In a recent attempt to buoy the few still struggling California homeowners, the mortgage assistance program, Keep Your Home California, has been extended with an addition of $383.3 million in federal funding this year. The funds are expected to aid an estimated 12,000 additional California homeowners with up to $100,000 in mortgage payment assistance per eligible homeowner.
The California program is part of the nationwide Hardest Hit Fund created to assist struggling homeowners and prevent foreclosures in the 18 states harmed most severely by the economic crisis. The program launched in 2011, well after the worst of the financial carnage of mass foreclosures had occurred. Though initially scheduled to sunset in 2017, Keep Your Home California will now continue through December 31, 2020.
Since its inception, the program has issued $1.34 billion in mortgage assistance and benefited more than 62,200 California homeowners — a small number compared to the more than 990,000 homes foreclosed between 2007 and 2014 alone.
Financial assistance for homeowners
Keep Your Home California primarily provides mortgage payment assistance to low- to moderate-income homeowners experiencing a financial hardship resulting from such things as:
- unemployment;
- unaffordable payments; or
- negative equity.
Homeowners who meet income eligibility requirements can qualify for aid under four Keep Your Home California programs:
- Unemployment Mortgage Assistance Program (UMA) provides unemployed homeowners with up to $3,000 per month in mortgage payment assistance.
- Mortgage Reinstatement Assistance Program (MRAP) offers homeowners as much as $54,000 to bring them current on delinquent mortgage payments.
- Principal Reduction Program (PRP) helps underwater homeowners who have suffered a financial hardship pay down the principal balance on their mortgage.
- Transition Assistance Program (TAP) provides financial aid to transition homeowners into affordable housing after undergoing a short sale or deed-in-lieu of foreclosure.
Further, a new program called the Reverse Mortgage Assistance Pilot Program was introduced in 2015 to provide senior homeowners with up to $25,000 to pay outstanding property expenses for their Home Equity Conversion Mortgage (HECM), a reverse mortgage insured by the Federal Housing Administration (FHA).
An ongoing demand
Though California’s economy has improved at an amazing pace since the pit of the 2008 recession — and job numbers continue to rise along with home prices — some homeowners still wrestle with unmanageable mortgage payments. In Q1 2016, 395,500 homes remained underwater in California (about 5.9% of mortgaged homes).
The persistence of underwater homes signals a critical need for continuing aid to struggling homeowners — one that even surpasses the resources available through Keep Your Home California. Nonetheless, the program’s continuation is promising for homeowners in the poorer parts of the state. It will help ease a portion of the mortgage debt still weighing down California homeowners who are undergoing distress.
However, timing has always been a questionable element of Keep Your Home California. The program rolled out in 2011, multiple years after the worst damage of the 2008 financial crisis had been inflicted and when governmental intervention would have been most effective. No clear goals were established at its inception that would signal the ultimate success or failure of the program. And without this objective, it is difficult to determine when the program has accomplished what it set out to do and ought to rightfully end.
Its recent extension simply underscores the fact the market still has healing to do and complete normalcy has not fully returned — and won’t until the extended sunset date of 2020.
Qualifying for assistance
While negative equity is still a problem for many homeowners, an underwater mortgage alone is not enough to obtain assistance through Keep Your Home California.
Keep Your Home California enforces several eligibility standards, which vary for each specific program. General eligibility guidelines require a homeowner:
- occupy the property as their primary residence;
- meet low to moderate income limits for their location;
- have a hardship evidenced by a signed Hardship Affidavit; and
- have adequate income to sustain mortgage payments after receiving program assistance.
Keep Your Home California considers the following hardships:
- severe reduction in household income;
- an increase in expenses beyond the homeowner’s control;
- unemployment or extended underemployment;
- death in the family;
- significant medical bills;
- divorce; and
- severe negative equity indicative of imminent default.
Further, eligibility guidelines require:
- the property be an inhabited single family residence (SFR) with one to four units located in California;
- the mortgage be in a first lien position;
- the remaining unpaid principal balance on the mortgage be $729,750 or less; and
- the mortgage be delinquent or at risk of imminent default.
Approval ultimately depends on whether a homeowner’s mortgage servicer accepts the offer of assistance from Keep Your Home California. Currently, several mortgage servicers participate in the program.
When a homeowner is approved for assistance, Keep Your Home California provides the agreed-to payment assistance and places a junior lien on the home, to be forgiven after five years from the date of assistance. Selling, refinancing or obtaining a reverse mortgage on the home during the five-year period will obligate the homeowner to pay back the assistance. Thus, the program does not put homes on the market for sale.
As a real estate agent, you can inform the public you have contact with about the homeowner assistance to help retain their home provided by Keep Your Home California. More information is available by calling 888-954-KEEP (5337) or visiting www.KeepYourHomeCalifornia.org.
The program accepts applications in multiple languages and does not charge fees for any of their services.
“Keep Your Home California will now continue through December 31, 2020” The program closed to new applicants on June 30, 2018
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Aly.
I was laid off last spring when the company I gave my life to for a quarter of a century decided to outsource our entire department’s work to workers from another country. It was a deplorable act and I was devastated, from which I am still recovering. The mental toll has been an almost insurmountable roadblock for me in finding another job. I know there are greener pastures ahead, but it’s been a tough road.
I am very, very fortunate to have found Keep Your Home California. Being the sole bread earner with two kids, we would have likely had to sell my home if not for their mortgage assistance. It is giving my family and I the temporary support we need during these extremely challenging times and I feel very fortunate as I likely would not even pass an interview at McDonald’s given my emotional psyche at the moment.
Now, I know there are likely some benefactors of the program who are truly not in need, but my family and I are truly in need.
Thank you, Hardest Hit Funds.
I would hope if a person is no longer living in home in five years it is due to death of sale of home in which case kyhc is reimbursed and banks are paid in full making it a win situation for all parties that would be the preferred plan not a foreclosure.
I was told i had been approved for reenstatement very excited the loan approximate 4100 then would be current and I would start making payments. However the servicers claims kyhc provided funds too late. Getting robo calls and agents leaving memos on door to sell home. Sls servicing leaving memos on door after having been approved and funds received with first payment due 9/1/17 actual due 15th now showing in default? This has been extremely stressful and I am using hud counselor who is caught in middle of this mixed communication. There is no one over seeing how lenders servicers are communicating and comply with kyhc standards. This is deplorable situation to be in.
I actually know someone benefitting from it but did not need it-this person took time off work on purpose but claimed it was medical… then applied knowing about the program. This person plans to do it again soon a free home while I work and havd none. I feel a lot of this stuff creates extra fraud fraudulently off work fraudulently getting 100000 of free house and the rest suffer. Theres a reason people are getting sick of social services they are creating liars instead of what they need to do which is help severely sick, elderly etc…
They are lethal with numerous paperwork and documentation. I can’t believe there is room for fraud? The whole process is quite demeaning
These programs do not benefit homeowners; they benefit the banks who own mortgages on these properties Banks who own mortgages on the California properties that qualify for these programs own mortgages on these properties far in excess of the the value of the property. These programs simply identify these mortgaged properties and, at taxpayer expense, “government” funds are used to diminish or eliminate the inevitable loss for the banks on these properties. The “homeowners” do not receive any relief, and my guess is that after the 5 year junior lien period is up, less than 1% of these homeowners will still own their home. The government should have just given the banks the money outright. Instead, along with their lackeys in government, the banks wanted to make it appear that it is the American people who were receiving assistance-when it is the banks themselves that receive the assistance. YET ANOTHER LIE AND FRAUD PERPETRATED AGAINST THE AMERICAN PEOPLE BY ITS GOVERNMENT AND, AS GEORGE CARLIN WOULD SAY,”THEIR OWNERS” (the banks).
Weren’t you just beaten to a mental pulp on Judge Judy?
Keep Your Home California has helped some of my clients save their homes. But, as the article notes, the program was late to the problem and could have saved many more. Moreover, information about the program was poorly and belatedly put out. While designed to work in conjunction with modifications, lender and servicer cooperation has been spotty. Still, KYHC can help some of the struggling homeowners in the current rise in foreclosures. Very good article.