Keep Your Home California, the state-run mortgage payment assistance program, just announced that that the federal government has authorized the expansion of two programs that help struggling California homeowners pay their mortgages.
The program changes make it easier for California homeowners to qualify for assistance. They are:
• KYHC Program Benefit Cap: The KYHC program cap was increased from $50,000 to $100,000 per household. This change will go into effect in early June.
• Mortgage Reinstatement Assistance Program: The increase – from $20,000 to $25,000 – of funding for homeowners to catch up on their mortgage payments in case of financial hardship – such as a pay reduction at work, a divorce or significant health care bills. This change goes into effect on May 7.
• Principal Reduction Program: The elimination of a requirement that a qualified homeowner’s mortgage servicer match the federal funds dollar-for-dollar. This means Keep Your Home California will fund 100 percent of a principal reduction up to $100,000 as long as servicers provide a rate and/or term modification to ensure the homeowner has an affordable, sustainable monthly mortgage payment. This change will go into effect in early June.
Also under the new changes to the Principal Reduction Program, the dollars would be disbursed in the first year rather than in three installments over three years and the forgivable loan will also extend from three to five years.
By eliminating the requirement that banks provide matching funds, state officials hope to make it easier for homeowners to get principal reductions.
Keep Your Home California Has Limited Funds
The participation by Fannie Mae and Freddie Mac could provide a major boost to Keep Your Home California. Watch for Fannie and Freddie to toot their own horns touting what great service they continue to for California homeowners.
Fannie Mae and Freddie Mac own about 62% of outstanding mortgages in the Golden State.
The issue is that only about 8,500 to 9,000 California homeowners would be able to get mortgage write-downs with the current level of funds available.
The new program info signifies a positive step for homeowners. However don’t get your hopes up too high. More than 60 mortgage servicers participate in at least one of the Keep Your Home California programs. However, only 14 servicers currently participate in the Principal Reduction Program. For a list of the participating servicers and the programs they participate in, visit http://www.keepyourhomecalifornia.org/participating.htm. Homeowners seeking information about the program are encouraged to call 888-954-KEEP (5337) between 7 a.m. and 7 p.m. weekdays and 9 a.m. to 3 p.m. Saturdays.