Cal. Code Regs. tit. 4 § 10091.8

Current through Register 2024 Notice Reg. No. 49, December 6, 2024

Section 10091.8 - Establishment and Funding of Loss Reserve Accounts

(a) Upon the Authority's acceptance of an application from an EFI or EFL to be a PFI, PFL, or Successor Servicer, the Authority shall instruct the Trustee to establish a Loss Reserve Account for the PFI, PFL, or Successor Servicer. At the PFI's, PFL's, or Successor Servicer's request, the Authority will establish up to three Loss Reserve Accounts for the PFI, PFL, or Successor Servicer. The Loss Reserve Account(s) will be held by the Trustee and will be used for the following:

(1) Receive and hold Loss Reserve Contributions deposited by the Authority for the benefit of a PFI, PFL, or Successor Servicer.

(2) Pay claims in accordance with Section 10091.10.

(b) Upon the enrollment of an Eligible Loan all of the following shall occur:

(1) The Authority will determine the Loss Reserve Contribution according to the following:

(A) For Enrolled Loans to Credit-Challenged Borrowers the Loss Reserve Contribution shall be twenty percent (20%) of the original Claim-Eligible Principal Amount.

(B) For all other Enrolled Loans, the Loss Reserve Contribution shall be five percent (5%) of the original Claim-Eligible Principal Amount.

(C) The contribution shall never be more than twenty percent (20%).

(2) The Authority will instruct the Trustee to transfer the Loss Reserve Contribution from the appropriate Program Holding Account.

(3) The Authority will notify the PFI or PFL of the enrollment, the CHEEF Loan ID corresponding to the Eligible Loan and the Loss Reserve Contribution transferred.

(c) Without regard to the term and maturity date of the Eligible Loan, the term of the enrollment in the Program shall not exceed fifteen (15) years, unless the project includes the "Solar Photovoltaic + Battery Storage" EEM, as described in Section 10091.11(j), in which case the term shall not exceed twenty (20) years.

(d) If upon review of the documentation provided by the PFI or PFL pursuant to this section that it appears through inadvertence the loan does not comply with Program requirements concerning Eligible Improvements as set forth in Section 10091.5(f), the Authority in its sole discretion may reduce the Claim-Eligible Principal Amount to bring the Enrolled Loan into compliance with the requirements of Section 10091.5(f).

(e) Annually based on the fiscal year ending June 30, the Authority shall instruct the Trustee to rebalance a PFI's or PFL's Loss Reserve Account(s), if necessary, and move funds from the PFI's or PFL's Loss Reserve Account(s) into the appropriate Program Holding Account(s).

(1) For Enrolled Loans that were enrolled prior to January 1, 2024, the initial rebalance amount will be the sum of the original Loss Reserve Contributions associated with Enrolled Loans that were paid off in full during the fiscal year.

(A) If the PFI or PFL did not make any claims as provided under Section 10091.10 during the fiscal year, the initial rebalance amount will not be changed and the funds will be transferred from the PFI's or PFL's Loss Reserve Account to the appropriate Program Holding Account(s).

(B) If the PFI or PFL made one or more claims as provided under Section 10091.10 during the fiscal year and the total claim amount is less than the initial rebalance amount, the final rebalance amount will equal the initial rebalance amount less the claim amount.

(C) If the PFI or PFL made one or more claims as provided under Section 10091.10 during the fiscal year and the total claim amount is more than the initial rebalance amount, there will be no rebalance.

(2) For Enrolled Loans enrolled subsequent to January 1, 2024, the Authority shall recalculate the Loss Reserve Contribution amount of each loan based on the methodology they were originally enrolled under, but using each loan's current outstanding Claim-Eligible Principal Amount instead of the original Claim-Eligible Principal Amount. Prior to rebalancing, the PFI, PFL, or Successor Servicer may submit to the Authority a Borrower's current credit score, retrieved within the previous six months prior to rebalancing, and the Authority shall use the updated credit score when recalculating the Loss Reserve Contribution amount.

(A) If the sum of each loan's current Loss Reserve Contribution amount, less the amount of claims made by the PFI, PFL or Successor Servicer throughout the fiscal year, is lower than the sum of the recalculated Loss Reserve Contribution amount, there will be no rebalance.

(B) If the sum of each loan's current Loss Reserve Contribution amount, less the amount of claims made by the PFI, PFL, or Successor Servicer throughout the fiscal year, is greater than the sum of each loan's recalculated Loss Reserve Contribution amount, the rebalance amount will be the difference between the two sums. The funds will be transferred from the PFI's or PFL's Loss Reserve Account to the appropriate Program Holding Account(s).

Cal. Code Regs. Tit. 4, § 10091.8

Note: Authority cited: Section 26009, Public Resources Code. Reference: Sections 26003(a)(3)(A), 26003(a)(6), 26003(a)(8)(A) and 26040, Public Resources Code.

1. New section filed 3-9-2015 as an emergency; operative 3-9-2015 (Register 2015, No. 11). A Certificate of Compliance must be transmitted to OAL by 9-8-2015 or emergency language will be repealed by operation of law on the following day.
2. New section refiled 9-8-2015 as a deemed emergency pursuant to Public Resources Code section 26009, including amendment of subsections (b) and (c)(3), new subsections (c)(6)-(c)(6)(A), amendment of subsection (d)(3), new subsections (d)(7)-(d)(7)(A), amendment of subsection (e)(11), new subsections (e)(15) and (e)(20)-(23), subsection renumbering, new subsection (f)(1)(F), subsection relettering and new subsections (f)(2)(G), (f)(3)(I) and (g)(2)(F); operative 9-8-2015 (Register 2015, No. 37). A Certificate of Compliance must be transmitted to OAL by 12-7-2015 or emergency language will be repealed by operation of law on the following day.
3. New section, including 9-8-2015 amendments, refiled 12-3-2015 as a deemed emergency pursuant to Public Resources Code section 26009; operative 12-7-2015 (Register 2015, No. 49). A Certificate of Compliance must be transmitted to OAL by 3-7-2016 or emergency language will be repealed by operation of law on the following day.
4. Certificate of Compliance as to 12-3-2015 order, including further amendment of section, transmitted to OAL 3-1-2016 and filed 4-13-2016; amendments operative 4-13-2016 pursuant to Government Code section 11343.4(b)(3) (Register 2016, No. 16).
5. Editorial correction removing duplicative subsection (l) (Register 2016, No. 18).
6. Amendment filed 9-5-2017 as an emergency; operative 9-5-2017 (Register 2017, No. 36). A Certificate of Compliance must be transmitted to OAL by 6-4-2018 or emergency language will be repealed by operation of law on the following day.
7. Amendment refiled 3-5-2018 as an emergency, including amendment of subsections (c), (c)(2), (c)(5), (d) and (e)(13), new subsections (e)(27)-(28), amendment of subsections (h), (h)(2)(B) and (h)(2)(D), new subsections (l)(1)(B)-(C) and subsection relettering; operative 3-5-2018 (Register 2018, No. 10). A Certificate of Compliance must be transmitted to OAL by 6/4/2018 or emergency language will be repealed by operation of law on the following day.
8. Amendment refiled 5-30-2018 as an emergency; operative 6-5-2018 (Register 2018, No. 22). A Certificate of Compliance must be transmitted to OAL by 9-4-2018 or emergency language will be repealed by operation of law on the following day.
9. Certificate of Compliance as to 5-30-2018 order, including amendment of subsection (e)(12), transmitted to OAL 8-3-2018 and filed 9-17-2018; amendments effective 9/17/2018 pursuant to Government Code section 11343.4(b)(3) (Register 2018, No. 38).
10. Amendment filed 5-24-2021 as an emergency; operative 5/24/2021 (Register 2021, No. 22). Emergency expiration extended 60 days pursuant to Executive Order N-40-20 plus an additional 60 days pursuant to Executive Order N-71-20. A Certificate of Compliance must be transmitted to OAL by 3-22-2022 or emergency language will be repealed by operation of law on the following day.
11. Change without regulatory effect amending subsection (c) filed 8-25-2021 pursuant to section 100, title 1, California Code of Regulations (Register 2021, No. 35).
12. Amendment refiled 3-17-2022 as an emergency, including further amendment of table within subsection (c); operative 3/23/2022 (Register 2022, No. 11). A Certificate of Compliance must be transmitted to OAL by 6-21-2022 or emergency language will be repealed by operation of law on the following day.
13. Refiling of 3-17-2022 order on 6-20-2022 as an emergency; operative 6/22/2022 (Register 2022, No. 25). A Certificate of Compliance must be transmitted to OAL by 9-20-2022 or emergency language will be repealed by operation of law on the following day.
14. Certificate of Compliance as to 6-20-2022 order transmitted to OAL 8-19-2022 and filed 9/29/2022 (Register 2022, No. 39).
15. Amendment of subsection (c) - table, items 9 and 41 filed 12-22-2023 as an emergency; operative 12/22/2023 (Register 2023, No. 51). A Certificate of Compliance must be transmitted to OAL by 6-19-2024 or emergency language will be repealed by operation of law on the following day.
16. Renumbering of section 10091.8 to section 10091.9 and former section 10091.7 to 10091.8, including amendment of subsections (a)(2), (c), (e)(1)(A)-(C) and (e)(2), filed 4-15-2024 as an emergency; operative 4/15/2024 (Register 2024, No. 16). A Certificate of Compliance must be transmitted to OAL by 10-14-2024 or emergency language will be repealed by operation of law on the following day.
17. Refiling of 12-22-2023 and 4-15-2025 emergencies on 6-14-2024 as an emergency; operative 6/20/2024 (Register 2024, No. 24). A Certificate of Compliance must be transmitted to OAL by 9-18-2024 or emergency language will be repealed by operation of law on the following day.
18. Certificate of Compliance as to 6-14-2024 order, including amendment of subsections (b)(1)(A), repealer of subsections (b)(1)(B)-(C), subsection relettering and amendment of newly designated subsection (b)(1)(B) and subsection (e)(2), transmitted to OAL 7-19-2024 and filed 8-30-2024; amendments effective 8/30/2024 pursuant to Government Code section 11343.4(b)(3) (Register 2024, No. 35).