California’s New Home Loan Policy Sparks Controversy

At a Glance

The California Senate Appropriations Committee advanced a bill to allow undocumented immigrants to use the state’s zero down, no payment home loan program
The program offers loans of up to 20% of a home’s purchase price with zero down payment and no payments
The bill, AB 1840, aims to include undocumented individuals in the California Dream for All Shared Appreciation Loans program
The expansion could create significant cost pressures, potentially in the millions annually

Legislative Approval and Program Details

The California Senate Appropriations Committee recently approved the measure with a 5-2 party-line vote, allowing undocumented immigrants to access the state’s zero down, no payment home loan program. The bill, AB 1840, authored by Assemblymember Joaquin Arambula, now moves to the full Senate and requires Governor Gavin Newsom’s signature to become law.

This bill aims to include undocumented individuals in the California Dream for All Shared Appreciation Loans program, which offers loans of up to 20% of a home’s purchase price without requiring a down payment or immediate repayment.

Ease of Access for Undocumented Immigrants

Undocumented immigrants, who otherwise face considerable barriers to homeownership, will now be eligible to use Individual Tax Identification Numbers (ITINs) instead of Social Security numbers to secure these loans. However, opponents argue this might encourage illegal immigration and stress the state’s financial resources.

Financial Implications and Stability Concerns

Undocumented borrowers can repay the loan when the home is refinanced, sold, or transferred, including a repayment of the original loan amount plus 20% of any increase in property value. However, the initiative overlooks potential evasion, as there are no provisions on how long a property can be held, allowing certain trusts to avoid repayment.

“The expansion could create unknown significant cost pressures, potentially in the millions annually,” warned the Appropriations Committee analysis. Funding the Home Purchase Assistance Program to accommodate the expanded eligibility population might place additional financial strain on the state.

Criticism and Historical Context

The implementation of this program follows concerns similar to those raised during President George W. Bush’s home down payment assistance initiative, cited as a contributing factor in the 2007-2008 global financial crisis. Critics argue the policy could exacerbate housing prices and decrease loan recipient quality.

California’s mean home prices nearing $1 million require an annual household income of over $200,000—far above the state’s median income, causing affordability challenges for many residents. Republican state Sen. Brian Dahle criticized the bill for potentially favoring undocumented residents over tax-paying citizens.

High Demand and Lottery System

With 18,000 individuals applying this year for the $255 million loan program and 1,700 recipients receiving up to $150,000 each for down payment and closing costs, the demand has been robust. The “Dream For All” program initially saw $300 million in loans claimed in less than two weeks, prompting a shift to a lottery system from a first-come-first-serve model.

CALIFORNIA CITIZENS SHOULD SUE STATE FOR USING TAX PAYERS’ DOLLARS TO FUND ILLEGALS’ HOMES.

Cali proposes bill for illegal immigrants to buy homes with $0 down & 0% interest. Social Audio influencer, @FreddyRoosevelt says, “F*ck these people, why hasn’t Cali done this for my… pic.twitter.com/0KSAkV8ksT

— Grant Cardone (@GrantCardone) August 21, 2024