Federal Program Helping Unemployed Homeowners Pay Mortgages to Begin Payouts In California

Unemployed Sacramento residents facing possible foreclosure or Chapter 7 or Chapter 13 bankruptcy may be glad to know that the California Housing Finance Agency has finally decided to start the application process that will give unemployed homeowners up to $3,000 per month to pay their housing mortgages according to an article published in SFGate.

California has decided to implement the first of four programs launched by the United States Treasury as part of the Hardest Hit Fund. This fund consists of $7.6 billion that will provide the 18 hardest hit states with the largest drops in housing prices or high unemployment rates.

In order to qualify, a homeowner must meet specific eligibility requirements that are based on age as well as income restrictions. Additionally, the individual homeowner’s loan servicer must agree to participate in the federally funded program. Unfortunately, only three mortgage loan servicing companies had decided to join the program, but CalHFA plans to more than double that number over the upcoming week.

California intends to implement three other programs under the name “Keep Your Home California,” which will: give up to $15,000 to homeowners who have fallen behind on their mortgage payments, provide borrowers with up to $50,000 to reduce principal balances who owe more money than what their homes are worth, provide homeowners with up to $5,000 in transition assistance who give up their homes in connection with deed-in-lieu of foreclosure or a short sale. Homeowners may qualify for more than one program but are not eligible for more than $50,000 in total assistance.

While CAlHFA had planned to begin these programs last Fall, the process was delayed since the programs require the participation of loan servicers. Unfortunately, assistance from the corporate servicers has been difficult to achieve even though the lenders have something to gain from these programs as well.

These assistance programs are structured as a non-recourse, non-interest-bearing lien against the homeowners property which will be forgiven after three years. If the homeowner defaults on his or her payments then the homeowner would risk having to repay the loan. As of Friday, only Chase, CalVet and CalHFA have signed up for the unemployment assistance program.

As a Sacramento Bankruptcy Attorney I am pleased to inform individuals about the existence of these sorts of public assistance programs. Numerous people may benefit from the assistance offered and should explore these as well as the other options available to them in order to get through these difficult financial times. If you or someone you know is facing possible foreclosure you may be eligible for one of these programs. It is important to get informed and contact an individual who may be familiar with the many options available for debt relief.

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