Nearly $700 million in assistance for California homeowners struggling to stay in their homes will be made available this fall, the biggest infusion of federal money aimed directly at the state's struggling home- owners since the housing market meltdown began.
The money is flowing from stimulus funds set aside for the "hardest hit" states, those that have suffered the most severe home price declines and foreclosures.
The California Housing Finance Agency, known as CalHFA, announced Wednesday that the federal government had approved its plan to establish four programs to aid homeowners, ranging from mortgage help for the unemployed to mortgage principal reduction for "underwater" owners at risk of foreclosure.
"We will use these funds to help as many families as possible remain in their homes and, in so doing, stabilize neighborhoods that have been severely impacted by foreclosures," Steven Spears, executive director of CalHFA, said in a statement released Wednesday.
More than 40,000 households are likely to be helped, said Evan Gerberding, marketing manager for Keep Your Home, the name for the new raft of CalHFA assistance programs. Homeowners with loans from any lender are eligible, not just those whose loans are insured by CalHFA.
CalHFA is working with lenders to get them to match dollar-for-dollar the funds being used to help homeowners. The agency did not say how many lenders are on board so far, but Gerberding said, "We've talked to some of the biggest lenders in the country and we've found they are in full support of this."
With financial cooperation from lenders, the number of homeowners to be helped could grow significantly, she said.
The four programs include:
Up to six months of mortgage assistance for homeowners who have lost their jobs, with a cap of $1,500 monthly.
Assistance for homeowners who owe past-due payments, with a required match by the mortgage lender or the borrower, with a cap of $15,000.
Mortgage principal reduction for underwater borrowers, those who owe significantly more on their loans than their homes are worth. Details have not been announced, but the goal is to work with lenders to get principal balances to "market levels," according to the Keep Your Home website.
"Transition" assistance for those who can't afford to stay in their homes, are completing a short sale or signing the home over to the lender in lieu of foreclosure and must move to other housing.
All the programs will be available no later than Nov. 1, CalHFA said. Programs target only first mortgages, not seconds, and only owner-occupied homes. To be eligible, borrowers must document their financial hardship, undergo financial counseling, and be low- or moderate-income, based on limits set by the state Housing and Community Development department. In Santa Clara County, a four-person household making $126,600 or less a year is considered moderate income.
Program details available so far can be found at www.keepyourhomecalifornia.com, and the site will be updated frequently, Gerberding said.
"We're very excited about this," said Martin Eichner of Project Sentinel in Sunnyvale, one of dozens of agencies statewide that provide counseling to those trying to get loan modifications and avoid foreclosure. "It's a definite effort to be more comprehensive."
Eichner applauded the plan's provisions for unemployed homeowners, who often hope to qualify for the federal Home Affordable Modification Program (HAMP) but can't if they lack income. The federal Home Affordable Unemployment Program, which goes into effect in July, will provide some unemployed homeowners with mortgage "forbearance" — adding missed payments to the back end of the loan — but will not help pay the amount due, as the CalHFA plan is designed to.
Kevin Stein of the California Reinvestment Coalition, which has advocated for homeowners seeking loan modifications from lenders, said of the CalHFA plan "the emphasis on principal reduction is the right emphasis and is consistent with where things are moving." In March, the federal government announced a new program for reducing the loan principal of more homeowners who are underwater.
But the CalHFA plan won't heal the state's foreclosure woes, he said. At the end of May, more than 132,000 California properties were scheduled for sale in foreclosure auctions, according to Foreclosure Radar.
"This will be some help for some people," he said. "We need to go beyond the 'hardest hit' fund to promote policies and laws that encourage loan modification and prevent further displacement of families."
Also on Wednesday, the Treasury Department announced its approval of homeowner assistance plans in Arizona, Nevada, Florida and Michigan, the four other original "hardest hit" states. Of the five, California received the most money.
Source: San Jose Mercury News, 6/24/2010
By Sue McAllister
smcallister@mercurynews.com
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