Unemployed? Worried about your mortgage? CalHFA program may help.

In January the State of California was provided federal dollars to help unemployed home owners pay their mortgage. The program is called Keep Your Home California. The program was allocated $874,995,915.28 (Really, 28 cents?) and intended to help home owners avoid foreclosure while looking for new employment. Eligibility requirements include:

  1. Homeowner must qualify as a low-to-moderate income household, as follows:
    1. Low-to-moderate income of 120% or less of the HCD Area Median Income (as defined by the California State Department of Housing and Community Development), for a family of four, in the county where homeowner resides.  (For Santa Clara County, for a family of four HCD is $124,000)
    2. A loan financed in whole or in part by bonds that are tax-exempt under IRC section 143, the homeowner is presumed to satisfy income limits.
  2. Homeowner must complete and sign a Hardship Affidavit / 3rd Party Authorization
    documenting the reason for the hardship.
  3. Homeowners who have recently encountered a financial hardship due to
    underemployment or unemployment, including those whose financial hardship is related
    to their military service.
  4. Homeowner must agree to provide all necessary documentation to satisfy program
    guidelines established by CalHFA MAC.
  5. Homeowner must be currently eligible to receive unemployment benefits.
  6. Mortgage loan is delinquent or at risk of imminent default as substantiated by
    homeowner’s hardship documentation. Loans in foreclosure are not eligible.
  7. Homeowner in an “active” Chapter 7 or Chapter 13 bankruptcy is eligible for the program
    subject to the homeowner’s counsel or bankruptcy trustee approval in accordance with
    local court rules and procedures.
  8. General program eligibility is determined by CalHFA MAC, the housing counselor or
    servicer based on information received from the homeowner. Program-specific eligibility
    is determined by CalHFA MAC on a first-come/first-approved basis until program funds
    and funding reserves have been exhausted. Loan servicer will implement the HHF
    program based on participation agreement terms and conditions.
  9. Current unpaid principal balance (UPB) of the first lien mortgage loan is not greater than
    $729,750 (GSE conforming limit for a one-unit property).
  10. The property securing the mortgage loan must not be abandoned, vacant or condemned.
  11. The applicant must own and occupy the single family, 1-4 unit home (an attached
    or detached house or a condominium unit) located in California and it must be their
    primary residence.

The program provides “mortgage payment assistance equal to the lesser of $3,000 per month or 100% of the PITI (principal, interest, tax, insurance) and any escrowed homeowner’s association dues or assessments, for up to six (6) months, with the purpose of preventing avoidable foreclosures until such time that the homeowner retains employment sufficient to meet the demands of satisfying their regular mortgage payment.”

Program assistance limitation is “up to $18,000 per household total (average funding of $14,455.43), equaling the lesser of $3,000 per month or 100% of PITI and any escrowed homeowner’s association dues or assessments (and in all cases, subject to the HHF Program maximum benefit cap of $50,000 with respect to monies previously received under other HHF Programs, if any).”

The structure of the assistance is in the form of non-recourse, non-interest bearing, subordinate loan secured by CalHFA.  At the conclusion of 3 years, the subordinate loan will be released.  “Loan funds will only be repaid to Eligible Entity (CalHFA MAC) in the event of a sale or refinance with sufficient net equity proceeds prior to forgiveness. Recovered funds will be recycled in order to provide additional program assistance until December 31, 2017, at which time any recovered funds will be returned to Treasury.”

To read more or apply see the Keep Your Home California website.

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3 Replies

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  1. This nicely post contains useful information for everyone. Great resource, well done!

  2. Louis Alley says:

    In the current housing market, it can easily take 6 months just to sell a property. If somebody is chronically un/under employed, it may be a better idea to just move to a less expensive area. The bay area has nice weather, but the cost of living is so high that (at least from my perspective) it only makes sense to live here if you work in the tech industry and are getting a significant premium over what you would make in, say, Atlanta. North Dakota has a much lower unemployment rate and a much lower cost of living. I worry that the lower income assistance programs (like the down payment support) may just be helping people with lower income take on large initial debt or grow existing debt.

    If I was looking at 6+ months of unemployment paying on a house worth less than the mortgage, I’d cut my losses and move out of state. Credit recovers in 7 years. There’s no shame in renting if the financials point in that direction.

    Banks have a way of increasing payments over time. I’ve seen my monthly payment rise $100 on a vanilla loan since I bought in 2009 just by some funny reserve calculations for tax and insurance. In the same time, heating, refrigerator, washer all broke and my kitchen flooded. If I was renting, I’d likely be paying the same payment, and my landlord would be footing the bill for the appliances.

    For some people this program might be a good idea. Just make sure to consider all the options.

  3. CJ Brasiel says:

    Louis – Thanks for reading and the comments. I agree that there may be cases where it simply doesn’t make sense to save the home but there are times when it makes sense. Especially for home owners that have families and/or believe their situation is temporary.

    I am sorry to hear about the challenges with your home. I believe strongly in home warranties. A home warranty most likely would have covered some of the issues you encountered. I always make sure my home buyers have a home warranty for the first year. I can’t tell you how many times situations (hot water heaters, dishwashers, plumbing, etc.) have been fixed with a simple $55 deductible.

    In regards to the impound accounts increasing they are normally increased via Mello Roos tax assignments and increases in home insurance based on claims. This would occur whether or not they were collected in impounds. If you were renting, it is most likely the landlord would also pass on any increase in taxes or insurance to you as well through increased rents. All depends. I understand it is frustrating and hope that things will turn more positive for you and many other home buyers soon.