Keep Your Home California, mortgage servicers help homeowners facing underwater mortgagesPosted: December 16, 2011
Note: This is the third blog in a series that details the four programs available from Keep Your Home California.
Many cash-strapped homeowners in California are staggering from a powerful one-two punch – getting behind on their monthly mortgage payments while the value of their home plummets.
For these hard-hit homeowners, the American dream has become a real-life nightmare. But a Keep Your Home California program can cut principal, lower monthly payments and reduce the number of toss-and-turn nights.
The appropriately named Principal Reduction Program offers low- to moderate-income homeowners as much as $50,000 to reduce the money owned on their mortgage. Now, lenders/mortgage servicers must participate in the program – and provide capital on a dollar-for-dollar matching basis. So, some homeowners could receive as much as $100,000 over a three-year period (now, that got your attention, huh?)
Currently, 11 mortgage servicers participate in the Principal Reduction Program, including Bank of America and GMAC. But more mortgage servicers (learn about servicers here) join the lineup every few weeks, so keep checking the complete list at http://www.keepyourhomecalifornia.org/participating.htm.
Keep Your Home California – funded with $2 billion as part of the U.S. Treasury’s Hardest Hit Fund – has set aside more than $790 million to assist homeowners “underwater” with their current mortgages through the Principal Reduction Program. And there are many homeowners that owe more – in many cases, a lot more – than the current value of their home.
In fact, the GoldenState has more than 2 million underwater mortgages, about 30 percent of the outstanding mortgages – the fifth-highest rate in the nation, according to industry tracker CoreLogic. However, California is far from the hard-to-believe 60% rate in Nevada.
So, as you can tell from the data, news reports and just talking with family members, friends and neighbors – or maybe even looking in the mirror – underwater mortgages are a serious problem in the state.
Now, just like any of the Keep Your Home California programs, there are some requirements, most notably the mortgage must be delinquent or at risk of imminent default.
In addition, just like the previously mentioned Mortgage Reinstatement Assistance Program, homeowners must have adequate income to make the modified mortgage payments. Quite simply, we need to ensure that homeowners approved for the program are financially able – and willing – to make the monthly payments and meet lender requirements. Otherwise, we are setting aside dollars that could be used for another family in desperate need of mortgage assistance.
The Principal Reduction Program also follows the same basic requirements as those mentioned in the previous two blogs:
- The first lien mortgage must be originated on or before Jan. 1, 2009.
- The applicant must own and occupy the home, which includes condominiums or town houses.
- The house must be the homeowner’s primary residence.
- Homeowners must agree to provide all necessary documentation.
- Financial hardship cannot be from a voluntary employment resignation (as in “I quit!”).
The Principal Reduction Program has other requirements, so we encourage you to read the summary guidelines at http://www.keepyourhomecalifornia.org/programs/prp.pdf .
But if you’re a homeowner facing foreclosure or are seriously underwater with the mortgage, consider the program – and let Keep Your Home California work for you.
As always, if you would like more information about Keep Your Home California and our four programs, check www.KeepYourHomeCalifornia.org (www.ConservaTuCasaCalifornia.org in Spanish) or call 888-954-5337 from 7 a.m. to 7 p.m. Monday through Friday, and 9 a.m. to 3 p.m. Saturdays.