Foreclosure Intervention Housing Preservation Program (FIHPP) Fact Sheet
On July 19, Governor Newsom signed AB 140, which implements the housing items of the 2021 CA budget. AB 140 creates the Foreclosure Intervention Housing Preservation Program (FIHPP) with $500mil in funding over 5 years.
The fact sheet below is based on the bill text available at https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220AB140
What is the Foreclosure Intervention Housing Preservation Program?
- FIHPP will provide $500mil in loans and grants to nonprofits purchasing and rehabilitating buildings at foreclosure auction, in the foreclosure process, or at risk of foreclosure
- The program will run through June 30, 2026
What buildings are eligible?
- Residential buildings between 1 and 25 units are eligible for acquisition and rehabilitation through the FIHPP
- For a building to be eligible, it’s owner needs to be in foreclosure with a recorded notice of default or at risk of foreclosure, defined as a building with one or more of these features:
- There is a mortgage delinquency of at least 90 days.
- There is a delinquency on two or more property tax payments.
- The owner of the property is a debtor in a bankruptcy proceeding.
- There is tenant-initiated litigation against the owner of the property on the basis of lack of habitability.
- A local government body responsible for enforcing building codes has deemed the property partially or fully uninhabitable.
- Other indicators that HCD may specify
What organizations can use these funds?
- While there are detailed specifications of what entities may receive and use the funds, the broadest category is nonprofits whose “primary activity is the development and preservation of affordable housing.”
- LLC subsidiaries of Community Land Trusts are also eligible
- Tenants, including resident-controlled corporations may be beneficiaries of the funds but must be in a contractual relationship with another non-profit which would enforce affordability restrictions.
- Any organization using these funds will need to ensure the affordability of rents and resale of the building for 55 years
- Units must be affordable to persons and families of extremely low, very low, low, or moderate income
- Units occupied by families above income limits at the time of acquisition will not be displaced; rather their unit will be made affordable upon vacancy
Who is involved in the administration of the program?
- CA Dept. of Housing and Community Development is establishing guidance for the program covering application procedures and loan and grant terms, among other issues.
- FIHPP funds will be disbursed by one or more third party nonprofit lender, such as a Community Development Financing Institution, selected by HCD
- HCD may contract with third party entities for program development support and technical assistance provision
What other things should we know about implementation?
- HCD is required to consider geographic equity in the allocation of loans and grants
- Program funds that revolve back after use will remain within the program
- Funds not disbursed by December 31, 2025 will be returned to HCD for use on other programs
- HCD must report on the program to the legislature by May 15, 2023