California bill would allow undocumented immigrants paying taxes to get home loans

A new bill that would allow some undocumented immigrants to receive loans to buy homes is sparking debate as it passes through the California Legislature.

Assembly Bill 1840 would make it clear that a person who applies for a loan under the California Dream for All Program cannot be disqualified solely because of their immigration status. It passed the state Senate with a 25-14 vote.

The program is run by California Housing Finance Agency, which generates revenue "through mortgage loans, not taxpayer dollars," according to the agency's website.

Their program provides a shared appreciation loan -- which typically means that first-time homebuyers do not pay interest. Instead, they only have to pay back the original loan amount, plus 20% of any home value appreciation. The loan covers 20% of the purchase price or up to $150,000 to cover a down payment or closing costs.

The loan must be paired with a 30-year fixed interest rate first mortgage from the California Housing Finance Agency and the recipient does not have to make payments on the share appreciation loan until the first mortgage is paid off.

In a general statement on the program's mission, Gov. Gavin Newsom stated: “As part of the state’s comprehensive efforts to improve affordability, build generational wealth and unlock access to housing, Dream For All is paving the way home for thousands of Californians. This program is more than just financial assistance – it’s about providing a pathway for individuals to achieve their California dream.”

It is not clear if Newsom intends to sign the bill. A two-thirds vote in each chamber of the legislature would be needed to override a veto -- which could be achieved with the votes in favor of the bill thus far.

If the new bill is passed or signed into law, undocumented borrowers would be able to apply for the housing loan. However, they would be required to have a valid Social Security number or Individual Taxpayer Identification Number in addition to meeting existing legal residency and documentation requirements.

This language would allow, for example, people who pay taxes but are not legal citizens, such as recipients of the Deferred Action for Childhood Arrivals policy, known as DACA, to apply for the loan.

Supporters say the bill is intended to allow all those who pay taxes in the state to be able to qualify for the assistance.

“Homeownership is one of the largest contributors to building wealth for low and middle-income families,” said Cynthia Gomez, a deputy director at The Coalition for Humane Immigrant Rights in an April hearing on the bill. “However, it's also well understood that there are many barriers to access for homeownership, in particular for communities of color. California is solution-orientated, and we have implemented various policies that have made homeownership a reality for Californians.”

Critics argue that the money should not be geared toward people who are undocumented and that noncitizens should not be eligible for state programs.

"I just can't get behind using our limited dollars for people who continue, who are in this country undocumented when we have very limited funds," said state Rep. Joe Patterson during a hearing on the bill in April.

The Trump campaign told Politico that it believed the bill to be “fundamentally unfair but typical Democrat policy.”

The Senate Appropriations Committee said in a mid-August meeting that the cost pressures on the program, if it were to undergo an expansion, are "unknown," but the California Housing Finance Agency (CalHFA) indicated "that any costs to update program regulations to prohibit application disqualification based on immigration status would be minor and absorbable," according to filings in the legislature on the bill.

The debate comes as immigration has continuously ranked as a top issue for 2024 voters, according to Gallup .

California has the largest undocumented population in the country, with an estimated population of 1.85 million undocumented immigrants in 2021, according to the Pew Research Center.

At the same time, California is dealing with a housing crisis, with a growing homeless population and increasingly high costs for housing.

California mid-tier homes are twice as expensive as the typical U.S. home -- selling at more than $700,000,according to California's Legislative Analyst's Office, and 28% of all homeless people in the U.S. live in California, the point-in-time report from the U.S. Department of Housing and Urban Development recorded.