The California Housing Finance Agency established the four Keep Your Home programs using money from the Treasury Department’s $7.6 billion Hardest Hit Fund. Before, borrowers were restricted from modifications, unemployment funds, relocation assistance and even principal reductions if they had a second home.
Officials eliminated the exclusion, because they said many homeowners are co-signers on a second home or are underwater on their first property.
Other changes to the programs include allowing borrowers to take advantage of principal reduction offers even if they completed a cash-out refinance in the past, which many Californians did during the boom.
CalHFA also increased the amount of unemployment assistance qualified borrowers would receive and how long they could get it. Out-of-work homeowners can receive up to $3,000 in mortgage and tax assistance per month for up to nine months, an increase from six months before the change.
Borrowers can also get $20,000 through a reinstatement program to use for past-due mortgage payments, up from $15,000.
“This expanded eligibility will allow more families to qualify and receive greater assistance,” said Claudia Cappio, Executive Director of the California Housing Finance Agency.
In order to qualify for these programs, the borrower’s servicer must participate. CalHFA said nearly 50 mortgage servicers now participate in at least one of the four. But only 11 servicers participate in the principal reduction program that requires the bank to match each dollar the agency removes from the loan.
While Bank of America joined the California principal reduction program in July, Fannie Mae and Freddie Mac loans are still excluded.
The California Attorney General Kamala Harris recently called on both companies to provide principal reduction to her constituents.