Keep Your Home – Free Money
SACRAMENTO, Calif.–(BUSINESS WIRE)–Keep Your Home California today announced an expansion of its Principal Reduction Program, opening the door for more financially distressed low and moderate income homeowners to receive as much as $100,000 in free mortgage assistance.
“In areas that are still severely depressed, there is a heightened chance that those homes will end up in foreclosure. These changes are intended to level the playing field a little bit for homeowners in that kind of distress.”
Now, a loan-to-value ratio of greater than 140 percent is recognized as one of the qualifying financial hardships that will enable homeowners to apply for the Principal Reduction Program. It’s the latest change to the Principal Reduction Program, which has been expanded several times to help more homeowners.
“We are constantly analyzing our data to identify factors that result in foreclosure. Although the housing market has improved dramatically over the last few months, there are still areas of the state where home prices are not rebounding as quickly, and many homeowners in those areas have exhausted all of their resources just trying to hold on until that recovery reaches them,” said Claudia Cappio, California Housing Finance Agency (CalHFA) Executive Director. “In areas that are still severely depressed, there is a heightened chance that those homes will end up in foreclosure. These changes are intended to level the playing field a little bit for homeowners in that kind of distress.”
Keep Your Home California, which is overseen by CalHFA, was established to help low and moderate income homeowners who have suffered a financial hardship, such as a job loss, cut in pay, extraordinary medical bills or a divorce. Under the latest change to the Principal Reduction Program, a loan-to-value ratio of 140 percent or higher is recognized as a financial hardship, allowing more homeowners with underwater mortgages to apply for the program.
About one of every seven mortgages was underwater in California during the third quarter of 2013, according to industry tracker CoreLogic. Many of these underwater homes are in economically hard-hit regions of the state, including the Central Valley – from Bakersfield to Stockton – and the Inland Empire (Riverside and San Bernardino counties). These neighborhoods and communities that have been slow to recover should benefit from this expansion to the Principal Reduction Program.
Homeowners will also get much-needed help to reduce their mortgage principal under the new guidelines. However, homeowners using the Principal Reduction Program must remain in their home for at least five years; if homeowners sell prior to that date, they may be required to pay back the assistance from the proceeds of the sale of the home if there is sufficient net equity.
Keep Your Home California started in February 2011, after the state received almost $2 billion from the U.S. Treasury’s Hardest Hit Fund. Keep Your Home California has three other programs in addition to the Principal Reduction Program:
Unemployment Mortgage Assistance Program: Out-of-work homeowners collecting jobless benefits from the state Employment Development Department could receive as much as $3,000 per month in mortgage assistance for up to 12 months.
Mortgage Reinstatement Assistance Program: Homeowners who are behind on their payments could receive a maximum of $25,000 to help them “catch up” on their past-due mortgage payments. Homeowners must have suffered a financial hardship and be able to make their mortgage payments going forward.
Transition Assistance Program: Homeowners who have reached an agreement for a deed-in-lieu of foreclosure or a short sale with their mortgage servicer could receive up to $5,000 in relocation assistance. The money allows families to find new housing.
To qualify, homeowners must meet program eligibility requirements including having suffered a financial hardship – such as a job loss, cut in pay, a divorce, extraordinary medical bills or a loan-to-value ratio of more than 140 percent (for the Principal Reduction Program only) – and meet county-by-county income requirements (a complete income limit list is available at http://keepyourhomecalifornia.org/income-limits/).
In addition, a homeowner’s mortgage servicer, the company that collects the monthly payment, must participate in the specific program (visit http://keepyourhomecalifornia.org/participating-servicers/ to see the list of participating servicers).
Currently, more than 100 of the 158 mortgage servicers enrolled in Keep Your Home California participate in the Principal Reduction Program. These servicers manage the vast majority of homeowners’ mortgages in California.
Keep Your Home California, a federally funded program, has assisted almost 32,000 homeowners and funded more than $450 million since the program started in February 2011.
Homeowners seeking more information about the program should call 888-954-KEEP (5337) between 7 a.m. and 7 p.m. weekdays and 9 a.m. to 3 p.m. Saturdays. The counseling center can answer questions in virtually any language and there is never a fee for the services. A Spanish-language version of the website is available at www.ConservaTuCasaCalifornia.org.
California Housing Finance Agency
Evan Gerberding, 916-326-8602
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