I stumbled across this one today...
https://www.zerohedge.com/personal-f...incomes-211000
The headline sounds great. But when you take a few moments to sit back and think about it, this is horribly dangerous!
First off, why is California letting people buy a house with virtually no down payment in this market? Housing prices are already down almost 40% in many areas around the San Francisco Bay. Is this a ploy to try and prop up a market where the wheels are already falling off?
Secondly, for anybody that takes this offer the state of CA effectively OWNS 20% of your house! They do not disclose the details other than to say if you sell the house, the state gets to take 20% of the sale price regardless of how much prices increase.
Third, what happens if prices fall when you sell? Does the state get their original 20% back in full or do they share in the haircut?
Forth, what happens if you buy a house for $500K (and the state kicks in the initial $100K for the down payment), you stay in the house and make all your mortgage payments and pay the mortgage off in 10 years. Maybe by then, the house appraises for $1 million. Presumably, you now owe the state $200K for the original loan. Can you finance that or do you have to come up with it as a lump sum?
Fifth, what if you die? Do your heirs have to come up with the 20% payback in a lump sum?
This whole thing absolutely reeks of a state takeover of all private property! I fully expect other progressive states to follow suit on this scam. I'm sure most of us are old enough to own our homes outright. But warn your kids and grandkids to avoid these scams like the plague!!! THE GOVERNMENT IS NOT YOUR FRIEND!!!
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