Mortgage aid for undocumented immigrants passes state legislature

Assemblymember Joaquin Arambula ( D-Fresno), left, is shown in 2023.

By Karen GarciaStaff Writer

Aug. 29, 2024 3 AM PT

The California Assembly gave final appoval Wednesday to a bill that could help undocumented immigrants in California buy homes, despite opposition from Republicans who said it would encourage more Mexican immigrants to cross the border illegally.

Elon Musk went as far as posting on his social platform X that “half of Earth should move to California, given all the incentives to do so.”

Assembly Bill 1840, which now goes to Gov. Gavin Newsom’s desk, would allow undocumented immigrants to apply alongside other qualified applicants for the California Dream for All Shared Appreciation Loans program. The program offers no-interest loans of up to $150,000 to cover down payments and fees.

As the bill made its way through the state Senate and Assembly this week, lawmakers debated whether undocumented people, and specifically Mexican immigrants, should be eligible for a program that doesn’t have enough money to meet the demand. According to the California Housing Finance Agency, no new applications are being accepted for the program currently because all of its funding has been allocated.

Republican Assembly members argued Wednesday that the bill’s expansion would unfairly take away loans from U.S. citizens.

“What is not right is, you are going to overshadow many eligible people who really, really, really are having difficulty themselves,” Assemblymember Tom Lackey (R-Palmdale) said. “And they happen to be documented.... People who have followed all the rules in life are going to be displaced.”

Another argument made by Assemblymember Kate A. Sanchez (R-Rancho Santa Margarita) was that the program would encourage “more illegal, not legal, immigration into this state.”

“This isn’t rocket science. If you’re giving out free stuff, more people are going to come,” Sanchez said.

Democrats countered that the program was intended to help all eligible first-time home buyers, including immigrants “in good standing.” The measure would simply clarify that undocumented immigrants who have a state taxpayer identification number and pay taxes are eligible, they said.

That would include Cambodian, Korean, Haitian, and Nigerian immigrant populations, Assemblymember Isaac Bryan (D-Los Angeles) said. “I believe that we can focus on our immigrant populations and take care of our native born populations here in California,” Bryan said.

The bill’s lead author, Assembymember Joaquin Arambula (D-Fresno), said lawmakers needed to remind themselves that the nation and the state is made up of immigrants who “come here and make our economy better.”

“So for those who have a good credit score and who qualify for a loan, we are saying that we want you to set roots here in our great state if you qualify, only if you qualify,” Arambula said. The Assembly passed the bill on a 45-15 vote.

What is the California dream loan program?

The California Dream for All Shared Appreciation Loans program was launched last year by CalHFA to aid low- and middle-income first-time home buyers and support the goal of generational wealth. It offered qualified buyers a loan worth up to 20% of the purchase price of a house or condominium, capped at $150,000.

These loans don’t accrue interest or require monthly payments.

Instead, when the mortgage is refinanced or the house is sold again, the borrower pays back the original amount of the loan plus 20% of the increase in the home’s value.

The program initially received $300 million in taxpayer funds, which financed nearly 2,200 loans, CalHFA says. The Legislature then provided $225 million more, which is going to about 1,700 additional applicants.

Who is currently eligible to apply for the home loan program?

Eligible people must be either low- or middle-income and a first-time mortgage borrower. The annual income limit for qualified borrowers is 120% of the area median income, which varies by county. For example, it’s $155,000 for borrowers in Los Angeles County, $204,000 in Orange County and $198,000 in Ventura County.

The program’s definition of first-time, or first-generation, borrower is a person who has not held a stake in a house in the U.S. in the last seven years. Their parents also could not have a current stake in a house.

If there is more than one buyer involved in the purchase of the home, at least one must be a first-generation home buyer.

The program’s initial borrowers were limited to U.S. citizens and noncitizens authorized to be in the country, such as legal permanent residents, according to the CalHFA manual. Borrowers also had to make the home they bought their main residence within 60 days after purchasing it. Eligibility based on immigration status was obscure in the program’s fine print, supporters argue, and AB 1840 proposes to clarify that and expand on who can apply for this program.

How would Assembly Bill 1840 change the program?

Arambula introduced AB 1840 at the start of the year to expand eligibility to include undocumented individuals.

To apply for a loan, undocumented applicants must meet requirements set by the Federal National Mortgage Assn., also known as Fannie Mae, which include having a taxpayer identification number or Social Security number. Under Fannie Mae rules, applicants must have a valid employment authorization or a certain type of documentation, such as a green card or work visa.

Arambula previously told The Times that the existing program’s eligibility requirements were ambiguous for undocumented individuals, “despite the fact that they’re qualified under existing criteria, such as having a qualified mortgage.”

Without the explicit inclusion, undocumented individuals may be discouraged or left out of the opportunity to participate, Arambula said.