Prop 37 home loan glossary

The measure

CalHFA

The California Housing Finance Agency, a state entity that runs programs to help low- and moderate-income Californians afford housing. It will run Prop 37's program.

Initiative statute

A law placed on the ballot by voter signatures. Prop 37 is a statute, not a constitutional amendment.

Legislative Analyst's Office (LAO)

California's nonpartisan fiscal adviser. It analyzes every ballot measure.

Revenue bond

A bond repaid from specific payments, not the state General Fund. Prop 37's bonds are repaid from borrowers' loan payments.

Statement of the vote

The Secretary of State's official report of election results. An initiative takes effect on the fifth day after it's filed.

Community Reinvestment Act

A federal law that encourages banks to meet local credit needs. The measure tells CalHFA to try to make the program meet its criteria, which could interest banks.

The loan

Middle-class homeownership loan

The name of the Prop 37 loan in the measure.

Second mortgage

A loan secured by your home that ranks behind the first mortgage. The measure calls it a "secondary mortgage."

Down payment

The cash you pay up front. Prop 37 requires at least 3 percent of the price.

Private mortgage insurance (PMI)

Insurance that protects a lender, often required when you put down less than 20 percent. The CFPB explains it here.

Origination fee

A lender's charge for making a loan. Prop 37 caps it at no more than 0.5 percent or $290, whichever is greater.

Hardship deferral

A temporary pause on monthly interest payments, available on request under criteria CalHFA will set.

Cash-flow underwriting

Judging a borrower with records such as bank statements, paystubs and rent history. Lenders must allow it under Prop 37 if credit scores don't qualify.

Limits

Area median income (AMI)

The middle income for an area. Half of households earn more and half earn less. Prop 37's ceiling is 200 percent of AMI, adjusted for family size.

Conforming loan limit

The largest mortgage Fannie Mae and Freddie Mac can buy, set by county each year by FHFA. Prop 37's price cap is 125 percent of it.

FHFA

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac.

The home

Qualified new home

A new or newly converted home, first sold to the borrower, under the county price cap.

Qualified builder option

A voluntary path for developers that adds labor standards in exchange for different construction defect rules.

Right to repair

California's process that requires homeowners to give builders notice of a defect claim before suing. Prop 37 changes it for homes under the builder option.

Mello-Roos

A special tax that pays for roads, schools and other infrastructure in many newer California communities.