California Approved $300 Million in State-Backed Home Loans. Who Got the Money?

California lawmakers marketed its new loan program for first-time home buyers as a “Dream For All.”

But just 11 days after applications opened, the initial pot of money is tapped out, sucked dry by eager house hunters. It turns out the dream was only for a lucky couple thousand borrowers — a disproportionate number of them white, non-Latino and living in the Sacramento area.

The Dream for All program was paused on April 6, less than two weeks after the California Housing Finance Agency said it would make the program available to lenders. About $288 million in initial funding will be provided to 2,564 homebuyers, according to an internal document obtained by CalMatters.

The complicated program involves the state paying some or all of the upfront costs for buying a home — namely, the down payment — in exchange for a share in the home’s value when it is sold, refinanced or transferred. If the home appreciates in value, those gains to the state would then be used to fund the next borrowers.

The program was meant, in part, to help address California’s ethnic and racial wealth gap, with Black and Latino families having fewer net assets than the national average. Participation in the program was limited to households earning less than 150% of median earnings in their county. According to the initial characteristics shown in the agency document obtained by CalMatters, roughly two-thirds of the beneficiaries went to those making less than $125,000. The average loan was a little more than $112,000.

But those figures also show that the program was disproportionately used by white homebuyers. Senate President pro Tempore Toni G. Atkins, of San Diego, said in a statement Monday that the program was intended to reach those historically shut out of the housing market.

“While this program has been immensely successful in getting new homebuyers into the market quickly and in places with low homeownership rates like the Central Valley, clearly more work needs to be done to make sure that there is statewide awareness, particularly in communities of color,” Atkins said.

The fact that the program ran out of cash in a two week spree speaks to just how voracious demand is for housing in California. It also suggests that some of the people who made use of the program were already well into the house hunting process. 

That raises an important question: How many of the people who benefited from the loan program actually needed the help and how many would have purchased a home anyway?

“I would guess that 30 to 50% of the people who are using it could qualify or buy without it because I had plenty like that,” said Matt Gougé, a Sacramento loan officer, referring to his own clients. 

California prohibits affirmative action, limiting the housing agency’s ability to direct the money to communities of color.

“We’d like to do something we’re not allowed to do in California, and this is not the fault of CalHFA or anybody else,” said Micah Weinberg, chief executive of California Forward, a nonprofit hired by the state treasurer to create an initial framework for the program. “When those of us outside of government talked about what the intention of the program is — it is to really, very specifically, target those demographic communities, African Americans and others — who have been locked out of the homebuyer marketplace for a variety of different reasons.”

“You actually can’t do that directly in California“

Click here to read the full article in CalMatters

Berniecrats Should Visit Havana

Havana CubaI recently returned from a trip to Havana, Cuba. Bernie Sanders and all of his young acolytes should visit for the fine cigars, good rum and, most importantly for them, an up close view of socialism in the real world. I brought home legal amounts of the former two commodities, and have re-affirmed that I want no part of the latter.

A romantic notion of Cuba, and Havana in particular, one that I shared before my visit, is that Cuba is stuck in the 1950s. There is a very real nostalgia in modern pictures of those cool now 60 year old cars with vibrant paint jobs, still running on cobblestone streets among old buildings haunted by the likes of Earnest Hemingway and unsavory long-gone underworld figures. To me, at least from the pictures of a Havana so firmly planted in the fifties, it seemed like Hemingway – or decidedly worse, Che Guevara or Fidel Castro himself – might come around a corner at any moment.

But my trip very much changed my mind. The real Havana is quite different, much worse, and socialism is to blame.

Havana is not stuck in a time warp. The fifties ended there, just like they did everywhere else. The difference is, because of socialism, no one has fixed anything in Havana since the fifties. Those sweet old cars? Get in one and all illusions disappears. They ride like they are rolling across railroad tracks. The interiors are gutted. The doors are practically rusted shut, and more rust peaks out from beneath those fancy paint jobs.

Meanwhile, the buildings are dilapidated – those that are not already crumbling to the ground. On a tour bus, my guide informed us that “we are now entering the wealthy part of town.” You would never know it because the “wealthy” neighborhoods are those that were new in the fifties. Today, they are as run down as all the other neighborhoods. From their appearance, virtually nothing has been done to maintain them. Indeed, virtually nothing except hideous sixties-era soviet style blockish apartment housing appears to have been built in Havana since the nineteen-fifties. And then nothing has been done to repair any of it since.

I even had a chance to see Revolution Square, the central spot where Castro would deliver his hours long harangues to the assembled masses. It was eye opening. I expected something like the Mall in Washington, D.C., a vast, well maintained public space and place of pride for Cuba. In fact, it is a parking lot. Literally. With grass and weeds sprouting up through asphalt cracks.

Nothing in Havana is new or maintained, from those photogenic cars to the housing to the public spaces. Time did not stop in the fifties. It soldiered on, leaving a tired, worn out, run down town, with a public spirit seemingly as dead and buried as Hemingway, Guevara and now Fidel.

Again, socialism is to blame.

“How so?” a young Berniecrat might fairly ask.

One of my tour guides explained: Following the “success of the Revolution,” private ownership disappeared. The public – meaning of course, the government – owns everything. Gradually, some private property has returned. For example, it is possible for a Cuban to own his or her own apartment. But, my tour guide continued, the people own the apartment building itself.

Not surprisingly, “the people” are unwilling to pay to maintain “their” buildings. That is socialism. When everyone owns the building, no one fixes the plumbing or heating or the crumbling infrastructure. When everyone owns the park, no one weeds or otherwise cares for the grounds. Havana demonstrates that socialism is a recipe for creeping dilapidation. Even Berniecrats should want no part of that.

It need not be this way. Before the “success of the Revolution,” Havana was by all accounts truly a wealthy, vibrant place. It had money, a functioning economy, and a robust private sector. No one would argue that it was without fault, just as no one would argue that any society anywhere at any time in the history of the world is without fault.  But Havana was not then crumbling into poverty and stale disrepair.

The city has much to offer. The people were friendly and open, the cuisine delicious. Havana’s history could support a vibrant tourist trade, with its commodities of world-class cigars and rum merely leading the list of commercial opportunities to pull this island nation from poverty.

But “success of the Revolution?” Hardly. Poor, tired, old Havana is what you get with what the socialist are selling. Go to Havana and take a look at it in real life, not theory. Bring back cigars if you are so inclined, but leave the ideology there.

Don Wagner is the Mayor of Irvine, a former California State Assembly Member, and attorney with Best Best & Krieger LLP.