The number of underwater homeowners who received principal reductions on their mortgages through the Keep Your Home California program increased dramatically in 2013.
More than 1,600 homeowners were approved in 2013, according to the final quarterly report of the California Housing Finance Agency, marking a 272% increase from 940 homeowners who received a principal reduction at the end of 2012. The growth has been even more staggering in dollar amounts reaching $158.4 million at the end of 2013, up 384% from the end of 2012.
In November, Keep Your Home California officials announced that homeowners with 140% or greater loan-to-value ratios meet the financial hardship criterion for the Principal Reduction Program. Changes in the program made it easier for homeowners to apply; 70% of the applications for the Principal Reduction Program since its inception in February 2011 were received in 2013, the agency noted in a press release.
"Many California homeowners are continuing to struggle with their mortgage payments and need financial help, despite the much-improved real estate market," said Claudia Cappio, executive director of the California Housing Finance Agency that oversees Keep Your Home California program. "It's certainly paying off."
About 120 servicers are now enrolled today in the Principal Reduction Program, compared to less than 50 at the end of 2012. Moreover, some of the largest banks, including Wells Fargo, Bank of America, Chase and Citibank have approved more homeowners representing 73% of the total in January compared to 49% in July.
Homeowners were approved faster: taking 70 days during the fourth quarter, compared to 110 days since the program started. The average homeowner received $77,000 in principal reduction, up 23% saving about $360 per month.
"The housing market has improved, but there are still regions in the state where many homeowners have underwater mortgages," Cappio said.