California Finance Local News

No Downpayment Loan Bill Proposed for Illegal Immigrants in California

No Downpayment Loan Bill Proposed for Illegal Immigrants in California

State legislators in California have considered extending the zero-down, no-payment house “loan” program to undocumented immigrants. California has high housing prices because the state does not build enough homes to meet demand, which has led to a shortage of units per person. The state ranks 49th in this category.

State Senator Briah Dahle (R-Bieber) criticized Assembly Bill 1840, calling it an insult to the left-behind and priced-out Californians. Prioritize people who are lawfully present in our state; I’m all for assisting first-time homebuyers.

Illegal immigrants are rerouting their routes away from the Texas border and toward Arizona and California. This has sparked worries that the state’s already expensive healthcare and unemployment benefits programs for illegal immigrants could attract even more of these individuals.

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Costing an estimated $3.4 billion, the state plans to expand MediCal, the taxpayer-funded healthcare program, to all illegal immigrants in 2024. There will be 700,000 newly qualified illegal immigrants who will enroll. The expense will increase in proportion to the number of participants and the number of people enrolled in the program, which offers gender reassignment interventions.

“The social and economic benefits of homeownership should be available to everyone,” stated Assemblyman Joaquin Arambula (D-Fresno), who authored the bill, in an interview with the Los Angeles Times.

The program in question, which was run by the California Housing Finance Agency, was launched in 2023 with $300 million allocated for 2,300 applicants. However, in just 11 days, the funds were depleted. Reduced income limits to 120% of the county median household income and a new requirement that applicants be first-generation homebuyers are two changes for this year’s program.

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Participants in the scheme are eligible to receive “loans” equal to up to 20% of the home’s purchase price, which can cover the down payment, without having to put down any money and without having to make any payments on the “loan.”

Repayment of the state’s “loan” is possible upon refinancing, sale, or transfer of the property; the borrower is required to repay the initial loan sum plus 20% of the property’s appreciation in value. The state won’t lose money outright unless a property loses more than 80% of its purchase price.

However, there are no rules about how long a property can be held for, so it’s unclear if the state can ever get its money back if a family decides to keep the home. This includes what happens with certain types of trusts, like right-of-survivorship trusts.

The high cost of housing in California is causing 45% of the population to contemplate leaving the state. The typical home in the state requires roughly triple the median household income to afford.

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