Even during best of times, many Californians continue to struggle

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.

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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.

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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.

Senior Couple at Home

“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.

 

 

 

 


Keep Your Home California expands Reverse Mortgage Assistance Pilot Program

Change can be good, especially when it involves coming to the aid of a struggling homeowner.

Keep Your Home California has expanded its Reverse Mortgage Assistance Pilot Program, allowing more senior homeowners at risk of foreclosure because of past-due property expenses to qualify for as much as $25,000 in assistance.

The pilot program is now available to low and moderate income senior homeowners who have proprietary reverse mortgages. Previously, only homeowners with a Federal Housing Administration (FHA) Home Equity Conversion Mortgage (HECM) were eligible for program consideration. .

Keep Your Home California also recently streamlined the counseling process, allowing homeowners to receive the mortgage assistance much faster.

The pilot program, which started in early 2015, was established to help homeowners 62 years or older who are at risk of losing their home to foreclosure after getting behind on their reverse mortgage property-related expenses.

“The taxes are so high, and they go up every year. I just didn’t have enough income.” Verna H.

Although homeowners receive income from reverse mortgages, they are still responsible for property-related expenses, including property taxes and homeowners insurance. And fast-rising home prices have a financial effect on senior homeowners with reverse mortgages, especially those who live on fixed incomes.

“The taxes are so high, and they go up every year,” says Verna H., who bought her home in Southern California in 2005 and received a reverse mortgage on the property two years later. “I just didn’t have enough income.”

It’s an all-too common concern for senior homeowners. But Keep Your Home California’s reverse mortgage assistance program definitely helps.

“It saved our lives,” says Joanne H., a homeowner with a reverse mortgage in Central California who has benefited from Keep Your Home California.  “The weight it took off … you just don’t know. We were going to lose our home.”

Keep Your Home California’s Reverse Mortgage Assistance Pilot Program has helped Verna, Joanne and many other seniors avoid foreclosure and get back on solid financial ground.

“It was a real lifesaver to me,” says Jeanette M., who moved into her Southern California home in 1999 and received a reverse mortgage several years ago. After her husband passed away, her already tight budget became even more difficult. “It was not a pretty picture. We were way in the hole.”

The details about the program

Special counseling from a HUD approved nonprofit agency allows seniors to assess their financial situation and helps them manage their delinquent property-related expenses. In addition to reinstating qualifying homeowners’ past-due expenses, the Reverse Mortgage Assistance Pilot Program can also provide up to 12 months of additional assistance for future expenses, in order to help get homeowners back on their feet. Senior homeowners must meet county-by-county income limits and be able to document an eligible financial hardship such as — loss of income, a divorce, a death in the family or extraordinary medical expenses – in order to qualify for the free mortgage-assistance program.

Homeowners must also live in the home with the reverse mortgage and demonstrate their ability to make the property expenses going forward.

“People are scared because they don’t think the program can help, but it’s not that way,” says program recipient Jennie M., who lives in Central California. “It’s a positive step that can help you.”

Homeowners seeking assistance should contact their reverse mortgage servicer to begin the application process for the reverse mortgage program. Fifteen mortgage servicers participate in the program: American Advisors Group; Celink; Champion; Financial Freedom; James B. Nutter; Liberty Home Equity Solutions in Michigan and Texas; Live Well Financial Inc.; Ocwen Loan Servicing LLC; Plaza Home Mortgage Inc.; Reverse Mortgage Funding (RMF); Reverse Mortgage Solutions (RMS); SunWest; Urban Financial of America and Wells Fargo.

Keep Your Home California has set aside about $10 million for the program, enough to help about 830 seniors. The average senior homeowner will receive about $13,000. As of December 31, 2016, 537 homeowners received $6.7 million in assistance through the program.

If you would like more information about the Reverse Mortgage Assistance Pilot Program, please visit www.KeepYourHomeCalifornia.org. Homeowners more comfortable with Spanish should visit www.ConservaTuCasaCalifornia.org.

 


What is principal reduction and how does it help homeowners?

How much does principal reduction help homeowners struggling with their mortgage due to a financial hardship?

Just ask homeowners Charles and Kathleen, Gordon and Bettie, or Elaine (click the links and read their stories).

All these homeowners have benefited from Keep Your Home California’s Principal Reduction Program, which offers as much as $100,000 in principal reduction – all for free. In fact, almost 9,500 homeowners have been approved for the Principal Reduction Program.

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Charles and Kathleen

The popular program assists homeowners with unaffordable and/or underwater mortgages in California. About one of every eight homeowners with a mortgage in California has a negative equity mortgage.

Almost half of the homeowners approved for Keep Your Home California in second-quarter 2016 were enrolled in the Principal Reduction Program.

The program lowers principal – the amount owed on the mortgage – and also often reduces the monthly payment. In fact, the average homeowner approved for the Principal Reduction Program enjoyed a monthly mortgage payment reduction of $258, from $1,400 to $1,142.

That means fewer dollars owed and more money in your pocket. It’s a winning combination for everyone, from homeowners to local businesses.

San Francisco homeowners Charles and Kathleen save about $300 every month, thanks to Keep Your Home California’s Principal Reduction Program. “It’s like a weight taken off our shoulders,” Charles says.

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Elaine

The lower monthly payments have definitely helped Elaine of Southern California, who was forced into an earlier-than-planned retirement and receives significantly less income, mostly from Social Security. Her principal was reduced by $81,500, which lowered her monthly mortgage by almost $400.

 

“It’s really made a big difference,” Elaine says

Bettie and Gordon, also of Southern California, save a few hundred dollars every month from the program.

“That was probably one of the happiest days of our lives,” Bettie says of when she and her husband were approved for the Principal Reduction Program.  “The big thing is we are still in our home, and we can stay here.”

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Bettie

And that’s the goal behind the Principal Reduction Program. A vast majority of homeowners who have received principal reduction assistance from Keep Your Home California remain in their home two years later.

Keep Your Home California has three forms of principal reduction. Each plan helps homeowners in a unique way.

  • Principal Reduction-Affordability Provides principal reduction assistance to eligible homeowners with an unaffordable mortgage payment, defined as a debt-to-income ratio greater than 38% of the gross household income. The homeowner does not need to have an underwater – or negative equity – mortgage. The average homeowner has their principal balance reduced by $64,478, and the monthly payment by $296.
  • Principal Reduction-Recast Allows homeowners to obtain an affordable payment and lower total debt associated with their negative equity mortgage without using a servicer-provided loan modification. The rate and terms of the loan do not change, the loan is simply re-amortized based on the new, lower outstanding principal balance, which leads to lower monthly payments. The average homeowner has their principal balance reduced by $56,306, and the monthly payment by $217.
  • Modification In conjunction with a servicer-provided loan modification, program funds are used to lower the homeowner’s outstanding principal balance. The modification changes the terms of the mortgage to ensure the homeowner will have affordable monthly payments going forward. The average homeowner has their principal balance reduced by $37,193, and the monthly payment by $540.

Now, homeowners must have endured a financial hardship, such as a job loss, cut in pay, divorce, death in the family, extraordinary medical bills, or other financial challenges in order to qualify for the Principal Reduction Program. Keep Your Home California representatives will help determine whether the hardship qualifies for the program.

California Suburban Sprawl

 

Homeowners must meet county-by-county income requirements and their mortgage servicer – the company that collects the monthly payment – must participate in Keep Your Home California. Almost 190 servicers are enrolled in the Principal Reduction Program, including Bank of America, Wells Fargo and U.S. Bank.

Homeowners interested in learning more or applying for the program should call the counseling center at 888-954-KEEP (5337) or find more information at 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.

 

 


Documentation paves the way for up to $100,000 in free mortgage assistance

Paperwork is part of the application process with Keep Your Home California.

Nothing really new to you here — many of the documents that were necessary when you applied for a mortgage are also required for Keep Your Home California. But our application process may make homeowners eligible for much-needed financial assistance to ease their mortgage problems.

Instead of spending thousands of dollars when obtaining a mortgage –– for closing costs, down payment and escrowed funds — the Keep Your Home California application process is free.

On top of that, the federally funded, state-managed program is actually helping you save your home – along with your commitment, your effort and the money you have invested in your home. Plus, you don’t have to move and, for some people, that is priceless.

documents

Certain documents are needed to determine a homeowner’s eligibility for Keep Your Home California assistance. Documentation of eligibility is required before assistance may be provided, in order to safeguard this taxpayer-funded program.

The following are the most frequently required documents needed to apply for Keep Your Home California:

  • Pay stubs
  • EDD pay stub, if applying for the Unemployment Mortgage Assistance Program
  • Bank statements
  • A hardship affidavit letter (more information regarding hardships below)
  • Third-party disclosure
  • Tax forms from previous years, such as your 1040s
  • Current property insurance statement
  • Current property tax statement
  • A copy of a short sale or deed-in-lieu of foreclosure agreement (if applying for the Transition Assistance Program)

Now, each homeowner – and their situation – is different, so additional documents may be needed to verify eligibility for assistance.

It is almost impossible to overstate the importance of documentation in the Keep Your Home California application process. The reasons why homeowners need the mortgage assistance in the first place are revealed through the documents they provide.

Also, documents are vital to a homeowner’s eligibility determination. In fact, an application for assistance is not complete until all required documents have been provided. The documents are the key to unlocking the door to assistance from Keep Your Home California, which must meet federal requirements to safeguard this taxpayer-funded program.

There are three unique Keep Your Home California programs designed to help homeowners remain in their homes:

As mentioned above, homeowners must have endured or still be suffering from a financial hardship, such as a job loss, cut in pay, divorce, death in the family, extraordinary medical bills or other financial challenges in order to qualify. Keep Your Home California representatives will help determine whether your hardship qualifies for the program.

Also, homeowners must meet county-by-county income requirements and their mortgage servicer – the company that collects the monthly payment – must participate in Keep Your Home California.

Homeowners interested in learning more or applying for the program should call the counseling center at 888-954-5337 or find more information at www.KeepYourHomeCalifornia.org or at 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.

Photo courtesy of the artists of Unsplash.

 


A mortgage payment could be cheaper than paying rent

Some California homeowners dealing with a cash crunch could be considering difficult but necessary options — perhaps foreclosure, a short sale or even selling their home with little or no equity afterwards.

But what happens when the deal closes or the homeowner walks away? Where will the homeowner and their family live?

It’s an important and often pricey question.

California homeowners that believe living mortgage-free means more money in their pocket, may want to reconsider. In many cases, former homeowners could actually pay more in monthly rent than their previous monthly mortgage payment, according to industry reports.

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California rental rates have increased about 15% during the past year, and more in some areas of the state. In fact, the Golden State has six of the 18 most-expensive metropolitan areas in the nation for rent, including four in the top 10.

A two-bedroom apartment in San Francisco will cost about $4,650 per month — the highest rent in the nation and almost $1,000 more than second-place New York City, according to Zumper.

Los Angeles is the second most-expensive city for rent in California (and fifth nationwide) at $2,500, followed by San Jose (sixth in the U.S) at $2,308 for a two-bedroom home. Oakland finished as fourth most expensive at $2,270, followed by San Diego at $1,840, according to Zumper.

Earlier this year, the Economic Roundtable put out a report that found 13,000 people become homeless in Los Angeles County each month, due to the high cost of housing.

Even if you live in California’s midsize, inland cities, rent could cost a few hundred dollars more than a mortgage, according to Zillow. For example, the average rent for a three-bedroom home in Sacramento is $1,459, with Bakersfield and Redding at $1,374 and $1,311, respectively.

Sure, as a renter you don’t have to pay property tax and homeowner’s insurance, but you don’t have the tax benefits of homeownership, either. Keeping people as homeowners with an affordable mortgage payment is a better option than having them enter the high-cost rental market due to a financial hardship.

So, what if you could actually stay in your home?

Well, Keep Your Home California, the free mortgage-assistance program, has four distinct programs that could help. The federally funded, state-managed program has one primary goal: help homeowners stay in their homes.

For example, Keep Your Home California’s Mortgage Reinstatement Assistance Program allows homeowners to catch-up on their past-due payments, up to $54,000. Now, homeowners must be able to make the payments going forward, but this gives them a clean slate and the opportunity to remain in their home.

The Principal Reduction Program offers as much as $100,000, lowering their principal balance and often reducing the monthly mortgage payment by hundreds of dollars. The program is designed to help homeowners with unaffordable or underwater mortgages.

And the Unemployment Mortgage Assistance Program provides up to $3,000 per month for 18 months, or a total of $54,000, for out-of-work homeowners. Rather than worrying about the monthly mortgage payment, homeowners can focus on finding a job.

Of course, Keep Your Home California has some requirements, including the homeowner’s mortgage servicer, the company that collects the monthly payment, must participate in the program. More than 240 mortgage servicers are currently enrolled in the program, including Bank of America, Wells Fargo and Chase.

And homeowners must meet county-by-county income requirements, which range from about $70,000 in rural counties to more than $120,000 in some Bay Area counties. Additionally, homeowners must have suffered a financial hardship — such as a job loss, cut in pay, divorce or extraordinary medical expenses — in order to be eligible for the program. Severe negative equity, a loan-to-value ratio of 120% or more, is considered a financial hardship for the Principal Reduction Program.

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 (Spanish speakers 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 iosphere at FreeDigitalPhotos.net.

 


Some helpful tips to make the Keep Your Home California application process much easier

Keep Your Home California receives about 1,500 calls daily from financially struggling homeowners.

Each homeowner, from the empty-nesters in Eureka to the newlywed couple in Norco, has a financial hardship and a one-of-a-kind story. Sure, some of the details may be similar – such as a job loss, cut in pay, divorce or extraordinary medical bills – but none are the same.

As a result, applying for the mortgage-assistance program is far from a cookie-cutter, one-size-fits-all effort and requires communication, details, some documents – and, yes, even patience.

KYHC homepage

We want to share a few helpful tips that will make the application faster and improve the overall experience.

Before calling the counseling center, homeowners should check the list of mortgage servicers – the company that collects the monthly payment – participating in Keep Your Home California. More than 200 mortgage servicers, including Bank of America, Wells Fargo and Chase, are enrolled in the program. If your mortgage servicer is not on the list, then unfortunately you are not eligible for the program.

Homeowners should also visit the Keep Your Home California homepage and complete the short online questionnaire, which can help determine their eligibility – and the program that best fits their situation. Keep Your Home California is made up of four programs each designed to address different situations that face homeowners who may be at risk of foreclosure:

  • Principal Reduction Program: Homeowners with negative equity could qualify for a maximum of $100,000 in principal reduction, which will also often cut their monthly mortgage payments. A mortgage with a loan-to-value ratio of 120% or greater is considered an eligible financial hardship for the program. Homeowners must also be able to make their mortgage payments going forward in order to be eligible for the program.
  • Unemployment Mortgage Assistance Program: Out-of-work homeowners collecting jobless benefits from the state Employment Development Department can receive as much as $3,000 per month in mortgage assistance for up to 18 months.
  • 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. To be eligible for the program, homeowners must have recovered from their financial hardship and be able to make their mortgage payments going forward.
  • Transition Assistance Program: Homeowners who have reached an agreement with their mortgage servicer for a deed-in-lieu of foreclosure or a short sale could receive up to $5,000 in relocation assistance.

If your mortgage servicer is enrolled in the program and you’ve completed the online eligibility form with positive results, call the counseling center as soon as possible and learn more about Keep Your Home California.

Call the counseling center at 888-954-KEEP (5337) between 7 a.m. and 7 p.m. weekdays and 9 a.m. to 3 p.m. Saturdays. Counselors are available in English and Spanish, and translators are available for free in virtually any language.

When you call, please be aware that applicants must complete a private counseling session, which takes about 45 minutes. All folks listed on the mortgage – such as a husband and wife – must be on the phone at the same time.

We strongly suggest you have a pad of paper and pen available during this counseling session, along with your mortgage loan number and most recent mortgage statement. Also, have your most recent wage or income information ready.

You should also be prepared to discuss your financial hardship – as mentioned above, a job loss, cut in pay, divorce, death in the family, extraordinary medical bills – a requirement for Keep Your Home California.

If you appear to be a good candidate for the program at the conclusion of the counseling session, you will be asked to fax or mail some documents to the center for review by Keep Your Home California and your mortgage servicer. Be prepared to send in proof of income – a W-2 or 1099 statement – bank statements, the mortgage payment statement and possibly additional documents.

Homeowners should send the documents as soon as possible to expedite the review process. Also, homeowners should return calls immediately when contacted by Keep Your Home California.

The review process can take 30 to 45 days and often longer for the Principal Reduction Program. The faster a homeowner can send in the documents and respond to questions, the quicker the review process – and the sooner for approval for the program.

Of course, not everyone who applies is approved for the program. But by following the advice above, you will improve your chances – and reduce the wait.


Do the math, Keep Your Home Californians makes sense – and saves money

Number-crunching is an American tradition, from baseball players’ batting averages to counting the days to summer vacation.

Facts and figures, for better or worse, shape our lives.

Keep Your Home California – a federally funded, state-managed mortgage assistance program – deals with a ton of numbers and files a quarterly report with the U.S. Treasury Department. And some of the figures were a bit head-turning in the recent report.

For example, almost 99% of homeowners are still in their homes six months after receiving assistance from Keep Your Home California. Obviously, this helps hard-hit homeowners, many who are without work. But nearby homeowners also benefit from the program, with fewer homes entering foreclosure and home prices stabilizing.

Numerous other figures caught our attention in the report:

  • First-time applicants increased 64% during the second quarter compared to first-quarter 2012. Aggressive advertising and marketing efforts have helped, along with word of mouth.
  • Much of the additional applications came from the Unemployment Mortgage Assistance Program. Keep Your Home California approved 68% more applications for the program during the second quarter compared to the first three months of the year. The state Employment Development Department issued a mailer detailing the Unemployment Mortgage Assistance Program to hundreds of thousands of homeowners during the quarter, the biggest reason for the boost in applications. The program offers as much as $3,000 per month for up to nine months in mortgage assistance for homeowners collecting benefits from the EDD.
  • About 25% of homeowners enrolled in the Unemployment Mortgage Assistance Program have found employment and no longer had a need for the mortgage assistance through  Keep Your Home California.
  • We approved 18% more homeowners for the Mortgage Reinstatement Assistance Program during the second quarter compared to the first quarter. The program offers homeowners as much as $25,000 to catch up on their mortgage payments.
  • Almost three of every four homeowners approved for Keep Your Home California earn less than $50,000 per year; 90% earn less than $69,000.
  • Women rule, really. OK, we already knew this, but almost 60% of homeowners applying to the program are women. This just shows that women ask for help, men, well, you know …
  • More than 90 servicers are participating in the program, with almost a third enrolled in all four programs. This is a dramatic increase from several months ago. The more servicers participating in the program, the more homeowners we can help.

Certainly, the above figures are great, but the bottom line is we want to help even more homeowners. We want to keep our hitting streak going, and end the season on a high note.

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.

Image courtesy of [image creator name] / FreeDigitalPhotos.net