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Why California Paused Its Mortgage Aid Program in Less Than Two Weeks

| How Africa News


California officials said Friday that due to overwhelming demand, they were forced to halt a new mortgage relief program for first-time home buyers less than two weeks after it launched.

The “California Dream for All Shared Appreciation Loan” program, aimed at lower- and middle-income borrowers, was designed to provide loans of up to 20% of the purchase price of a home — significantly more generous than existing state and federal programs.

According to loan officers who attended agency presentations, officials believed the $300 million allotted for the program could keep it running for months.

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.

The agency sent a bulletin to lenders on Thursday informing them that all funds could be committed by April 10.

“All loans must be rate locked by 3 p.m. PST on April 12, 2023, or when the available funds become fully committed, whichever is earlier,” according to the bulletin. On March 27, the program began making loans available.

According to the agency, the program is assisting 2,300 Californians in purchasing their first homes.

The bulletin stated, “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 realized their dream of homeownership.”

Affordable housing is notoriously difficult to find in California, and the new program provided buyers with a significant increase in purchasing power. In addition, despite rising interest rates, housing prices have finally begun to fall, attracting buyers into the market.

Cross Country Mortgage executive vice president Scott Evans said the program was great, but 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.

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