(The Center Square) – California Gov. Gavin Newsom vetoed a bill that would have allowed illegal immigrants to use the state’s taxpayer funded home down payment equity exchange program that would have provided up to $150,000 to qualifying illegal immigrant homebuyers. Newsom’s veto cited the program’s “finite funding,” which received no money this year and ran out of funding in 11 days last year, and the state’s budget situation, which required the cutting, shifting, and deferral of spending by $47 billion this year.
“Governor Newsom listened to our calls and rightfully vetoed the bill to give illegal immigrants free home loans,” said Senate Minority Leader Brian W. Jones, R-San Diego, in a statement celebrating the veto.
California’s Dream for All Shared Appreciation Loans program allows applicants to secure “loans” of up to $150,000 or 20% of the home’s purchase price — or, about what a typical down payment is — with zero down payment on this state “loan,” and no payments. In exchange, the state receives the original loan amount plus 20% of the appreciated gain when the home is refinanced, sold, or transferred.
Last year, 1,700 applicants were selected by lottery to access the program’s $255 million in funds. It’s not clear what happens if a family decides to hold on to a home as there are no provisions on how long a property can be held for, which means certain kinds of trusts could potentially allow the loan to not be paid back. Democrats argued those applying for the funds have to work to qualify for mortgages and are thus paying taxes, while Republicans argued the program, which ran out of funds in 11 days, is already overcrowded.
With the state facing an estimated 4.5 million home shortage and the cost of housing cited as the top factor for residents considering leaving the state, the government has been setting out to increase housing supply largely by zoning and subsidizing price-controlled housing. However, this need to reduce housing costs by expanding the supply of housing is at ends with the state’s financial interest produced by this program, which incentivize the state to keep housing prices high and allow them to grow further to ensure the loan-for-equity program does not lose money and force the government to cut spending.
