Governor Schwarzenegger announced yesterday that $200 million in bond-financed low interest rate loans will be made available for up to 1,000 first time home buyers. The target properties: vacant foreclosed properties in some of the California communities hardest hit by the current foreclosure wave.
The program, called the Community Stabilization Home Loan Program, was announced in Stockton, the reigning U.S. foreclosure capital. The program will be administered through the California Housing Finance Agency ("CHFA"), a state agency that promotes home ownership for low to moderate income Californians through a variety of programs.
Okay, so it's only 800 to 1,000 homes, or a fraction of a percent of this year's foreclosure total or current REO inventory in California. And yes, the money ends up with the banks who own the REOs, so in a way, it's a bailout.
But it's something. The rates are fixed and below market rates, so the buyers should be able to keep up with loan payments, and participating lender sellers are said to be selling the homes at at least 12% below current market value.
As long as CHFA's underwriting guidelines hold water (I'm pretty sure they do), and as long as the lenders are basing "current market value" on sources other than zillow or trulia, then maybe this program will be the first step in helping stabilize some of the California communities that have been devastated by the foreclosure boom.
