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Assistance for Unemployed Homeowners in California Facing Foreclosures

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By : Scott Zahid    99 or more times read
As foreclosure assistance, $7.6 billion federal funds have been rolled out for 18 states. Among them, California State has received the largest amount of $2 billion. California Housing Finance Agency is handling the execution of assistance programs. About 100,000 homeowners who are unemployed and suffering from foreclosures are expected to receive help.

Four programs will be implemented to aid distressed homeowners. Initially, these programs were supposed to be launched in November 2009; however, Monday 10 January onwards application for the new program has started. Diane Richardson, California Housing Finance Agency’s director of legislation, said, “The program launched this morning and phones are open” and “the website has been updated”.

Among the four programs, only one foreclosure aid program is being piloted now, the “Unemployed Mortgage Assistance Program. The plan has been implemented under the “Keep Your Home California” initiative and the $2 billion funds are allotted under the umbrella of Hardest Hit Fund.

Other programs under the “Keep Your Home California” initiative are:

Principal Reduction Program – where extra capital will be given that will reduce the principal amount, making the monthly mortgage payments lower.

Transition Assistance Program- helps with short sale, deed in-lieu and provides assistance with relocating to another place.

Mortgage Reinstatement Assistance Program- will help in recovering the outstanding balance in defaulted mortgages by providing aid up to $15,000.

Homeowners suffering due to foreclosures and are unemployed can apply for all programs, but a maximum amount of $50,000 will be allotted per house and up to $3000 can be availed for six months as mortgage payment until one looks for a job. To be eligible for the program, first the homeowner’s mortgage lender needs to participate in the program. So far, only three lenders across the state have consented to join.

Homeowners with low or moderate income who are suffering from foreclosures and unemployment due to death, illness, disability can only apply for this program. Other criteria’s should be fulfilled before applying. Like the homeowner’s income should be 120% less than median income for family of four. People who have a refinance, second mortgage, home equity line in credit cannot apply. Mortgages dating before January 1, 2009, will only be considered. The balance of the mortgage should not exceed $729,750. Borrowers who are in foreclosure for more than three months will not be considered.

This is a non-recourse and non-interest foreclosure aid; therefore if homeowners default, sell or refinance their mortgage later, they might have to repay back the amount received.

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