Keep Your Home California can help homeowners who received HAMP modifications lower their monthly mortgage payments

More than 300,000 homeowners in California have benefited from a federal program that lowers their interest rates – and their monthly mortgage payments.

The federal government’s Home Affordable Modification Program (HAMP) has been a much-appreciated and greatly needed program for homeowners struggling with their mortgage payments. Almost 325,000 homeowners in California have been approved for permanent loan modifications under HAMP, saving an average of $720 per month – and allowing many of them to remain in their homes.

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However, after five years at a rate as low as 2%, most homeowners in HAMP Tier 1 modifications will experience an interest rate increase, up to 1% per year until their rate adjusts to the market rate at the time of their modification.

For California homeowners, the median interest rate after adjustment will be 4.5% – well below their interest rate before modification. The final rate step-up will result in homeowners paying a median of $317 more per month.

For some homeowners, even a slight payment increase could make it difficult to meet their monthly mortgage obligation. If homeowners find themselves in this situation, Keep Your Home California may be able to help.

Keep Your Home California’s Principal Reduction Program offers as much as $100,000 to reduce the outstanding principal balance, which can save homeowners hundreds of dollars every month on their mortgages. Homeowners must be able to demonstrate a financial hardship in order to qualify for assistance through the program. An increase in a homeowner’s monthly mortgage payment that causes the payment to be unaffordable is a qualifying hardship.

The average homeowner approved for the Principal Reduction Program had their mortgage payment reduced by $269 per month during the second-quarter of 2014. And their average loan-to-value ratio fell from 146% to 112% during the second quarter.

So, homeowners approved for the state-managed program can benefit with lower monthly payments – and be much closer to right-side-up on their mortgage.

To qualify, homeowners must meet county-by-county income requirements, and their mortgage servicer must participate in Keep Your Home California. Currently, more than 200 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 http://keepyourhomecalifornia.org/participating-servicers/.

If you would like more information or want to apply for Keep Your Home California, call 888-954-KEEP (5337) or visit www.KeepYourHomeCalifornia.org (those more comfortable speaking Spanish should visit http://conservatucasacalifornia.org/). 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.

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