California Just Approved a New Mortgage Policy That Looks Just Like What Led to the Financial Crisis of 2008

California voters have approved Proposition 37, which allows buyers of newly built homes to make a down payment of just 3%, with the state providing the remaining 17% as a second mortgage funded by up to $25 billion in bonds. This initiative is intended to make homeownership more accessible by reducing upfront costs and potentially eliminating mortgage insurance. However, critics draw parallels to the lending practices that contributed to the 2008 financial crisis, expressing concern about the potential for increased defaults and economic instability, especially as the program reportedly does not require US citizenship or legal status for eligibility.

• California voters passed Proposition 37, creating a loan program for down payments on newly built homes.
• Buyers can now put down 3% instead of 20%, with the state lending the other 17% as a second mortgage.
• The program is funded by up to $25 billion in bonds.
• Supporters believe it will make homeownership more affordable by eliminating mortgage insurance and lowering payments.
• Critics suggest this policy resembles those that led to the 2008 financial crisis.
• Eligibility for the program reportedly requires only proof of residency in California for one year, not US citizenship or legal status.