California promotes expanded availability of mortgage relief

California housing officials are urging households to take advantage of Homeowner Assistance Fund resources following recent changes to eligibility, including updated area median-income levels. 

The new income thresholds will qualify more mortgage borrowers for up to $80,000 in financial assistance. Funding was originally made available in late 2021 under provisions of the American Rescue Plan Act in order to help households encountering economic distress due to economic impacts of COVID-19. 

"Even now, too many homeowners are still struggling to recover from the financial toll of the pandemic. This adjustment could mean that more families will not only save their house, but their home," said Rebecca Franklin, president of the CalHFA Homeowner Relief Corporation, in a press release.

The Golden State's Homeowner Assistance Fund already expanded in February this year to make relief available to more borrowers, including reverse mortgage holders. It also opened up to support households who may have already received some form of pandemic-related loss mitigation, such as a partial-claim second mortgage or loan deferral if granted in or after January 2020.

Homeowners can qualify for federal relief if combined income comes in at or below 150% of their area's median levels, as determined by the U.S. Department of Housing and Urban Development. Qualifying thresholds rose across most California counties from 2022 to 2023, and range from $99,000 to $223,000 for a household with two residents age 18 or older. But eligible income decreased in a few of California's wealthier markets, including San Francisco and adjacent counties, where the amount shrank from to $223,000 from $223,700. 

Los Angeles County saw the eligible-income total increase to $151,350 from $142,950. Meanwhile, the limit in Santa Clara County, which includes San Jose, also grew to $214,100 from $202,200. 

Qualifying limits were also published for households of other sizes, with the range for single homeowners running from $96,200 to $195,100. For households with three adult residents, the upper threshold is now between $111,400 and $250,850. 

Eligible homeowners may apply for funding online to catch up on late or missed mortgage and property tax payments, or to help pay partial-claim or deferred amounts. Struggling homeowners with reverse mortgages may also apply it to their insurance costs.

Focus on state HAF programs is currently growing as regulators underscore to the lending industry its responsibility to provide means available to help homeowners avoid foreclosure. Some states with remaining funds, which the Department of the Treasury meted out beginning in 2021, have amended their original terms to increase uptake of the programs and protect more borrowers. 

Among those changes are extensions of original application deadlines and the addition of reverse liens to the pool of eligible loans. Earlier this month, Hawaii doubled the maximum amount available through its program and stated it could provide assistance for utility payments and selected other charges even to households without an existing home loan.

The Biden Administration made almost $10 billion in Homeowner Assistance Fund aid available nationwide through the American Rescue Plan Act, with $750 million granted to California. Each state took responsibility for their program's administration, regulations and fund disbursement. CalHFA estimates it will allocate all of its funds by September 2025.

The range of different policies and campaigns are resulting in varied outcomes across the country. While a handful of states have already closed their programs, the majority remain open to new applicants. But some states, such as Pennsylvania, encountered problems with vendors used, leading the Keystone State to put some of its efforts on hold.