The state of California has imposed a new law that may help struggling homeowners stay in their homes. The program called “Keep your home”, has went into effect in an effort to stop foreclosure. Freddie Mac and Fannie Mae are two of the financial institutions that participate in this program.
The mortgage programs offered by the state include payment assistance for unemployed and reductions to mortgages that are upside down. Since the summer, the state has disbursed $1.7 billion on over 100,000 struggling homeowners through the Troubled Asset Relief Program. Currently, the state is expecting to assist more than 300,000 homeowners. For homeowners who are unemployed, the program will pay 100 percent of the mortgage for up to one year. To qualify, the unemployed must be receiving unemployment benefits.
So far, 2,456 loans have been serviced and $136 million have been saved in reductions. There are certain requirements that homeowners must meet in order to be approved. The principal balance cannot be more than $729,750 and the household income cannot be more than $123,600.
There comes a time when California home owners are faced with economic circumstances that make it difficult for them to meet their ongoing mortgage obligations. In some cases, unemployment can be one of the major issues that caused financial set backs. When a homeowner is overwhelmed with debt, there may be other alternative options available instead of foreclosure. Loan modification or applying for one of the state programs, such as principal reduction or mortgage assistance, may be able to help homeowners stop foreclosure.
Source: sfgate.com, New rules could help distressed homeowners, Kathleen Pender, Oct. 30, 2013