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Homeowner Advocates Praise Improvements to California Foreclosure Defense Program

January 25, 2013

Vincent Howard and our Oceanside foreclosure defense attorneys have kept an eye on Keep Your Home California, the state program intended to help stop foreclosures. The funding for the program came from the federal government, which funded state-level programs out of "bailout" money. The states were free to do what they liked with the money, and California made several plans, including an ambitious principal-reduction plan for certain homeowners. The San Diego Union-Tribune reported this month that about two years into the program, 98 percent of participants are still in their homes--though the bad economy still means not all are financially secure.

The article opens with the story of Adam Alotaibi, an Escondido man who received help paying his mortgage during the time he was unemployed. The assistance helped him stay in his home until he was able to find a new job and resume making his own payments. Keep Your Home California offers this program for up to nine months or $27,000 in total, to people who are collecting state unemployment benefits. Another program offers up to $100,000 in reductions in loan principal to homeowners like Gloria Lawrence of Poway, whose homes declined in value severely. Lawrence's mortgage payment went down by $300 a month--but the article says she lost that savings when she had to replace her car. Another couple is still out of work and has run out of mortgage assistance.

Keep Your Home California offers three other programs. One helps homeowners transition to rental housing after a short sale or deed in lieu of foreclosure; another funds catch-up payments for people who fell behind on payments but can make them in the future. A third program is funding for local government or nonprofit programs, including two other principal reduction programs. A foreclosure prevention manager at Community HousingWorks, a nonprofit, said he thought Keep Your Home California had improved substantially in 2012, in part because of changes that permitted more loan servicers to join the principal reduction programs. In particular, Keep Your Home California dropped the requirement for loan servicers to match program funds 100%, which may have been the reason so many more loan servicers joined.

The HousingWorks employee quoted in the article observed that this rule change permitted many more people to be included in the program, which is better than not spending the program money at all. Though this may sound like faint praise, our Murrieta foreclosure defense lawyers agree. The original plan to require matching funds would have provided more relief, but the financial industry is so dead-set against paying for principal reductions that it's not surprising that so few joined. Faced with a choice between a less aggressive form of help and no help at all, Keep Your Home California apparently decided to compromise in a way that reached more homeowners. Vincent Howard and our Lake Forest foreclosure defense attorneys approve of efforts to keep more people out of foreclosure.

If you believe you were misled or lied to when you took out your mortgage, you should call Vincent Howard and the team at Howard Law, P.C., to discuss your legal rights and options. You can reach us through our website or call 1-800-872-5925.

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