(The central square) — The California Senate Budget Committee has introduced a bill that would allow undocumented immigrants to take advantage of the federal home loan program with no down payment and no installment payments. Lawmakers believe this expansion would create “significant cost pressures.”
The social and economic benefits of homeownership should be available to everyone. Therefore, the California Dream for All program should be available to all,” wrote the bill’s author, Rep. Joaquin Arambula, Democrat of Fresno. “When undocumented people are excluded from such programs, they miss out on an important opportunity to ensure financial security and personal stability for themselves and their families.”
AB 1840, which has already passed the Assembly and is now up for a vote in the Senate, would prevent the state’s California Dream for All Shared Appreciation Loans program from rejecting individuals based on their immigration status. This program allows applicants to receive “loans” of up to 20% of the home’s purchase price – or about a typical down payment – without requiring a down payment or installment payments on this government loan.
The government “loan” can potentially be repaid to the state if the home is refinanced, sold or transferred, with the borrower paying back the original loan amount plus 20% of the property’s appreciation. It’s not clear what happens if a family decides to hold on to a home, as there are no provisions for how long a property can be held, meaning certain types of trusts could potentially allow the loan to go unpaid.
The House Budget Committee’s analysis said the expansion would create “unknown significant cost pressures, potentially amounting to millions annually, to provide additional funding for the Home Purchase Assistance Program to serve the larger eligible population.”
This year, 18,000 people applied for the $255 million “loan” program through a lottery, with 1,700 lucky winners receiving up to $150,000 each for down payment and closing costs.
The home down payment assistance program for less-eligible individuals, created by President George W. Bush, is widely blamed for fueling the housing bubble—by increasing home prices and declining borrower quality—that led to the global financial crisis of 2007–08.
The average home in California costs nearly $1 million and is only affordable for households with an income of over $200,000, more than three times the median household income.
