BIG problems with California for Dream for all program
This program is everywhere, it is the talk of the town on social media, with lenders, agents, clients, loan officers, heck everyone is talking about this program. From the surface it seems great but now that the program has officially rolled out and everyone is trying to get a piece of the $300MM, it is like black Friday at Best buy.
As of March 30th, 2023 I am hearing crazy stories; you cannot get your one on one counseling session until April 15th and that will only get pushed out more and more. There are only 5 total counselors that do the 1 on 1 (1 hour sessions). So, if they must get through 2000 people, that will take probably 2 months. Even if people are locked in with the money and rate, how can they find a home when there is NO inventory. There are lots of people that don’t even need this program applying, they have the down payment and can just go buy a home. CalHFA rate locks are 30 days, they have extensions but those cost more money. The list keeps going on and on.
There is so much hype, so many people are going to be left disappointed, frustrated, and ultimately feel they got screwed in my opinion. If you noticed I am not even talking about the program, I am just talking about the process to get approved.
What are all the thousands of people that did what they were supposed to do when they realized they were a day late and the program ran out of money? Maybe they will put more money into the program? Maybe they will figure out a better system? Maybe they are just screwed and realized they wasted their time.
I would love to hear some feedback and thoughts on the process of this program and what you are hearing?
Here is a link to the California Dream for All Shared Appreciation Loan Program.
The corresponding Handbook lacks some important text. What if the house decreases in value? I know many will say that is impossible, but in that scenario will CalHFA send a check to the owner upon sale of the property? Here's an example image of the shared appreciation split. Below is a chart of Home Price Index of California from the St. Louis Fed (FRED) dataset:
I think everyone forgot about the Great Recession and subsequent drop in home prices. I'm not saying that kind of correction will happen again, but I am saying that there is a possibility that home prices can decline.
@Chris Martin CalHFA would of course never send a check to the owner, but the big question is whether or not they would reduce the balance of their 20% down loan if the home drops in value. Highly doubtful. But as you mentioned, no one is really thinking about that because the likelihood of a significant drop in home values is low in CA. At least for most of the state.
@Kenny Simpson I don't really see any problems with the program itself. All of what you said is about difficulties accessing it or getting approved, etc which is proving challenging because of how popular it is and everyone wants to take advantage. I don't see that as a big issue - sure some who want to use this program may not get to, but hey, life's not fair.
Yikes seems like a program that you dream at night and back to reality when you wake up @Carlos Valencia @Albert Bui
Quote from @Kevin Luttrell:
@Chris Martin CalHFA would of course never send a check to the owner, but the big question is whether or not they would reduce the balance of their 20% down loan if the home drops in value. Highly doubtful. But as you mentioned, no one is really thinking about that because the likelihood of a significant drop in home values is low in CA. At least for most of the state.
@Kenny Simpson I don't really see any problems with the program itself. All of what you said is about difficulties accessing it or getting approved, etc which is proving challenging because of how popular it is and everyone wants to take advantage. I don't see that as a big issue - sure some who want to use this program may not get to, but hey, life's not fair.
@Kevin Luttrell there will be so many wasted credit pulls, excited people, waste of work on pre-approvals and yes the process is messy due to overloaded system but this will be a waste of time for most when the dust settles. Plus when people want to refi, they will have to have 3% equity for 97% CLTV and $$ for closing cost. Seems like a bunch of hype and will disappoint more than it will help. This is the talk of the town but more people talking about it don't have a clue about it.
Quote from @Matthew Kwan:
Yikes seems like a program that you dream at night and back to reality when you wake up @Carlos Valencia @Albert Bui
We will see but too many excited people and only a few out of the crowd will win in the end
Quote from @Chris Martin:
Here is a link to the California Dream for All Shared Appreciation Loan Program.
The corresponding Handbook lacks some important text. What if the house decreases in value? I know many will say that is impossible, but in that scenario will CalHFA send a check to the owner upon sale of the property? Here's an example image of the shared appreciation split. Below is a chart of Home Price Index of California from the St. Louis Fed (FRED) dataset:
I think everyone forgot about the Great Recession and subsequent drop in home prices. I'm not saying that kind of correction will happen again, but I am saying that there is a possibility that home prices can decline.
When we have a slow down, recession rates will drop faster and then all these people will want to refi. If you have a 680, the pricing is will worse at a 97% CLTV, you have to equity to refi plus closing cost. There is NO inventory so for now values might be OK but if we get a bunch of inventory and recession yes these people will be upside down. Great for marketing for FTHB but in the long run who wants to have a partner on their primary residence and feel trapped.