Approval for programs depends on income, monthly mortgage payment

We’ll be honest, this blog covers a difficult topic, one that makes everyone uncomfortable.

But it’s unavoidable, and critical to your family’s future. This blog is all about dollars and how they need to make sense, especially with two of our programs.

Keep Your Home California counselors and mortgage servicer representatives carefully consider income under all four programs, but especially the Mortgage Reinstatement Assistance and the Principal Reduction programs. It’s the only way the programs will work.

The Mortgage Reinstatement Assistance Program offers as much as $20,000 for financially strapped homeowners to basically catch-up on their mortgage payments.

The Principal Reduction Program provides a maximum of $100,000, with the mortgage servicer agreeing to a dollar-per-dollar match to cover half of the overall reduction. The program also reduces the monthly mortgage payment, a much-appreciated benefit for struggling homeowners.

But both programs have a major requirement: Homeowners must have adequate income to keep up with the modified mortgage payments. The servicer, the company that collects the mortgage, can lower the principal and/or the interest rate, but homeowners must be able to make the monthly payments going forward, after the changes are in place.

Under the Mortgage Reinstatement Assistance Program, the monthly payment, including insurance and taxes, cannot exceed 38% of the homeowner’s gross monthly income. With the Principal Reduction Program, the monthly mortgage payment cannot be more than 31% of the homeowner’s gross monthly income.

For example, if a homeowner’s gross monthly income is $5,000, she cannot spend more than $1,900 for her mortgage-related obligations under the Mortgage Reinstatement Assistance Program – or $1,550 for the Principal Reduction Program.

Otherwise, it will create another challenge for financially strapped homeowners, who are much more likely to face foreclosure or a short sale down the road.

So, please contact the counseling center and see if you qualify for the Mortgage Reinstatement Assistance or Principal Reduction programs. Of course, there are some requirements – including you must meet income limits – and your servicer must participate in the program, but both programs are an available tool for homeowners.

You can learn more about Keep Your Home California at — or, in Spanish. Of course, you can always call the counseling center at 888-954-5337 from 7 a.m. to 7 p.m. weekdays and 9 a.m. to 3 p.m. Saturdays.

Image: renjith krishnan /