California is enjoying a booming housing market, with record-setting prices in some areas, including the Bay Area and parts of the Los Angeles region.
But while some homeowners are cheering fast-rising prices and multiple offers in a red-hot market, there are less-fortunate individuals who are doing whatever they can to keep their home.
Luckily, Keep Your Home California – a free mortgage-assistance program – is available for many of these homeowners. So far, more than 74,000 homeowners have been helped, and thousands more could benefit from the federally funded, state-managed program.
The $2.36 billion program assists homeowners with a number of hardships, from being out of work to having an underwater mortgage – and many other reasons. In short, even with a healthy housing market in some areas, many Californians are still struggling.
Some housing markets – especially in the Central Valley, High Desert and Northern California – have been slower to recover. For example, 98% of homes in San Francisco have exceeded their previous peak price, generating hefty gains for homeowners.
But less than 4% of the homes in Bakersfield, Fresno and the Inland Empire (Riverside and San Bernardino counties) have passed their peak price, meaning many homeowners have underwater mortgages, according to a Trulia report.
In fact, almost 281,500 homeowners in California had negative equity during the first quarter and owe more than the current value of their home, according to a recent CoreLogic report.
Negative equity is not the end of the world for some homeowners. Yet “continuing to make monthly payments on an underwater home is like renting, but with the interest mortgage deduction,” says Greg Cook, a mortgage consultant in Southern California.
Basically, homeowners dealing with negative equity are not gaining and likely losing financial ground.
Another all-too common challenge for homeowners is an unaffordable mortgage. A cut in pay or an increasing interest rate (or both) can make a one-time affordable payment into a much-tougher monthly burden. If a homeowner gets behind on just a couple mortgage payments, good luck catching up.
Of course, as we all know, sometimes life-changing events happen, such as a job loss, divorce, a death in the family or extraordinary medical expenses. These are all emotional – and financial – nightmares. And even during the best of economic times, all of these challenges happen far too often.
For example, California has created about 2.49 million jobs during the past seven years, easily the best job-growth rate in the nation, according to the state Employment Development Department. It’s the equivalent of everyone in San Diego and San Jose, the second- and third-largest cities in the state.
But even with the head-turning, impressive job growth, there are still 923,000 out-of-work Californians – more than the population of San Francisco, the fourth-largest city in the state. And there are some industries, such as energy and retail, where jobs continue to disappear. For example, numerous retailers — including Macy’s JCPenney, Kmart, Sears, Staples and Bebe — have announced store closures and layoffs during the past few months.
Plus, there are some areas of the state where the economic recovery is very slow. There are eight counties with jobless rates more than double the statewide average, including four counties with double-digit rates – Colusa, Imperial Merced and Plumas.
So, as some communities thrive – impressive job growth and home price increases – others struggle to survive. But it’s not always about a particular community or a region.
Sometimes, a booming economy and housing market can have a negative effect on seniors living on a fixed income. Higher home prices often lead to higher property taxes. For a senior on a tight budget, higher property taxes can become a financial hardship.
“It caused a little disruption,” says Shirley Y. of the boost in property taxes prompted by fast-rising home prices in her Bay Area neighborhood that has become popular with homebuyers. “We were able to do it for a while … We just kept getting squeezed.”
It’s an all-too common situation for homeowners with reverse mortgages – and many others in the state.
Fortunately, Keep Your Home California can help Shirley. And with five programs, the free mortgage-assistance program can help many other homeowners with the challenges and hardships outlined above.
Homeowners just need to take the first step and contact Keep Your Home California.
In order to apply, homeowners must have a financial hardship, such as a job loss, cut in pay, divorce, death in the family or extraordinary medical expenses.
In addition to the financial hardship, homeowners must meet county-by-county income requirements and their mortgage servicer – the company that collects the monthly payment – needs to participate in Keep Your Home California.
Homeowners interested in learning more or applying for the program should call the counseling center at 888-954-KEEP (5337) or visit www.KeepYourHomeCalifornia.org or www.ConservaTuCasaCalifornia.org for Spanish speakers. The counseling center is open 7 a.m. to 7 p.m. weekdays and 9 a.m. to 3 p.m. Saturdays. Calls can be taken in virtually any language through a free translation service.
California’s economy continues to improve, with a declining jobless rate thanks to some fast-paced hiring in several industries, especially by high-tech firms in the Bay Area.
But for many Californians, finding a job remains a long, difficult struggle.
In an effort to help homeowners who are unemployed long-term, Keep Your Home California has expanded its Unemployment Mortgage Assistance Program from 12 months to 18 months.
Under the change, out-of work homeowners eligible for jobless benefits from the Employment Development Department can receive as much as $3,000 per month for a maximum of 18 months – or a total of $54,000. Previously, the limit was $36,000.
The Unemployment Mortgage Assistance Program – easily the most utilized Keep Your Home California program – is designed to help financially strapped homeowners with their mortgage payments while they look for work.
Homeowners currently enrolled in the Unemployment Mortgage Assistance Program can have their eligibility extended to 18 months, while those who were previously part of the program may also be eligible for additional benefits if they still meet requirements. Homeowners are encouraged to contact Keep Your Home California for more information at 888-954-5337.
Keep Your Home California officials carefully considered the decision to expand the free mortgage-assistance program and after reviewing numerous data, there was clear evidence to prompt the move.
For example, there were 1.35 million people in the state unemployed in October, the equivalent of everyone in San Diego, according to the EDD. And more than one of every three of those unemployed people has been without work for at least 27 weeks, considered long-term unemployment.
Eight of the state’s 58 counties – and their residents – are still enduring double-digit jobless rates, including almost 24 percent in Imperial County. And 33 counties have an unemployment rate above the statewide average of 7.3 percent.
Certainly, California’s economy has made some serious gains following the Great Recession, but clearly more job-growth is necessary, especially in the hardest-hit areas of the state such as the Inland Empire and the San Joaquin Valley.
The expansion of the Unemployment Mortgage Assistance Program will help homeowners and the communities where they live.
The Unemployment Mortgage Assistance Program is one of four programs through Keep Your Home California:
- Principal Reduction Program: Homeowners who owe more than their home is worth can cut their mortgage principal as much as $100,000 while saving hundreds of dollars every month. Homeowners approved for the program enjoyed an average savings of almost 20 percent on their monthly payments, from $1,523 to $1,229 during the third quarter.
- Mortgage Reinstatement Assistance Program: Homeowners who are behind two months or more on their payments could receive as much as $25,000 to help them “catch up” on their past-due mortgage payments. Homeowners must have recovered from their financial hardship and be able to make their mortgage payments going forward in order to be eligible for the program.
- Transition Assistance Program: Homeowners who have reached an agreement for a deed-in-lieu of foreclosure or short sale with their mortgage servicer could receive up to $5,000 in relocation assistance.
In order to qualify for Keep Your Home California, homeowners must meet program eligibility requirements, including having suffered a financial hardship – such as a job loss, cut in pay, a divorce, death or extraordinary medical benefits. Homeowners with a loan-to-value ratio of 120% or greater could meet the qualified hardship requirement under the Principal Reduction Program.
Also, 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.
Image courtesy of Stuart Miles at FreeDigitalPhotos.net.
Keep Your Home California enjoyed a banner year in 2013, with the introduction of a spokesman and a new interactive website — and a record of funds issued by the free mortgage-assistance program.
The state-funded program introduced Mario Lopez as a bilingual spokesman, with ads featuring the Extra host talking about Keep Your Home California on TV and in radio spots. A new round of commercials should appear during the next several weeks.
Also, Keep Your Home California debuted a new website that allowed homeowners to answer 12 questions to determine if they should apply for the program. The new, easier-to-use website includes homeowner Success Stories and reports and statistics about Keep Your Home California, including county-by-county and program-specific data.
The program also greatly increased its outreach to homeowners and mortgage servicers in 2013. Keep Your Home California added 67 participating servicers last year, with the overall total topping 160 servicers.
And Keep Your Home California representatives attended 142 community events to educate homeowners about the program during the year – or basically about one every two workdays.
The above efforts are all about connecting with homeowners and encouraging more people to apply for the program.
It definitely worked.
Keep Your Home California approved 13,688 homeowners for the program with combined funding of more than $307.3 million in 2013, a dramatic increase from the $201.7 million in 2012.
Much of the boom in funding is connected to the Principal Reduction Program, which increased from $30.3 million in 2012 to more than $125.6 million last year. Keep Your Home California approved 2,101 homeowners for principal reduction last year, almost four times more than the 563 homeowners in 2012.
The head-turning increase is attributed to some recent changes in the Principal Reduction Program, including a change to program criteria in November, which specified that an underwater mortgage with a 140% or greater loan-to-value ratio was considered a financial hardship. Homeowners must be able to demonstrate a financial hardship to qualify for each of the four assistance programs, so making this change to the Principal Reduction Program opened the door to a lot more people.
The Principal Reduction Program provides as much as $100,000 in mortgage assistance, a huge benefit for homeowners looking to lower their monthly payments and/or outstanding principal.
The Unemployment Mortgage Assistance program also had an increase in funding, with more than $152 million issued to homeowners last year, compared to $143 million in 2012. The program was expanded from nine months to 12 months in 2013.
About 1.54 million Californians were collecting jobless benefits in November, 233,000 fewer than a year earlier, according to the latest Employment Development Department report. Homeowners applying for the Unemployment Mortgage Assistance program must be eligible for jobless benefits.
The program provides as much as $3,000 per month for up to 12 months. Of course, if homeowners find jobs, they are removed from the program.
The Mortgage Reinstatement Assistance Program, which offers as much as $25,000 to help homeowners catch up on their mortgage payments, increased last year to $28.3 million, from $27.8 million in 2012. Keep Your Home California approved 2,066 homeowners last year for the program, down slightly from the 2,111 in 2012.
And the Transition Assistance Program, which gives as much as $5,000 to a homeowner with an approved short sale or deed-in-lieu of foreclosure to start over with a new living situation, helped 367 families last year – almost 300 more than 2012. The program issued about $1.34 million last year, compared to $335,000 in 2012.
So, as you can see, last year was a huge success for Keep Your Home California. But program officials have even loftier goals for helping homeowners prevent avoidable foreclosures in 2014.
If you have additional questions or would like to apply for any Keep Your Home California program, call 888-954-5337 or visit www.keepyourhomecalifornia.org (Spanish speakers should visit www.conservatucasacalifornia.org). The counseling center is open 7 a.m. to 7 p.m. weekdays and 9 a.m. to 3 p.m. Saturdays.