A California homeowner assistance program funded with $2 billion in federal stimulus money is upping the ante to help more struggling homeowners facing foreclosure and unemployment.
The four-pronged Keep Your Home California, is designed to help 100,000 struggling homeowners, but since the program launched in February, fewer than 8,000 homeowners have received assistance, due to tight qualifying requirements and administrative delays.
To cast a wider net to cover more homeowners, California Housing Finance Agency program recently removed a “cash out” restriction that previously disqualified many homeowners. Homeowners previously were not eligible for the programs if they had consummated a cash-out refinance on their home.
It will also begin to assist homeowners who own second homes, a provision not previously available. And, for unemployed homeowners, it has increased both the amount of mortgage payment assistance and the length of time unemployed homeowners can receive the assistance.
Homeowners who’ve taken cash out in a refinance or equity loan are more likely to be “underwater” or owe more on their home than the home is worth. Because they are behind the eight ball they likely are also more in need of assistance.
“The most important change to our area in the new guidelines is the change that removes the limits as to how much one’s home can be underwater,” said Kim DiBenedetto an agent with Coldwell Banker Del Monte Realty in Carmel.
“The previous restrictions eliminated 99 percent of our marketplace because some homeowners are upside down by as much as 200 percent or more. No one really qualified before based on the amount their home was underwater. So this change should hopefully include many more homeowners in our area,” she added.
First, in Monterey County , households are limited to $81,350 in income to qualify for any of the programs. Each program has additional qualifying requirements.
Here’s a quick rundown of each program.
UMA provides mortgage payment assistance to eligible homeowners who have experienced an involuntary job loss and are receiving California unemployment benefits.
UMA benefit assistance can be up to $3,000 per month for as long as nine months, for a maximum $27,000 benefit. The old program limited payments to six months for a maximum of $18,000.
UMA benefits can be used to cover mortgage payments, including tax, and homeowner association dues.
MRAP provides assistance to eligible homeowners who, because of a financial hardship, have fallen behind on their payments and need help to reinstate their past due first mortgage loan.
MRAP assistance can be a one time payment of up to $20,000 ($5,000 more than previously offered) to cover principal, interest, taxes and insurance, as well as any homeowner’s association dues.
PRP provides assistance to eligible homeowners who have experienced an economic hardship coupled with a severe decline in the home’s value.
Homeowners who qualify for the PRP could be eligible for up to $50,000 in reduced mortgage principal, provided there’s a dollar-for-dollar match from the participating servicer, which could push the total amount of reduced principal to $100,000.
TAP provides one-time funds to help eligible homeowners relocate into a new housing situation after executing a short sale or deed-in-lieu of foreclosure program. The TAP can provide up to $5,000 in transition assistance per household.