Feeding Starving Crocodiles!
I once walked up to a cage full of starving crocodiles (there were at least 20 of them), and I tossed in a hamburger patty.
Needless to say, there was a massive feeding frenzy, and two of the crocodiles ended up getting eaten by the others.
I then explained to the crocodiles that I cared about them a lot, that my hamburger patty was proof, and that they should vote for me to be their head crocodile keeper.
Sadly, they weren’t impressed.
OK… that probably did not happen, but it is a great metaphor for what CA politicians are doing when re-introducing CA’s Dream For All Program.
NOTE: Non-California readers might still want to read this just so they can laugh at California (again), or they can skip to the hot housing data below.
CA’s Dream for All Shared Appreciation Loan
Briefly, CA’s Dream For All Program was a 100% financing/down payment assistance/equity share program that was released in March.
This blog explains it in more detail, but here are the bullets:
- The CalHFA Dream For All provides a loan for 20% of the home purchase price, and there are no payments required on the 20% loan!
- Borrowers will be required to pay back the original loan amount plus 15-20% (depending on income level) of any appreciation in the value of the home. This repayment is not due until the sale of the home, end of the first loan term, or refinance*.
- *CalHFA allows for a one-time “limited cash-out” refinance without needing to pay back the 20% loan at that time.
- CalHFA also provides the 80% 1st mortgage through JVM – at very competitive interest rates.
The program was simply awesome, as the private sector will never offer anything even close to this enticing because no private lender could afford the risk.
Hence, the program was almost too good to be true in that it ran out of its $300 million allotment in only 11 days!
As a result, CA’s legislature recently authorized additional funds for a revised CalHFA Dream For All Program.
BUT, AND THIS IS WHY I COMPARE THE LEGISLATURE’S ACTIONS TO FEEDING A HAMBURGER TO HUNGRY CROCODILES: THEY ONLY AUTHORIZED $200 MILLION THIS TIME.
So, given the awareness of the program now, given the even more limited amount of funds, and given the exceptional demand for housing – I expect the funds to only last about 11 minutes this time.
The funds and the timeline for the program will not be released until this fall, but we are advising interested homebuyers to remain vigilant and to stay in touch with us now in order to ensure they are in line with a ratified contract before the funds run out.
We acted extremely quickly last time and were very fortunate to have funded more of these loans than almost every other lender.
And – we’d like to be in that position again – needless to say.
We will keep you posted!
Housing Market on Fire – Again!
Here is a bit of data that MBS Highway shared today:
- Average Offers Per Sale: Up to 3.5 in June from 3.3 in May;
- % of Properties Selling Over List Price: Up to 33% in June, from 31% in May;
- Median Days On Market: 18 (near record low);
- % of properties selling in under 30 days: Up to 76% from 74%.
This is just another reminder that the “bubble boys” were wrong… very wrong.
