re: California passes new law where only have to put down 3% for new home instead of 20 %

3% equity is still 3% equity whether the first lien is 80% or 97%.

These boneheads have never underwritten a loan.

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Wouldn't that apply to literally every 3.5% FHA loan?

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If we were comparing apples to apples, but we aren't.

For example, for the FHA down payment you have to have a credit score of 580 or higher (for those from 500-579 it's 10% down).

By contrast, Prop 37 makes the 3% available for credit scores as low as 500.

The GFC was built on bundled sub-prime loans (580-669), Prop 37 delves into what's considered "deep subprime".

In other words, this has the potential to be even worse from that standpoint.

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You can tell they expect to have complete control of the federal govt for a very long time which is going to have to pay for their inevitable bail out.

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100%. The buyer pays 3% down but CalHFA (state-funded program, to the tune of $25B) pays the other 17% down to get the buyer to 20%. And THEN the buyer has to get another mortgage for the remaining 80% (since the CalHFA money is a loan).

This is also for new builds only, not pre-existing homes and not for homes being rebuilt after disaster recovery (example: Pacific Palisades).

I wouldn't be surprised to see this program as a vehicle for the state to snatch up properties from disaster victims who haven't been able to rebuild yet (giving preference to new builds and even more preference on new builds backed with the CalHFA money) by then buying out the mortgage holder (since they would essentially own the property with the mortgage company if the buyer defaults).

Theyll be clamoring for 2nd mortgage forgiveness soon enough

This will end up well.