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California officials said Friday they were being forced to pause a new mortgage relief program for first-time home buyers less than two weeks after it began, because of overwhelming demand.
The “California Dream for All Shared Appreciation Loan” program, aimed at lower- and middle-income borrowers, was designed to provide loans amounting to 20 percent of a home’s purchase price — substantially more generous than existing state and federal programs.
Officials believed the $300 million allotted for the program could keep it going for months, according to loan officers who attended agency presentations.
Instead, it became evident within days that the money would run out almost immediately.
“Demand for the program was unprecedented, and we’ve put a pause on our lending as of this morning,” California Housing Finance Agency spokesman Eric Johnson said via email Friday.
On Thursday, the agency sent a bulletin to lenders telling them that all funds could be committed by April 10.
“All loans must be rate locked no later than 3 p.m. PST on April 12, 2023, or when the available funds become fully committed, whichever is sooner,” the bulletin said. The program began offering loans on March 27.
The agency said that the program was helping 2,300 Californians buy their first homes.
“CalHFA is extremely proud of this successful program and pleased to make such a profound difference in the lives of so many Californians who have achieved the dream of homeownership,” the bulletin said.
Affordable housing is notoriously hard to come by in California, and the new program gave buyers a substantial boost in purchasing power. Also, housing prices have finally begun to drop, drawing buyers into the market despite increasing interest rates.
Home sales rise as prices decline
Scott Evans, executive vice president of Cross Country Mortgage, said that he thought the program was great, but that state officials underestimated its appeal.
“It got people back, re-engaged in buying a house and created a lot of activity,” said Evans, who estimated that his team had preapproved probably 100 people.
Now his company has to go back to those applicants and redo their approvals on different terms, he said.
Source link: https://www.washingtonpost.com/business/2023/04/07/mortages-california-downpayments/