Update on California’s Mortgage Assistance Programs
Soon after Al R. bought his dream house in the greater Sacramento area, he lost his greatpaying job.
Like many homeowners in recent years, the American Dream had become a real-life nightmare—and an everyday struggle.
Al and his family made a few mortgage payments and then got behind. Then, he came across a mailer about Keep Your Home California (KYHC), the free mortgage-assistance program from CalHFA that has helped more than 41,000 homeowners since February 2011.
"We thought it was too good to be true," says Al. "There was some serious nail-biting whether we were going to keep our home. One of our biggest fears was that the program would end before we were approved."
California received almost $2 billion from the federal government to develop and administer the Keep Your Home California programs. To date, over $723 million in assistance has been provided to homeowners across the state—so there is still plenty of funding left for homeowners who are interested in applying.
There are four unique programs, each designed to address different aspects of the economic downturn.
- Unemployment Mortgage Assistance—Up to $3,000 per month for up to twelve months for unemployed homeowners who are collecting unemployment benefits from the State of California's Employment Development Department (EDD). Homeowners whose unemployment benefits have expired can qualify too, if they apply within 30 days of receiving their last benefits.
- Mortgage Reinstatement Assistance Program—Up to $25,000 to help qualified homeowners catch up on their mortgage payments. Benefit assistance can cover principal, interest, taxes, insurance, and any homeowner's association dues that are impounded in the first mortgage payment.
- Principal Reduction Program—Up to $100,000 to help pay down the principal balance of a first mortgage loan for eligible homeowners who owe more on their mortgage than their home is worth. This program is available to homeowners who have experienced an economic hardship or severe decline in their home's value. Having a loan-to-value ratio of 120 percent or greater qualifies as a hardship.
- Transition Assistance Program—Up to $5,000 to help eligible homeowners make a smooth transition into stable and affordable housing when they agree to a Short Sale or deed-in-lieu of foreclosure program.
Homeowners must meet eligibility criteria to qualify for KYHC assistance, including meeting county income limits and their mortgage servicer must participate in the program. View a list of participating servicers to see which KYHC programs they are currently offering.
Al was approved for the KYHC's Unemployment Mortgage Assistance Program, which offers as much as $3,000 per month for up to 12 months. Homeowners who meet the program income limits and are also collecting jobless benefits from the Employment Development Department are eligible for the program.
Now, Al is back to work and making his mortgage payments on his own. "The bottom line is that we got [the assistance], and it saved our home," he says.
(Editor's Note: Residents in other "Hardest Hit" fund states can find information about their state's mortgage assistance programs using the "Take Action" tab on this page.)