loans shall be for the purpose of repairing, including reconstructing, dwellings that are owner-occupied or would be
owner-occupied but for the damage caused by the natural disaster and for rental dwelling units of one to four units. Loan funds shall be used to fund work necessary to repair damaged dwellings and to correct serious, life-threatening violations of the state or local building code or housing standards that are required to be corrected prior to occupancy, including ensuring compliance with applicable seismic safety standards and related property improvements or to finance the reconstruction of dwellings destroyed as a result of the natural disaster up to a maximum of fifty thousand dollars ($50,000) per unit. The department shall limit the square footage of units repaired or reconstructed using funds provided pursuant to this section to the predisaster size of the unit.
(2) In the case of manufactured housing or mobilehomes, loan funds shall be used to bring the manufactured home or mobilehome into compliance with the standards set forth in
Chapter 4 (commencing with Section 18025) of Part 2 of Division 13.
(3) For the purposes of this section:
(A) “Owner-occupied dwellings” include single-family units, attached owner-occupied units, condominiums, townhouses, cooperatives, and manufactured homes, including mobilehomes.
(B) “Rental dwelling of one to four units” includes single-family units, condominiums, townhouses, cooperatives, duplexes, and manufactured homes, including mobilehomes.
(c) The loan, together with any existing indebtedness encumbering the secured property, shall not exceed the after-repair value of the property, except that the department may waive this limitation in individual cases to ensure, when necessary, correction of serious, life-threatening violations of
the state or local building code or housing standards, seismic safety standards, and general property improvements relating to these standards pursuant to subdivision (b).
(d) (1) The outstanding balance of a loan provided under this section, including principal and accrued interest thereon, shall be due and payable, after 30 years or when either of the following occurs: (A) the borrower transfers ownership of the rehabilitated property, or (B) fails to occupy the rehabilitated property as his or her principal place of residence, whichever comes first. For rental dwellings, the term of the loan shall be 20 years.
(2) After the initial recordation of the deed of trust securing the department’s loan, the department shall not subordinate its deed of trust to additional or other financing except in cases of extreme hardship necessary to protect the health or
safety of the occupants or to the extent that the total principal of loans senior to the department’s loan is unchanged or decreased and the department’s security interest is not jeopardized, as determined by the department.
(e) The department may make loans directly to borrowers, or contract for the administration under this section of loans with one or more entities that it determines to have the necessary experience to successfully administer the loan program, including, but not limited to, local public agencies and private organizations. The department may authorize, under that contract, the payment of expenses incurred by the entities in administering the loan program and may prescribe the conditions pursuant to which the entities shall administer the loans.
(f) Sections 50663 and 50668 do not apply to loans made pursuant to this section.
(g) The department may set aside or use funds that are made available for the purposes of this section for the purpose of curing or averting an owner’s default on the terms of any loan or other obligation where that default would jeopardize the department’s security in the owner-occupied housing assisted pursuant to this section. The payment or advance of funds by the department pursuant to this subdivision shall be exclusively within the department’s discretion, and no person shall be deemed to have any entitlement to the payment or advance of those funds. The amount of any funds expended by the department pursuant to this subdivision shall be added to the loan amount secured by the deed of trust and shall be payable to the department upon demand.
(h) Any rule, policy, or standard of general application employed by the Department of Housing and Community Development in
implementing this section shall not be subject to the requirements of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code.
(i) Fund allocations made pursuant to this section shall not be subject to review or approval by the Loan Committee of the Department of Housing and Community Development operating pursuant to Subchapter 1 (commencing with Section 6900) of Chapter 6.5 of Title 25 of the California Code of Regulations.
(j) (1) In order to be eligible for one or more loans pursuant to this section, the borrower shall agree to all of the following conditions:
(A) All buildings shall be connected to their foundation systems as necessary to meet the seismic requirements of the 1973 Edition of the Uniform Building Code of the International
Conference of Building Officials in a manner approved by the department, which may include seismic strengthening of foundation cripple walls and affixing or bolting sill plates to the foundation.
(B) All water heaters shall be braced, anchored, or strapped to resist falling or horizontal displacement due to earthquake motion.
(C) Hazard insurance shall be obtained and maintained as required by the department.
(2) As a condition of receipt of assistance under this section, owners of rental dwellings shall agree, in writing, to all of the restrictions set forth in this subdivision.
(3) The loan shall include an amount sufficient to meet the requirements of subparagraphs (A) and (B) of paragraph (1).
Initial rents for rental housing rehabilitated under this section shall not exceed the rent charged immediately prior to the natural disaster. The department may allow for adjustments to the predisaster rents due to cost-of-living increases or increases necessary for debt service.
( l) The department shall adopt regulations establishing terms and conditions upon which repair loans may be made. These regulations shall be made available to the public by the department. The department may set interest rates for individual loans for each disaster at a rate that shall not exceed the rate for veterans’ home loans established pursuant to Section 987.87 of the Military and Veterans Code on the date the Governor declares a state of emergency for that disaster, plus up to one-half percent for administrative costs not included in the interest rate. The Department of Housing and Community Development shall prepare an annual
audit of administrative costs for the Department of Finance. All loans for each disaster shall bear the same interest rate. The department may also require periodic payments of interest, or principal and interest, or provide incentives for earlier repayment of principal and interest on owner-occupied dwellings. Incentives may include reduction of interest rates to a minimum of 3 percent for repayment that occurs within three years of the closing of the loan.
(m) Prior to full loan approval, the department may make loans not exceeding five thousand dollars ($5,000) per loan to pay for the costs of predevelopment activity which must be undertaken prior to making eligible repairs if, in the opinion of the department, the borrower is unable to pay for these costs in advance of full loan approval. These loans shall bear interest at the rate of 6 percent simple interest per annum and shall be evidenced by a promissory note secured by a deed of
trust. At the time of full loan approval, the predevelopment loan shall be canceled, and the principal amount of the loan and all accrued interest shall be included in the amount of the full loan and shall be subject to the same interest rate and terms and conditions as the full loan. For purposes of computing the maximum loan amount, the amount of any predevelopment loan shall be included.