Proposed California Law Restricts Homeownership, National Diversity Coalition Says

Proposed Law Would Effectively Convert Foreclosed Homes Across the State Into 'Rentals'

The Senate Appropriations Committee will vote on Aug. 11 whether to approve AB 1837 (author Mia Bonta, co-author Nancy Skinner), a law that advocates say has the potential to convert almost all foreclosed residential homes in California into rental units. According to ATTOM data, there were 12,800 foreclosure starts across the state of California in the first half of 2022, up 219% from last year[1].

"This is likely an unintended consequence that the bill authors didn't see," says Andre Chapple, Board Member of the National Diversity Coalition and Chief Executive of the African American Empowerment Coalition. "Instead of elevating people out of poverty, the new bill traps them in it." 


AB 1837 revises the "Homes for Homeowners, Not Corporations" program (SB 1079), which became effective in 2021. The current law allows prospective homeowners and mission-oriented organizations a 'last look' to buy homes that go to foreclosure auction, which are usually purchased by corporations. The intention of the program is to recirculate homes to owner-occupants and first-time homebuyers.

But advocates say that the new bill does the opposite of promoting home ownership because it restricts the homes as 'affordable housing' for at least 30 years. New homeowners of these properties would still need to shell out down payments, take out mortgage loans and pay for all home repairs. But when they try to sell, owners would need to sell the home for roughly the same price that they bought it. Sellers could even end up "under water" (owing money at closing) to keep the property 'affordable' for the next homeowner if the economy goes into recession and average wages decrease. The average American moves 12 times in their lifetime, or roughly once every seven years[2].

According to Jack Miranda, Board Member of the National Diversity Coalition and Executive Director of the Jesse Miranda Center for Hispanic Leadership, "They may be called homeowners, but the law basically turns these properties into rentals without a landlord to replace the furnace when it breaks." He added, "We appreciate the intention to keep homes affordable, but we can't put the entire burden of fixing California's affordability crisis on the backs of our minority and low-income communities."

The new law has a loophole - prospective homeowners who can buy a home with cash are not subject to the affordability restriction.  Foreclosure sales require buyers to pay with all cash. According to the Federal Reserve Board's latest Study of Consumer Finances, the average American only has $5,300 of savings in their bank accounts[3], while the average California home cost $865,000 in June 2022, according to the California Association of Realtors[4].

About National Diversity Coalition

National Diversity Coalition is a 501c3 nonprofit advocacy organization that represents almost 3 million diverse and minority constituents across the state of California from San Francisco Bay area, Central Valley, Greater Los Angeles, and San Diego. 


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Prachi Kohli






Source: National Diversity Coalition