As Moreno Valley foreclosure defense attorneys, we've written in the past about the federal Hardest Hit Fund, which gives states especially hard-hit by the housing crisis money to start anti-foreclosure programs of their own. We're happy to say that the state of California, which was one of the first recipients, has finally launched the first of its programs funded by that money. As the San Francisco Chronicle reported Jan. 9, the program extends money to California homeowners who can't make mortgage payments right now because they're unemployed. The money -- up to $3,000 per month for up to six months -- is structured as an interest-free loan secured by a lien against the home, but will be forgiven in three years unless the borrower defaults, sells or refinances.
The program was expected to begin last fall, but the California Housing Finance Agency ran into a major snag -- it needed loan servicers to sign on, and very few of them did. CalHFA said three servicers are signed up as of Jan. 9, and more were expected by the end of that week. Possibly as a result, the qualifications for the unemployment program are strict. Among other things, participants must be receiving unemployment benefits, but cannot be within 90 days of running out. Their loan balances cannot be higher than $729,750 and must have been made before Jan. 1, 2009. Loans must be delinquent or at risk, but not in foreclosure or more than three months behind. Owners must occupy the home and not own any other property or have a stand-alone second mortgage (such as a HELOC). CalHFA plans to launch three other programs Feb. 7; all four are under the name Keep Your Home California.
Our Rowland Heights foreclosure defense lawyers wish this program, and its participants, the best of luck. For people whose unemployment is temporary, a bit of assistance could be a life-saver, helping them avoid default or the credit hit that comes with falling behind. However, we're concerned that this program will go the way of HAMP -- that is, it will ultimately be ineffective because loan servicers will find ways to ignore or manipulate it. The problem with HAMP is its lack of an enforcement mechanism. When lenders break their promises or mistreat participants, there's no provision to hold them accountable aside from a lawsuit. Keep Your Home California needs built-in penalties for unethical behavior by servicers, or at least a provision explicitly allowing lawsuits, or it may also ultimately fail.
Howard Law PC represents homeowners across California who are fighting to save their homes from foreclosure or default. We have practiced this kind of law since the beginning of the housing crisis, so we know all about the tricks lenders and loan servicers use to manipulate the foreclosure and loan modification process. In our experience as Santa Ana foreclosure defense attorneys, loan servicers don't really want to grant loan modifications, because they can make more money by stringing along borrowers and collecting the fines and fees that accrue. That's why we hold servicers accountable for their promises and their actions, sometimes with lawsuits alleging they failed to seriously consider a modification. We want to leave every client with a reasonable, sustainable monthly payment that keeps them in their home.
If you're in default or think you will be soon and your loan servicer is too inept or uncaring to help, you should call Howard Law instead., To set up a free, confidential consultation on your legal options, you can reach us through our website or call 1-800-872-5925.