California Residential Mortgage Insurance Act.

Senator Cortese's California Residential Mortgage Insurance Act would establish a state-backed insurance program for multifamily housing construction loans, aiming to address severe shortfalls in affordable housing development. The program would operate through the California Housing Finance Agency, providing loan insurance and credit enhancements to stimulate private investment in multifamily housing projects.

The legislation creates the California Residential Mortgage Insurance Fund in the State Treasury to support the program's operations. Lenders would pay one-time insurance premiums capped at 2% of the total loan value, with these premiums funding the insurance pool. The agency would maintain authority to set varying premium rates based on risk assessments and manage the fund's investments.

Under the program's default provisions, the agency could acquire properties through foreclosure, issue state-guaranteed debentures to lenders, or directly cure defaults by making payments from the insurance fund. The bill includes detailed procedures for property management post-default and establishes mechanisms for terminating insurance coverage under specified conditions.

The measure would take effect in January 2027, contingent upon voter approval of a related constitutional amendment. Annual reporting requirements include program effectiveness evaluations and independent audits, with results distributed to legislative committees and made available for public review.