Unemployment Mortgage Assistance Program now helps homeowners catch-up on past-due mortgage paymentsPosted: December 14, 2017
Losing a job and looking for work is tough. Just ask anyone who has gone through the experience.
Searching for job openings online, sending out resumes – in some cases drafting cover letters – and going to interviews is often more difficult and time-consuming than a full-time gig.
Keep Your Home California continues to expand to make the experience for job-seekers who own homes much easier, more helpful and less stressful. The free mortgage-assistance program provides assistance to out-of-work homeowners so they can focus on the job search and not worry about their monthly mortgage payments.
To more effectively help homeowners, Keep Your Home California recently made some changes to the Unemployment Mortgage Assistance Program. The program now allows homeowners to get as much as 18 months or a total of $54,000 in financial assistance, whichever comes first. The move opens the door to the program for homeowners with mortgage payments of more than $3,000, the previous limit.
For example, jobless homeowners with a $3,600 monthly mortgage payment could get up to 15 months of assistance from the Unemployment Mortgage Assistance. A larger payment over less time, but still not exceeding the $54,000 limit.
Keep Your Home California has also adopted in recent weeks another major change to the Unemployment Mortgage Assistance Program – the state-managed program can now help homeowners catch-up on past-due mortgage payments, a rather common challenge for many households looking for work.
Another example: An out-of-work homeowner has a monthly mortgage payment of $4,000, but gets behind by three months as he looks for work. Under the new changes, Keep Your Home California will help the homeowner “catch-up” on those past-due payments of $12,000 and cover the monthly payment of $4,000 – again up to a maximum of $54,000. Under this scenario, Keep Your Home California can help the homeowner for as long as 10 months.
Homeowners can qualify for Keep Your Home California’s Unemployment Mortgage Assistance Program if they are eligible for unemployment benefits from the state Employment Development Department – or they have received jobless benefits within the past 60 days.
Even if a homeowner’s EDD benefits have already expired, as long as it was less than 60 days ago, they can still qualify for assistance.
Before homeowners can receive assistance from Keep Your Home California, they must meet the core requirements, including a financial hardship, such as a job loss, cut in pay, divorce, death in the family or extraordinary medical expenses.
They must also 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. A vast majority of mortgage servicers, including Bank of America and Wells Fargo, participate in the federally funded program.
Keep Your Home California has issued almost $1.9 billion – or about 90% of the funding allocated for the program – to 78,000 households across the state.
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.
Feature photo by ChameleonsEye/Shutterstock.
How much does principal reduction help homeowners struggling with their mortgage due to a financial hardship?
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.
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.
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.”
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.
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.
Sometimes change is good, especially when it provides as much as $100,000 in principal reduction for underwater homeownersPosted: April 14, 2014
Keep Your Home California officials are always looking to improve the free mortgage-assistance program for hard-hit homeowners. The program has undergone many changes since starting in February 2011. The next four blog posts will detail many of these program changes – and how they help homeowners.
California’s housing market continues to improve, with double-digit price increases every month for the past 24 months (as of February 2014).
Despite the dramatic gains, many homeowners are still upside down or “underwater” on their existing mortgage, meaning they owe more than their home is worth. In fact, according to a recent CoreLogic report, nearly one out of every eight California homeowners with an existing mortgage owes more than the value of their home. In some regions, such as the Central Valley and Inland Empire, the percentage of homeowners with underwater mortgages is much higher.
Keep Your Home California – a federally funded, state managed program – could help homeowners reduce their principal by as much as $100,000. The assistance provided through the Principal Reduction Program can get homeowners closer to being right-side-up on their mortgage. An improving economy and housing market could do the rest to return homeowners to a positive equity situation.
Since it started in February 2011, the Principal Reduction Program has undergone many changes with the goal of helping more homeowners who are struggling with their underwater mortgages.
For example, a dollar-for-dollar match requirement from mortgage servicers was eliminated in late 2012. This change was made to attract more mortgage servicers – mission accomplished (see below) – and make more homeowners eligible for the program.
In November, Keep Your Home California officials made another major change – a loan-to-value ratio of 140% or greater qualifies as a financial hardship, opening the door for more homeowners to apply for the Principal Reduction Program.
It’s a big change since homeowners must demonstrate a financial hardship in order to qualify for any of the four Keep Your Home California programs. Other types of qualifying financial hardships include a job loss, a decrease in income, a divorce, extraordinary medical expenses, etc.
These changes have allowed the free program to assist many more homeowners. Keep Your Home California approved 1,619 homeowners for the Principal Reduction Program in 2013, a huge increase from the 940 homeowners during the previous two years, combined. The $158.4 million in total Principal Reduction Program funds that were provided by the end of 2013, represented a 384.1 percent increase from the end of 2012.
Homeowners are also being approved faster – about 70 days during the fourth quarter, compared to 110 days since the program started. The average homeowner approved for the program received $77,000 in principal reduction – and enjoyed a 23 percent drop in their monthly mortgage payment, saving about $360 per month.
There are some additional requirements to qualify, including meeting the county-by-county income limits – from about $69,000 to $126,000 – and the homeowner’s mortgage servicer must participate in the program.
Currently, about 120 mortgage servicers – including Wells Fargo, Bank of America, Chase and Citibank – are enrolled in the Principal Reduction Program. In comparison, only 11 servicers participated in the principal reduction effort in December 2011.Change has been good for Keep Your Home California – and the thousands of homeowners who have benefited from the mortgage-assistance program. And officials will continue to look at new ways to improve the program.
If you have additional questions, would like more information or want to apply for the program, call 888-954-KEEP (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. Translators are available, so counseling sessions can be conducted in virtually any language.
Image courtesy of ddpavumba / FreeDigitalPhotos.net