Politics and Culture

After months of complaining about how Californian kids will have to do without textbooks because of the budget crisis, Arnold has found a way to give away yet more money. He wants to subsidize loans so that first-time buyers can buy 1000 homes. Isn't giving loans to otherwise unqualified borrowers how the mess started in the first place?

I must be living much better with all of that money spent!

SACRAMENTO, Calif. -- Gov. Arnold Schwarzenegger announced the start of a program Monday that he said would provide relief for homeowners hit hard by the mortgage meltdown.

The new program would release $200 million in funding to first-time homebuyers living in "distressed areas" of California.

The money would allow the homebuyers to buy houses that are currently in foreclosure.

"(The program was started to) help pump up (the mortgage industry)," Schwarzenegger said. "We all know a little bit about pumping up -- to pump up those areas most in need of economic stimulus. It will provide up to 1,000 below market fixed-rate loans to first-time homebuyers."

The $200 million comes from bond money, not from the general fund, Schwarzenegger said.

The loans are now available through the California Housing Finance Agency (CalHFA).

"This program will not only make it easier for families to purchase their first home, but will also help stabilize neighborhoods that have homes sitting empty," Schwarzenegger said. "No one single effort can solve our nationwide housing crisis, but together these measures make an important difference in California's neighborhoods."

The program will be available in Riverside, Los Angeles, Stanislaus, San Joaquin and Merced counties.

Several lenders have agreed to partner in the program and offer sales prices on bank-owned properties at least 12 percent below estimated value in the identified ZIP codes.

CalHFA estimates that the program will help about 800 to 1,000 Californians purchase their first home.

The homes must fall at or under CalHFA's sales price limits and families must meet income requirements.

The program will be offered until the $200 million in financing is allocated, the governor's office said.

"This mortgage relief package will give many first time home buyers the opportunity to attain the American dream while also helping areas of the state that have been hit hardest by the mortgage crisis," said State Treasurer Bill Lockyer.