A new government program will offer help to California homeowners facing foreclosure, following a U.S. Treasury Department decision last week.
Beginning Nov. 1, the California Housing Finance Agency plan will offer $700 million to help California families pay their mortgages.
“California’s twin problems of unemployment and declining real estate values have created a homeownership crisis for many of today’s California families,” said Steven Spears, executive director of CalHFA. “We will use these funds to help as many families as possible remain in their homes and, in doing so, stabilize neighborhoods that have been severely impacted by foreclosures.”
The plan, targeted at moderate-income families and military personnel, includes three mortgage assistance programs and a transition assistance program for borrowers who cannot afford to remain in their homes.
Eligibility is limited to moderate income homeowners. In Stanislaus County, that translates to an income of less than $71,500 for a family of four, or $50,050 for a single occupant.
The program also requires a documented financial hardship, the ability to make modified mortgage payments, and a mortgage that is either delinquent or in danger of default. Those who have taken a cash-out refinance, hold a mortgage worth more than $729,500, own other property, or signed a mortgage after Jan. 1, 2009, are not eligible.
An Unemployment Mortgage Assistance Program will assist homeowners who have lost their jobs. A temporary mortgage payment subsidy of up to $1,500 or 50 percent of the existing total monthly mortgage, whichever is less, may be available for up to six months.
The Mortgage Reinstatement Assistance Program will help those who remain current on delinquent mortgages. Up to $15,000 per household or 50 percent of the past due amount, whichever is less, could be provided with a dollar-for-dollar match from the lender.
A Principal Reduction Program will assist homeowners who owe more than their homes are worth. CalHFA will offer capital on a matching basis with participating financial institutions to cut outstanding principal balances, which will be reduced to market levels needed to prevent avoidable foreclosures. The PRP should be a prelude to loan modification, CalHFA says.
The final program, a Transition Assistance Program, will offer homeowners relocation assistance when they decide they can no longer afford their home. The TAP will work in conjunction with short sale or deed-in-lieu of foreclosure. Borrowers must occupy and maintain the property until the home is sold or returned to the lender as negotiated, according to CalHFA.
While funds won’t be available until the fall, CalHFA is hard at work building the infrastructure necessary to administer the programs. Because of this pre-planning process, funding should be doled out quickly come Nov. 1, CalHFA said.
“We will move quickly to ensure these programs are implemented in an effective way to help the maximum number of homeowners,” Spears said.
More information is available online at www.keepyourhomecalifornia.com
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