Mortgage Updates

Last week the California Budget crisis pulled cash for down payment assistance from 1st time home buyers pocket books.  All CalHFA down payment assistance programs have been temporarily suspended.  This comes on the heels of the Sacramento Housing Redevelopment Agency (SHRA) announcement that the CA State Department of Housing and Community Development (HCD) announced yesterday (12/19) that funding into bond programs such as the CalHome First-Time Homebuyer Program has been halted until the State’s budget shortfall is resolved.

The CalHFA programs involved include: 30-Year Fixed Mortgage products, including:Moderate Income,Low Income,Nonprofits & Affordable Housing Partnership Program (AHPP),Extra Credit Teacher Program (ECTP), California Homebuyer’s Down Payment Assistance Program (CHDAP) Extra Credit Teacher Program (ECTP) School Facility Fee Down Payment Assistance Program (SFF)

These programs are being temporarily suspended as a result of the action taken by the Pooled Money Investment Board (PMIB) on December 17, 2008. The PMIB loans money to state agencies to advance program funds which will later be repaid through bond issuances. CalHFA uses a PMIB loan to initially fund its Conventional 30-Year Fixed Mortgage and down payment assistance programs. The recent PMIB action froze all such PMIB loans. It is anticipated that this situation will continue until the State’s budget crisis is resolved.

The Sacramento Housing Redevelopment Association (SHRA) was the first to announce that CalHome funding was being suspended for moderate to low income home buyers.  Then later in the week, CalHFA followed with the suspension of their programs.  This is a significant blow to our industry and to home buyers

Among the more popular CalHFA programs are the Teacher's Extra Credit, CHDAP and the Schools Facility Fee down payment assistance.  The ECIP was available for teachers contracted to teach in under performing schools and was an incentive for teachers to remain in that district (school) for a minimum of five years.  The CHDAP provided for a simple interest no payment down payment assistance loan that was due on sale of the property of when the 1st mortgage was repaid. The SFF program was available to all 1st time home buyers meeting certain income limitations and purchasing a newly constructed home.  This is the only program, out of all the available DAPs, that is totally forgiven over a five year period.  A significant benefit to home buyers, and also to the community by encouraging a stable resident lifestyle.

CalHFA and SHRA (within Sacramento County) were among the few remaining down payment assistance opportunities for 1st time home buyers with the discontinuance of seller funded down payment assistance programs such as Nehemiah.  This is particularly troublesome since it is the first time home buyers that are fueling our real estate recovery. 

January 2009 is the next meeting for  the PMIB, it is then that we will hear more about when the CalHFA programs may be reinstated. - Stay tuned...