Additional Servicers Participate in Foreclosure Prevention Program

A program aimed at helping distressed California homeowners avoid foreclosures has received additional assistance from mortgage servicers.

The California Housing Finance Agency said that 20 mortgage servicing companies have joined the Keep Your Home California program that supports families who are struggling remain in their homes.

When the program began in February, there were only eight servicers that participated in the $2 billion federally funded program. Currently, the 20 servicers comprise 80% of the mortgages held by California homeowners.

“Increasing the number of participating servicers is critical because we need their partnership to assist families in California,” said Claudia Cappio, executive director of CalHFA. “We are pleased that more servicers are joining this effort and encourage others to partner with us to aid families who would like to remain in their homes.”

There are four programs that assist families who are considered to be at low- or moderate-income levels remain in their homes. Nearly 5,000 homeowners have either received funding or are in the process of getting help through one of the four programs.

Every program is limited to homeowners who meet a number of criteria, including owning and occupying the home as their primary residence, meeting income limits and facing a documented financial hardship. Each of the mortgage assistance programs requires the participation of the mortgage servicer.

The unemployment mortgage assistance program is intended to help homeowners who have involuntary lost their job and are close to defaulting on their home loans because their unemployment benefits are not enough to fund the loan. A homeowner is either provided with $3,000 a month for six months or 100% of the existing total monthly mortgage, whichever is less, to help pay the loan.

Another program that helps homeowners who have fallen behind on their mortgage payments due to a temporary change in a household circumstance such as death, illness or disability is the mortgage reinstatement assistance program. These funds can provide benefits of up to $15,000 for every household to reinstate mortgages to prevent foreclosures.

With the principal reduction program, money is provided to help a distressed borrower who is facing economic hardship whose home value is worth less than its mortgage. As part of the program, capital is given to reduce outstanding principal balances of qualifying borrowers with negative equity. This program acts as a prelude to a loan modification and lenders are required to match any assistance provided by the PRP.

The transition assistance program is intended to promote community stabilization by providing homeowners with relocation assistance when it is determined that they can no longer afford their home. TAP will be used in conjunction with a servicer-approved short sale or deed-in-lieu of foreclosure program in order to help homeowner’s transition into stable and affordable housing. Funds will be available on a one-time only basis.

“Keep Your Home California offers families a number of opportunities to remain in their homes,” said program director Diane Richardson. “Keeping families in their homes not only helps those families, but helps to stabilize neighborhoods throughout the state.”

The 20 servicers include six of the largest companies in California, such as Bank of America, JPMorgan Chase, Wells Fargo, GMAC, Citimortgage and EMC Mortgage.

Other servicers that are part of the program include the California Department of Veterans Affairs, Chase Home Finance, Community Trust, Fidelity Bank, Flagstar Bank, Guild Mortgage, Midland Mortgage Co., Navy Federal Credit Union, Statebridge, Vericrest, James B. Nutter & Co. and CalHFA.