SACRAMENTO, Calif.--(BUSINESS WIRE)--Keep Your Home California, the state-run mortgage payment assistance program, said today that the federal government has authorized the expansion of two programs that help struggling California homeowners pay their mortgages.
“These changes will allow more families to qualify for the programs and remain in their homes,” said Claudia Cappio, Executive Director of the California Housing Finance Agency, which manages the Keep Your Home California program. “By keeping families in their homes, we can help stabilize neighborhoods and communities.”
The program changes, approved by the U.S. Department of the Treasury this week, 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.
“We are making these changes to encourage more servicers to participate in the Principal Reduction Program,” Cappio said. “Unfortunately, we had limited participation among servicers with the existing program and thousands of homeowners could not qualify for assistance as a result. We are constantly evaluating how to make these programs most effective for California homeowners and believe now that the match has been removed and the funds will be disbursed in a one-time payment, the major obstacles to servicer participation have been cleared.”
More than 60 mortgage servicers are participating in at least one of the Keep Your Home California programs and these servicers cover about 95 percent of the mortgages in the state. 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 www.keepyourhomecalifornia.org/participating.htm.
Keep Your Home California is the State of California’s $2 billion foreclosure prevention effort, established under the U.S. Treasury’s Hardest Hit Fund. There are four unique programs that make up Keep Your Home California, all of which aim to prevent avoidable foreclosures by offering mortgage payment assistance to qualifying low and moderate income homeowners who are facing financial hardships. In addition to the Principal Reduction and Mortgage Reinstatement Assistance programs, Keep Your Home California also has the Unemployment Mortgage Assistance and Transition Assistance programs.
The Unemployment Mortgage Assistance Program offers a mortgage payment subsidy for as much as $3,000 per month for up to nine months, for homeowners receiving unemployment benefits from the state Employment Development Department. The Transition Assistance Program provides a maximum of $5,000 in relocation costs for homeowners who are moving from their home through a mortgage servicer-approved short sale or deed-in-lieu of foreclosure.
Keep Your Home California has approved about 19,000 homeowners and more than $411 million in funding since the program started in February 2011.
In order for homeowners to qualify for any of the four Keep Your Home California programs, they must meet eligibility criteria including income requirements and their mortgage servicer must be participating. More information on eligibility criteria is available at www.keepyourhomecalifornia.org/eligibility.htm and county-by-county income limits can be found at www.keepyourhomecalifornia.org/files/income.pdf.
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 or visit www.KeepYourHomeCalifornia.org (a Spanish-language site is available at www.ConservaTuCasaCalifornia.org).