Unaffordable monthly mortgage payment? Maybe Keep Your Home California can help

Affordable mortgage payments are a big-time concern for many homeowners in California, especially for families whose income has declined in recent years.

Keep Your Home California – the free mortgage assistance program — recently changed its Principal Reduction Program in order to help more low- and moderate-income homeowners struggling with their mortgage payments. Homeowners who have an unaffordable first mortgage payment may qualify for up to $100,000 in assistance.

The state-run program’s goal is to help homeowners attain an affordable mortgage payment, before they fall behind on their payments.

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Keep Your Home California will assist homeowners who have suffered a financial hardship – such as a loss of income, divorce, death or extraordinary medical bills — and help solve their mortgage troubles.

The change allows homeowners with a hardship and unaffordable monthly mortgage payments — greater than 38% of the homeowner’s household gross income — to qualify for assistance to reduce their principal balance. The principal reductions will often lead to savings of hundreds of dollars each month on homeowners’ mortgage payments.

It’s a big change for the program, which previously required homeowners to owe more on their mortgage than the value of their home, often referred to as negative equity or an underwater mortgage. Now, homeowners with unaffordable payments can apply and be approved for as much as $100,000 in assistance from Keep Your Home California, even if they have positive equity in their home.

“Despite an improving economy and job market, there are still many homeowners who are struggling every month …” California Housing Finance Agency Executive Director Tia Boatman Patterson said in a recent news release about the changes to the Principal Reduction Program. “Our goal is to help California homeowners prevent avoidable foreclosures.”

CalHFA oversees Keep Your Home California, a federally funded program.

Homeowners approved for the Principal Reduction Program must be able to make their monthly mortgage payments going forward.

Homeowners must also meet program eligibility requirements, including having suffered a financial hardship and county-by-county income requirements (a complete income limit list is available at http://keepyourhomecalifornia.org/income-limits/). Severe negative equity – a loan-to-value ratio of 120% or more – is considered a financial hardship under 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.