California Homeowner Assistance Plans–Foreclosure Prevention From Keep Your Home Program

Homeowners in California are hoping that foreclosure prevention efforts and mortgage assistance plans available from the Keep Your Home Program will be able to address various issues being experienced by California homeowners that may be leading to foreclosure or simply causing difficulties when it comes to making payments on their home loan.

The California program is hoped to address certain issues like unemployment, mortgage reinstatement, and principal reductions for homeowners who have an underwater mortgage. The Hardest Hit Fund provided capital for various programs in different states which were particularly hard hit by factors like unemployment and the loss in property values.

While these programs which are being proposed by the California Housing Finance Agency do offer homeowners the potential opportunity to address their mortgage needs, there is some concerns over whether the implementation of these programs will be effective.

It was reported in the LA Times that major mortgage servicers like Bank of America, Wells Fargo and J.P. Morgan Chase have not committed to formal agreements to offer their cooperation in the Keep Your Home Program. While it was stated that Bank of America said it would participate in specific areas of the assistance plan, they have yet to sign an official agreement. Also, the LA Times article stated that Fannie Mae and Freddie Mac will not participate in the principal reduction part of the plan, so there seems to be difficulties with getting the Keep Your Home program up and running.

There are those who feel that parts of the program, like principal reductions, may be causing hesitation on the part of major mortgage servicers, but arguments in favor of the state-specific mortgage assistance plans point to the fact that numerous homeowners could be helped if banks would get on board. Obviously, principal reductions, among other things, have been unpopular for many mortgage servicers, but they could help reduce foreclosures and strategic defaults on homes where the value has substantially dropped.

Obviously, there are homeowners who do not wish to short sale or walk away from their property, but are having a difficult time due to an underwater mortgage, and principal reductions from the Keep Your Home Program would greatly help. However, there are also opportunities for homeowners who are simply behind on their mortgage payments to be offered assistance that would make them current on their home loan or offer monetary assistance for those who are unemployed and seeking a job.

While similar programs have been implemented in other states across the nation, there are still some obstacles to be overcome before homeowners may start seeing benefits from these state-specific mortgage assistance opportunities.