New help available for Californians behind on mortgage payments

The California Mortgage Relief program is expanding its reach again, hoping to help more homeowners who have fallen behind on their payments during the pandemic.

Program officials announced on Tuesday that assistance would be extended to three new groups: homeowners whose mortgages had a “partial claim” or deferral, those who missed a second mortgage payment after June 2022, and those whose primary residence includes up to four units. It also offered more aid to homeowners who had previously received state aid.

One reason for the expansion is that the state has yet to spend most of the $1 billion in homeowner assistance the federal government provided last year as part of the U.S. bailout. . So far, about 10,500 households — more than half of them earning just 30% of their county’s median income — have received an average of $28,137 from the program, for a total of just under $300. millions of dollars.

“Many California homeowners are still recovering from the financial difficulties of the pandemic,” Agency for Business, Consumer Services and Housing Secretary Lourdes Castro Ramírez said in a statement. “This expansion of the program will allow the state to help even more homeowners who have fallen behind on their mortgage payments. Our primary goal is to keep families in their homes, prevent foreclosures, and help homeowners on a steady path to financial recovery.

Tiena Johnson Hall, executive director of the California Housing Finance Agency, said the agency has spoken with borrowers and loan officers to determine how to scale the program. “This expansion represents months of careful thought and creative solutions that ensure those most in need get help,” Johnson Hall said.

Volma Volcy, founder and executive director of nonprofit advocacy group Ring of Democracy, said the hardest thing was getting eligible borrowers to take the state’s offer seriously. “They tend not to believe it because it sounds too good to be true. … This time it’s true,” Volcy said.

“I’m begging you: come get help, because it works,” he added.

Under federal law, households earning up to 150% of their county’s median income who are suffering from pandemic-related financial hardship are eligible for up to $80,000 for delinquent mortgage payments and up to 20 $000 for missed property tax payments. According to the federal Department of Housing and Urban Development, 150% of LA County’s median income last year was $125,100 for a single person and $178,650 for a family of four.

A few caveats: If you’ve already paid off your mortgage or tax debt, you can’t get that money back by applying for state aid. You are also not eligible for mortgage assistance if your mortgage is a “jumbo” loan above the limits set by Fannie Mae and Freddie Mac. Finally, you cannot get state assistance if you have enough cash and assets (other than retirement savings) to cover your mortgage or tax debt yourself.

Here’s a breakdown of the new mortgage relief goals.

Partial claim of second mortgages and deferrals. Partial claims are a technique to help people at risk of losing their homes after missing several monthly payments on a loan backed by the Federal Housing Administration, the US Department of Agriculture, or the Department of Veterans Affairs. Rather than requiring larger payments to cover the overdue amount, agencies encouraged lenders to split the overdue portion into an interest-free second mortgage. This way, a borrower could stay current by paying only their usual monthly installment.

The second partial mortgage could be ignored until the house is sold, the mortgage is refinanced, or the first mortgage is paid off, in which case the partial debt would have to be paid in full. In the meantime, it is real debt that affects the borrower’s ability to obtain credit.

Similarly, some lenders offered deferrals that consolidated missed payments into one sum that was added at the end of the loan. Borrowers would not face higher monthly payments, but would have to repay the deferred amount (a “lump sum payment”) when they refinance, sell their home, or reach the end of their loan.

The state mortgage relief program is now offering up to $80,000 to pay all or part of a partial COVID-related claim or deferral.

“Using relief funds to pay off deferred balances for homeowners who have experienced COVID-related hardship restores home equity and puts financially vulnerable families in a stronger position to maintain homeownership,” said Lisa Sitkin, senior counsel for the National Housing Law Project, in a statement. “It also alleviates the anxiety of having to figure out how to repay a large lump sum payment in the future.”

More owners who fell behind in 2022. Previously, homeowners had to have missed at least two mortgage payments by June 30, 2022, or one property tax payment by May 31, 2022, to be eligible for a mortgage or tax relief, respectively. Now, you will qualify if you miss at least two mortgage payments or one property tax payment before March 1, 2023.

Homeowners who need a second shot of relief. The mortgage relief program was initially seen as one-time assistance. Now, however, California homeowners who have already received assistance can claim more if they have missed more payments and remain eligible. No household can raise more than $80,000 during the program.

Owners of multiple dwellings. Initially, mortgage relief was only available to people who owned and occupied a single-family home, condominium, or non-mobile manufactured home in California. From now on, assistance will be available to people whose principal residence includes up to four units, such as a duplex, a quadplex or a house with an accessory dwelling.

The program continues to offer help to an additional group: homeowners with reverse mortgages who have fallen behind on their property taxes or insurance payments.

How to apply?

Applications are only available online at camortgagerelief.org. For help completing one, you can call the program’s contact center at (888) 840-2594, where assistance is available in English and Spanish.

If you don’t have access to the internet or a computer, you can ask a housing counselor to help you. For help finding a counselor certified by the federal Department of Housing and Urban Development, call (800) 569-4287. You can also get help from the company that handles your mortgage.

The online application process begins with questions to determine your eligibility. If you meet the state’s criteria, then you can complete an application for the funds. Here is where you will need certain documents to establish how much you earn and how much you owe.

According to the program’s website, among the documents you’ll need to provide include a mortgage statement, bank statements, utility bills, and documents showing the income earned by each adult in your household, such as pay stubs, tax returns or a declaration of unemployment. benefits. If you don’t have access to a digital scanner, you can take photos of your documents with your phone and upload the images.

The site provides links to the app in English, Spanish, Chinese, Korean, Vietnamese, and Tagalog.

When will the program end?

The state will continue to offer assistance to homeowners who become delinquent due to COVID-related issues until it has expended the full federal billion dollars. The state estimates an additional 10,000 to 20,000 homeowners will be helped with the remaining funds.

The money will be allocated on a first-come, first-served basis, with one exception: 40% of the aid must go to “socially disadvantaged homeowners”. These are residents of neighborhoods most at risk for foreclosure, based on the Homeowner Vulnerability Index developed by UCLA’s Center for Neighborhood Knowledge.