I blogged last summer about the return of CA’s Dream For All Program: CA’s Dream For All Program (100% Financing) Returns – Worse Than Ever Too!
Briefly, this is probably the most popular down payment assistance program we have ever seen, as the program offers a full 20% down payment in exchange for 15% to 20% of future appreciation.
The program was so popular that its entire $300 million allotment was gone in 11 days. Many of us hoped that the program would return this fall – so agents and lenders everywhere have been on edge getting ready to make sure their clients are ready and able to take advantage of the program before funds run out.
Well – CalHFA saw what happened during round one and they are well aware of the potential feeding frenzy that would likely take place if the rules were not changed – so they are very astutely changing the rules.
NOTE: These rules are not finalized and are subject to change – which is why CalHFA is asking lenders not to discuss the program in detail; I am doing so now though simply because there is so much interest in the program.
Potential Changes to CalHFA’s Dream For All Program
I like these changes because we saw some rather well-off borrowers take advantage of the Dream For All Program during the last go-around. It was not because they needed the assistance; it was solely because the program was so advantageous for anyone.
So CalHFA is trying to make sure the program is only used to benefit people who truly need assistance. Below are some of the potential changes.
- WHEN: Funds will be available in spring of 2024 – not this fall like we were previously told.
- HOW MUCH: $255 million will be available; $45 million LESS than in round #1. So, even with the new rules, funds will dry up very quickly.
- LOWER INCOME: Income limits will be 120% of Area Median Income. This is almost $100,000 less than what was allowed in round one in high-cost counties.
- LOTTERY SYSTEM: Instead of a first come/first serve system like last time, there will be a lottery system – through which potential participants will need to register and hope to be selected randomly.
- FIRST GENERATION HOMEBUYER: At least one buyer needs to have NEVER owned a home and that person’s parents need to have not owned a home as well for at least 10 years.
While this removes much of the luster and excitement surrounding this program, it also makes it fairer and more applicable to the people who most need the program.
NAR Lawsuit via Jason Hartman
Tech Platforms Benefit Hugely; Trial Lawyers = Real Cartel; RE/Max Very Smart; Fannie will allow buyer commissions to be financed; Uber and Lyft With Lockbox Keys
Jason Hartman is an extremely successful real estate investor and YouTube commentator, and he weighed in on the NAR collusion/cartel lawsuit last week with some very interesting comments.
Here is his entire 42-minute video Devastating NAR Real Estate Class Action Lawsuit! and I recommend it in full (at 2x speed of course). But, here are a few takeaways.
- RE/MAX Was Smart to Settle: Everyone flamed RE/MAX for settling for $56 million before going to trial (because “they gave up too easily”). But, boy do they look smart now in light of the recent damage award of $1.8 billion (which is actually close to $5 billion when you account for the fact that this is a RICO case with “treble damages.”
- Money Not In Hands of Brokers/Industry Can’t Begin to Afford Damages: The plaintiffs’ attorneys are talking about a potential $100 billion in damages – which just dwarfs the value of all the real estate firms combined. So, the awards will have to come down – to avoid a sea of bankruptcies. Hartman reminds viewers too that the bulk of commissions went to the agents themselves and NOT to the brokers – so the money the lawyers are seeking is not only not in the hands of the brokers, it was never in their hands.
- Tech Platforms Benefit: In this recent blog – NAR and KW Get Crushed In Lawsuit; Who Are the Real Winners and Losers? – I suggested that some of the tech platforms (Redfin, Opendoor, Zillow, etc.) may be pushing this suit behind the scenes because they will ultimately benefit. Hartman noted that that will be the case, and some of the tech platform stocks performed well last week in response to the lawsuit (after falling at first).
- Fannie Mae May Allow Commission Financing: Hartman thinks Fannie and Freddie may change the rules to allow for the financing of buyer’s agent commissions, much like how FHA allows the financing of Up-Front Mortgage Insurance Premiums (effectively allowing higher loan-to-value ratios).
- Lawyers Are Actual Cartels/What About Tech?/No Pricing Fixing Within NAR! Hartman points out the irony of lawyers accusing NAR of price fixing/cartel pricing, when it is Bar associations that do the price fixing by pushing lawyers to always ask for 33% of litigation awards. Hartman points out too that he never heard any comments about price fixing or forcing 6% commissions during all of his years as a NAR member. Hartman then wonders why lawyers don’t go after Google, Facebook, and other tech monopolies that have way more pricing power than anyone in NAR.
- Why Commissions Are So High – U.S. MLS & House Shopping System Way Better: Hartman explains that commissions are in fact too high in the U.S. because there are too many agents and because they have to spend so much on marketing (that they have to recoup). But – Hartman also points out that our very expensive MLS system provides the best shopping experience for buyers in the world, as it is very difficult to see all of the properties available in all other countries. So, when the WSJ and the attorneys remind us that commissions are much lower in other countries, they also need to remember that the home shopping experience is also vastly inferior.
- Uber and Lyft To Take Over? Hartman suggests that vetted Uber and Lyft drivers might be given lockbox keys so they can show homes. 😊 And – that would be a true game-changer.