Our San Bernardino County foreclosure defense lawyers have written here before about the federal Hardest Hit fund, which granted money to states particularly affected by the housing crisis. California was one of those states, and it has used that money to start a series of programs collectively known as Keep Your Home California. Originally, eligibility was restricted to homeowners who had never taken out a home equity line of credit or refinanced for cash. As the Los Angeles Times reported April 6, such people will now be eligible for three of the four programs under Keep Your Home California. Eligibility was also expanded to include people whose loans originated after Jan. 1, 2009.
The three programs with the expanded eligibility include a program providing temporary relief for unemployed homeowners; one providing moving assistance for people who lose their homes; and one that gives people struggling to stay current on their loans financial assistance. People who had previously applied and been turned down because of loan origination date or refinance status were encouraged to reapply. A spokesperson for the state said that in the two months of the program’s life, its management realized that they’d be more effective with more eligible homeowners, especially given high unemployment. The fourth program, which reduces principal for qualifying homeowners, has not been changed and is getting a tougher reception with banks.
As Dana Point loan modification attorneys, we’d prefer to see more attention to the principal reduction program, since experts agree principal reductions are most effective at helping clients keep their homes. But we’re pleased that more mortgage holders will now be able to participate in Keep Your Home California. HELOCs and refinances for cash are sometimes pointed to as irresponsible behavior by homeowners “using their homes as ATMs,” and no doubt there are cases where that’s true. But in our experience, homeowners often have good reasons for tapping into their equity — including illness or needed repairs — and lenders certainly showed no hesitation about granting them when they stood to make money. And regardless of the reasons for the foreclosures, preventing them is good for the overall housing market.
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