Keep Your Home California’s severe negative equity hardship criteria for the Principal Reduction Program helps more homeowners with underwater mortgages

Despite a better economy and much-improved housing markets in many part of the state, a significant number of homeowners in California continue to struggle with underwater mortgages.

In fact, about 10% to 15% of homeowners in the state still owe more on their mortgage than the current market value of their house, according to recent industry reports.


Many of these homes are in the inland areas of California, such as the Inland Empire (Riverside and San Bernardino counties) and the San Joaquin Valley, from Bakersfield to Stockton. Regardless of where homeowners live – Redlands or Redding – if they are dealing with a significantly underwater mortgage, financial help is possible with Keep Your Home California’s Principal Reduction Program (PRP).

PRP offers as much as $100,000 to help homeowners who have experienced a financial hardship, have severe negative equity or both. Since severe negative equity reduces the options available to homeowners dealing with unaffordable mortgage payments, it is recognized as a hardship under the PRP guidelines.

Homeowners with a loan-to-value ratio of 120% or greater – for example, the unpaid principal balance of the first mortgage is $360,000, but the current value of the home is only $300,000 – meet the qualified hardship requirement for the Principal Reduction Program. Based on current data, many California homeowners with mortgages have a loan-to value ratio greater than 120%.

If you are a homeowner with an underwater mortgage, you should apply for this free, government sponsored program. Between April and June of this year, homeowners that qualified for the PRP saw a reduction in the median property loan-to-value decrease from 146% to 112%, and experience an average 20% reduction in their monthly payments.

Homeowners must meet county-by-county income requirements, and their mortgage servicer must participate in the Principal Reduction Program. Currently, almost 140 servicers are enrolled in the program, including Bank of America, Wells Fargo, Chase and several other large servicers. To check the complete list of mortgage servicers enrolled in the program, visit:

If you would like more information or want to apply for Keep Your Home California, call 888-954-KEEP (5337) or visit (Spanish speakers should visit The counseling center is open 7 a.m. to 7 p.m. weekdays and 9 a.m. to 3 p.m. Saturdays. Translators are available, so counseling sessions can be conducted in virtually any language.

Image courtesy of cooldesign at


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s