Loan Modification Program for Underwater Homeowners in California - $2 Billion Paid By The State
Homeowners in California who owe more than their home is worth and are facing financial hardship may be able to take advantage of a State sponsored program called Keep Your Home California.
This $2 billion program is funded by federal funds and is targeted to offer help to about 100,000 struggling homeowners.
A key part of the plan is to reduce the loan balance on homes where the market value has dropped significantly and homeowners find themselves underwater on their mortgage.
The continued rise in foreclosures is causing a downward pressure on home values, and as more foreclosed homes become part of the available inventory, the problem continues to worsen.
The key to this new program is that homeowners can actually stay in their home with one of several loan modification options: Keep Your Home Loan Modification Plan:
Homeowners who refinanced their homes and took cash out would not qualify for this loan modification plan.
The maximum benefit for any household participating in the program is capped at $50,000.
The banks have been reluctant to reduce principal on loans for underwater homeowners, but under this loan modification program they would be reimbursed $1 for every dollar of mortgage debt forgiven.
The State is still trying to get the big lenders to sign on and agree to participate in the Keep Your Home plan, and because foreclosures on homes is so expensive banks will come out ahead financially by writing down loan balances and keeping borrowers in their homes.
Homeowners must be prepared to complete and submit an acceptable loan modification application in order to qualify for this plan.
Their monthly income, monthly expenses and bank balances will all be reviewed carefully to determine if they qualify for assistance.
Interested borrowers need to carefully prepare their paperwork so that they have the best chance of being found eligible for this new loan modification program.
This $2 billion program is funded by federal funds and is targeted to offer help to about 100,000 struggling homeowners.
A key part of the plan is to reduce the loan balance on homes where the market value has dropped significantly and homeowners find themselves underwater on their mortgage.
The continued rise in foreclosures is causing a downward pressure on home values, and as more foreclosed homes become part of the available inventory, the problem continues to worsen.
The key to this new program is that homeowners can actually stay in their home with one of several loan modification options: Keep Your Home Loan Modification Plan:
- $875 million for temporary financial help to people who have reduced income or lost their jobs, providing a maximum of $3000 per month for 6 months to cover house payments
- $790 million for principal reduction on loans - approximately 25,000 underwater mortgages could be reduced
- $129 million to provide as much as $15,000 to each homeowner to help them get current on their mortgages and get a fresh start
- $32 million to provide moving expenses and transition costs for those homeowners who can no longer stay in their home
Homeowners who refinanced their homes and took cash out would not qualify for this loan modification plan.
The maximum benefit for any household participating in the program is capped at $50,000.
The banks have been reluctant to reduce principal on loans for underwater homeowners, but under this loan modification program they would be reimbursed $1 for every dollar of mortgage debt forgiven.
The State is still trying to get the big lenders to sign on and agree to participate in the Keep Your Home plan, and because foreclosures on homes is so expensive banks will come out ahead financially by writing down loan balances and keeping borrowers in their homes.
Homeowners must be prepared to complete and submit an acceptable loan modification application in order to qualify for this plan.
Their monthly income, monthly expenses and bank balances will all be reviewed carefully to determine if they qualify for assistance.
Interested borrowers need to carefully prepare their paperwork so that they have the best chance of being found eligible for this new loan modification program.
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