CALIFORNIA – CA lawmakers reverted $50 million, August 30, from the California Housing Finance Agency’s (CALHFA) ADU Grant Program that provides $40,000 to homeowners to cover pre-construction costs of an accessory dwelling unit (ADU).
Lawmakers now say $25 million may be put back into the program as well as $20 million transferred into the California Dream for All down payment program.
Hurdles for ADU construction
According to the LA Times, Assembly Budget Chair Phil Ting said one of the hurdles for ADU construction has been the reluctance of California lenders and major banks to develop ADU loans. Although CALHFA provides a $40,000 grant to qualified homeowners, the overall cost of an ADU can range from $300,000 to more than $400,000.
Two years ago, lawmakers provided $50 million to CalHFA to create a loan loss reserve fund that would backstop ADU loans from private lenders.
A loan loss reserve fund is money set aside to cover potential losses — loans don’t get repaid.
After CalHFA studied the issue, Ting said there was still a significant amount of hesitancy at the agency to start a loan loss reserve program.
Ting said as homeowners built more ADUs, more lenders took an interest in the field. After initially agreeing to redirect all $50 million to other programs, Ting is proposing to put $25 million into the existing ADU grant program and redirect the remainder.
California Dream For All down payment assistance
The Assembly Budget Committee also transferred $20 million to the California Dream For All (DFA) program, in addition to the $200 million that was restored to the program in July.
The first-time homebuyer program provides up to 20% down payment assistance in return for a share of the appreciation in the home’s value.
Earlier this year, CalHFA paused DFA applications in less than two weeks after they allocated the initial $300 million in funding to 2,300 applicants.
According to the website, CalHFA will provide an update Fall 2023 that will include a timeline for applications. They will send out all updates through their eNews to ensure all stakeholders remain informed.
To stay up to date on the latest CalHFA news visit https://public.govdelivery.com/accounts/CAHFA/signup/35119