Keep Your Home California offers as much as $100,000 to homeowners with unaffordable or underwater mortgages

Do you have an unaffordable or underwater mortgage? If so, Keep Your Home California could help.

The free, mortgage-assistance program is offering as much as $100,000 to low- to moderate-income homeowners in California with hard-to-make monthly payments or severe negative equity.

The assistance could make the difference between homeowners having some money left over at the end of the month or even staying in their home.

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In order to help more homeowners with unaffordable or underwater mortgages, Keep Your Home California has expanded its popular Principal Reduction Program. Homeowners approved for the program have received an average of $75,000 in principal reduction and a 14% drop in their monthly mortgage payments.

But what criteria does the state-managed program use to determine if a homeowner has an unaffordable or underwater mortgage, or in some cases, both?

A homeowner whose monthly payment exceeds 38% of their household income is considered an unaffordable mortgage and could be eligible for the program. For example, a homeowner who earns $5,000 per month but his mortgage payment is more than $1,900 may qualify.

And homeowners who owe more on their mortgage than their home is worth are also candidates for the program. Homeowners with a loan-to-value-ratio greater than 120% — considered severe negative equity indicative of imminent default — satisfy the financial hardship criteria for the Principal Reduction Program. For example, a homeowner whose house is currently valued at $300,000 but owes more than $360,000 may be eligible for the Principal Reduction Program.

About one of every nine homeowners in the state with a mortgage currently owes more than the value of their home, according to Zillow. But some counties and metro areas in California have a much-larger percentage of underwater mortgages.

The Inland Empire — Riverside and San Bernardino counties — has the fourth-largest percentage of underwater mortgages in the nation, at 13.9%, according to a recent CoreLogic report. And five California counties, including Imperial and Kings, have at least 25% of their homes with underwater mortgages.

It’s uncertain how many homeowners are faced with unaffordable mortgages, since many Californians are earning less than several years ago but their mortgage payments may remain the same or even higher as when they purchased their house.

Homeowners must meet county-by-county income limits, from about $70,000 in rural counties to more than $120,000 in higher-priced regions of the state.

Also, a homeowner’s mortgage servicer, the company that collects the monthly payment, must participate in the program. About 240 mortgage servicers, including Bank of America, Chase and Wells Fargo, are enrolled in the program.

Homeowners seeking more information about Keep Your Home California or any of its five programs should call 888-954-KEEP (5337) between 7 a.m. and 7 p.m. weekdays and 9 a.m. to 3 p.m. Saturdays or visit www.KeepYourHomeCalifornia.org. Representatives can answer questions and take applications in virtually any language through a translation service and there is never a fee for any Keep Your Home California services. A Spanish-language version of the website is also available at www.ConservaTuCasaCalifornia.org.