I just wanted to put this article out there for everybody. There are still programs to help underwater homeowners. Read and let me know what you think!
California’s Principal Reduction Program Expands Its Reach
03/25/2013 By: Krista Franks Brock
The Principal Reduction Program that functions under the Keep Your Home California program experienced a 47 percent increase in participation from the fourth quarter of 2011 to the fourth quarter of 2012, according to the Treasury.
Treasury attributes this jump in the program’s reach to recent changes that allow Keep Your Home California to finance principal reductions in their entirety rather than offering a dollar-for-dollar match to participating servicers.
Under the revised approach, about 60 mortgage servicers have opted to participate in the program, including Bank of America, JPMorgan Chase, and Wells Fargo, according to Treasury.
The Principal Reduction Program is an integral part of the Keep Your Home California program, which debuted in February 2011 and is funded through Treasury’s Hardest Hit Fund.
“By curbing mortgage debt and lowering monthly payments, homeowners are able to stay in their homes and breathe a bit easier,” Treasury stated last week.
In fact, according to Treasury, “one of the best ways to help financially strapped, underwater homeowners may be through a mortgage loan principal reduction.”
About 30 percent of California homeowners are underwater on their mortgages, according to Treasury. Eligible underwater homeowners facing financial hardships may apply for principal reductions and have their loan-to-value ratios reduced to between 105 percent and 140 percent.
On average, the Principal Reduction Program in California has reduced participating homeowners’ monthly payments from about $320,000 to about $223,000.
Thus far, about 1,000 homeowners have been assisted through the Principal Reduction Program, and about 25,000 homeowners have received assistance through the broader Keep Your Home California set of programs.
Aside from principal reductions, Keep Your Home California helps struggling homeowners in three ways. Homeowners who have lost their jobs may apply to have their monthly mortgage payments paid on their behalf for up to nine months in amounts not to exceed $3,000 per month.
Homeowners who have suffered financial hardship and fallen behind on payments can apply for financial aid to help cover missed payments and bring them current on their loans.
Lastly, homeowners who agree to a short sale or deed-in-lieu may receive assistance with their transitions to their new living arrangements.
In total, $2 billion of the total $7.6 billion allotted to the Hardest Hit Fund has been designated to the state of California. The Golden State is one of 18 states to receive funding from the federal program.