Home › For agents and lenders
For professionalsProp 37 for agents, lenders and builders
Prop 37 could reshape new-home sales in California, and buyers are already asking about it. Here's what the measure says that touches your work, what isn't settled, and how to register interest in working with this guide.
Real estate agents
The measure gives agents a defined role: borrowers must retain a licensed California real estate agent or broker. How that works on builder sales, and how commissions fit, will depend on CalHFA's rules and each builder's practice.
The California Association of Realtors worked with the measure's backers, according to CalMatters. Agents who know the program early will be well placed, since it only applies to new homes and first purchasers. Clients searching resale listings won't be able to use it, so manage expectations now.
Lenders and loan officers
CalHFA may contract with financial institutions to originate or service loans. A few details to watch from the measure's text:
- Origination fee of no more than 0.5 percent or $290, whichever is greater, with no other loan fees unless the agency approves them
- Early payment penalties are prohibited
- Lenders must allow voluntary financial records for cash-flow underwriting if credit scores don't qualify
- Underwriting aligned with Fannie Mae, Freddie Mac or FHA standards
- CalHFA must evaluate and, if possible, design the program to meet Community Reinvestment Act criteria
Combined loan-to-value could reach 97 percent, so first-mortgage investor overlays will matter. Those rules aren't out yet.
Builders
All developers can build eligible homes, says the Legislative Analyst. The qualified builder option is voluntary. Builders certify to CalHFA, which must issue a participation letter within 30 days, and they take on labor standards and liability for certain violations by contractors and subcontractors. In exchange, modified right-to-repair procedures apply. Talk to your counsel about what that means for your projects.
Pricing matters: the home must fall under 125 percent of the county's conforming loan limit. See the county limits.
What to tell buyers right now
- The loan isn't available yet, and no start date has been announced
- It's a loan, and it'll very likely add a monthly payment
- The rate and term aren't set, so don't quote them
- It works only on new homes, for the first purchaser
- They need 3 percent that isn't borrowed or a grant
Keep advertising accurate. Implying that you offer Prop 37 loans before CalHFA launches them could mislead consumers. Check with your compliance team first.
Register interest
This guide reaches Californians researching Prop 37. If you're a licensed professional who'd like to talk about working together once the program opens, send your details. Registering doesn't create a partnership, and we won't send readers to anyone until a licensed partner and a compliance review are in place.