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Right, it is a loan, which means the principle is spent to buy a house for someone and they pay you back over 30 years. That is a huge capital investment with a long repayment period.
California also has low supply of housing for citizens, so why specifically help undocumented immigrants get housing when their claim is far less solid than a resident with proper standing?
But if this scenario were the case, then they likely would have visa sponsorship to work a white collar job. That would thus make them documented. Many banks have lending guidelines for this scenario, which again makes this law even more useless