Help on the Way for Underwater California Homeowners

Help on the Way for Underwater California Homeowners

"Keep Your Home California" is a new program designed to help struggling California homeowners avoid foreclosure. It aims to do this by distributing $2 billion worth of federal funds from the "Hardest Hit Fund" in order to reduce delinquencies and avoid foreclosures in order to stabilize the California housing market.

The program is divided into an unemployment mortgage assistance program, a mortgage reinstatement assistance program, a principal reduction program, and a transition assistance program. The benefits are capped at $50,000 per qualifying household, mortgage servicers may choose to match the funds, so households could theoretically get up to $100,000 in assistance.

The following are some of theeligibilityrequirements of the program:

Utilize their home as their primary residence.

The principal balance of the mortgage cannot go over $729,750

Homeowners must meet low and moderate income limits

Homeowners have to complete a hardship affidavit

The loan in question must be delinquent or in danger of imminent default

For fulleligibilityrequirements, see this link.

Those who are suffering from a reduction in income or increased expenses may be eligible. This program seems like a good idea to me, however, I think it may be too little, too late. If every household were to receive $50,000, you would be able to aid 40,000 households. Even if you figure each household gets less aid, you are still probably helping somewhere less than 100,000 households. To put this in perspective, about 150,000 notices of foreclosure were issued in California in the second half of 2010. These numbers are only expected to increase in 2011.

Hundreds of billions of dollars worth of bailouts were issued to corporations during the crisis (if not more). $7.6 was made available to help homeowners who desperately need it. There is a disparity here that should be corrected. Check today's mortgage rates in California here.

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