Case in point: Keep Your Home California. The $2 billion, state-run mortgage assistance program has been approved for some major changes to its Principal Reduction Program.
Keep Your Home California has just eliminated the mandatory dollar-for-dollar match for participating servicers – basically the companies that collect the mortgage payments – and now funds 100 percent of principal reductions up to $100,000. Before, servicers and the federally funded program split the financial responsibility with a maximum of $50,000 each.
Of course, servicers must still be registered for California’s Principal Reduction Program and agree to an interest-rate adjustment and/or term modification to ensure homeowners have affordable and sustainable monthly mortgage payments. The sustainability is important because there is no long-term benefit if a homeowner is approved for the program but cannot make the payments down the road and the home eventually falls into foreclosure.
Keep Your Home California officials are hoping that by accepting the financial burden, more servicers will join the Principal Reduction Program and more financially strapped homeowners will get the help they need.
Currently, 20 servicers participate in the program, including Bank of America, the only big bank to sign up. In comparison, Keep Your Home California has about 70 servicers participating in at least one of its four programs.
So far, a little over 1,100 homeowners – worth a combined $69.5 million — are funded or in the process of getting money under the Principal Reduction Program.
Keep Your Home California will disburse the dollars during the first year under the Principal Reduction Program, rather than the previous three installments over a three-year period. In addition, the forgivable loan will extend from three to five years, meaning homeowners will not have to pay back the money if they remain in the home and make the mortgage payments for five years.
Get more details about the Principal Reduction Program at http://www.keepyourhomecalifornia.org/prp.htm.
We’re always reviewing the four programs, looking for the best way to meet the needs of homeowners. We’ve already made numerous changes since the program started in February 2011, so make sure to check the blog or the website for the latest information.
If you would like more information about Keep Your Home California, check http://www.keepyourhomecalifornia.org/ (or http://www.conservatucasacalifornia.org/ in Spanish) or call 888-954-5337. The processing center is open 7 a.m. to 7 p.m. weekdays, and 9 a.m. to 3 p.m. Saturdays.