Newsom vetoes bill that would have offered home mortgage aid to undocumented immigrants

California Gov. Gavin Newsom discusses his revised 2024-25 state budget during a news conference in Sacramento, Calif., Friday, May 10, 2024. (AP Photo/Rich Pedroncelli)
California Gov. Gavin Newsom, shown during a news conference in May, cited budget limitations Friday in vetoing a bill that would have helped undocumented immigrants buy homes. (Rich Pedroncelli/Associated Press)

A controversial bill that would have helped undocumented immigrants in California buy homes was vetoed Friday morning by Gov. Gavin Newsom who cited limitations to the program's existing budget.

Introduced by its lead author, Assemblymember Joaquin Arambula (D-Fresno), Assembly Bill 1840 would have allowed undocumented immigrants to apply alongside other qualified applicants for the California Dream for All Shared Appreciation Loans program. The program offers interest-free loans of up to $150,000 to low-income, first-time home buyers to cover down payments and fees.

The program initially received $300 million in taxpayer funds, which financed nearly 2,200 loans, according to the California Housing Finance Agency, or CalHFA. The Legislature then provided $225 million more, which went to assist about 1,700 additional applicants.

"Given the finite funding available for [the CalHFA] programs, expanding program eligibility must be carefully considered within the broader context of the annual state budget to ensure we manage our resources effectively," Newsom said in his veto message.

At a news conference in Sacramento on Friday, Newsom declined to elaborate on his decision, reiterating that he rejected the proposal based on cost. "The bill that was sent to me was a program that had no money," he said.

Read more: Newsom’s budget plan saves vital programs for immigrants, but kids and hungry seniors may suffer

According to CalHFA, no new applications are being accepted for the program currently because all of its funding has been allocated.

As the bill made its way through the state Senate and Assembly last month, lawmakers debated whether undocumented residents, specifically Mexican immigrants, should be eligible for a program that currently has no funds.

Many Republican lawmakers argued the bill would take opportunities away from U.S. citizens or encourage illegal immigration to the state.

In a statement, Arambula expressed disappointment in Newsom's decision, saying he believed the bill was about fairness.

"As I've said before, the bill is not about immigration policies or the housing crisis," he said. "No single bill can solve those issues."

Arambula said the governor's veto doesn't "change the fact that many people, including undocumented immigrants, dream of owning a home so that generational wealth can be passed to their children."

The California Dream for All Shared Appreciation Loans program was launched last year, aimed at helping low- and middle-income buyers create generational wealth.

It offered qualified buyers a loan worth up to 20% of the purchase price of a house or condominium, capped at $150,000. These loans don’t accrue interest or require monthly payments.

Instead, when the mortgage is refinanced or the house is sold again, the borrower pays back the original the loan, plus 20% of the increase in the home’s value since the borrower purchased it.

Read more: Gov. Newsom signs budget to close California's $46.8-billion budget deficit

AB 1840 would have expanded eligibility to include undocumented individuals, but they would be required to provide a taxpayer identification number or a Social Security number when applying for a loan. The IRS issues taxpayer identification numbers regardless of immigration status because nonresidents may also need to file tax returns.

Arambula previously told The Times that the existing program’s eligibility requirements were ambiguous about allowing undocumented individuals to apply, “despite the fact that they’re qualified under existing criteria, such as having a qualified mortgage.”

Without the explicit inclusion, undocumented individuals may be discouraged or left out of the opportunity to participate, Arambula said.

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This story originally appeared in Los Angeles Times.