CalHFA board authorizes $100M package for Disaster Rebuilding Assistance to expand construction lending

The California Housing Finance Agency board on July 23 authorized funds and programmatic guidelines for a Disaster Rebuilding Assistance Program created under trailer bill AB 179, approving the allocation of $56 million in state general funds and $44 million from National Mortgage Settlement (NMS) funds to support two main tracks: a construction loan loss guarantee and a construction loan rate buy‑down reimbursement.

Ellen Martin, CalHFA Director of Homeownership, told the board the loan loss guarantee program is designed to reduce lender risk and expand access to construction financing for homeowners who lost or had homes damaged in qualifying disasters (disasters with state-of-emergency, proclamation or major disaster declarations between 01/01/2023 and 01/08/2025). Martin said the guarantee is capitalized by the appropriation and is expected to enable guarantees roughly ten times the capitalization (staff cited a hypothetical $50M capitalization supporting up to $500M of guarantees) and will reimburse lenders for up to 75% of an eligible net loss capped at $250,000 per loan for a 36‑month guarantee period.

Martin described the rate buy‑down as a lender reimbursement that lowers borrower costs during construction and at conversion; reimbursement maximums are tiered (up to $100,000 for lower‑income borrowers subject to limits of 5% of the construction loan and 5% of the permanent loan; up to $50,000 for other borrowers subject to 3% limits). Program eligibility aligns with existing CalAssist disaster definitions and will allow a broad set of construction lending products (first and second lien construction loans, construction‑to‑perm, HELOCs, closed single and two‑close transactions). Enrolled lenders must meet licensing and experience requirements, accept managed construction escrow disbursements, and comply with consumer protections, contractor qualification and underwriting standards.

Board members asked about exposure under the 10:1 leverage estimate, administrative cost recovery, and prioritization to reach lower‑income survivors in high‑AMI areas. Martin said CalHFA will publish program term sheets and implementation guidelines at an early‑August announcement and target lender onboarding so enrollments can open in early September. The board approved Resolution 26‑21 by roll call and directed staff to proceed with publication of guidelines and rapid implementation.