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State budget crisis rocks CalHFA loans

Housing Finance Agency depends on state line of credit

California's budget crisis has forced the state's Housing Finance Agency to suspend its 30-year fixed-rate mortgage loan and down-payment assistance programs.CalHFA, which purchases more than $1 billion in mortgage loans a year, is among state agencies that depend on a line of credit from a pooled money investment account that's funded by state bond issues. The board that administers the account determined on Dec. 17 that with California facing a $40 billion budget shortfall, the state cannot issue either commercial paper or bonds. That decision led the Pooled Money Investment Board (PMIB) to shut down $3.8 billion in funding for infrastructure projects, and also prohibit state agencies from spending any more funds under existing loans.California Treasurer Bill Lockyer, who sits on the board, called the decision "extremely regrettable" but said that with the state's "fiscal house ... burning down" the board had no other choice.CalHFA on Friday issued a bulletin anno...