Federal help for troubled Californian homeowners

The Californian Government is lending a helping hand for homeowners struggling to pay the mortgage on their houses

The Keep Your Home Program set up by the California Government, has allocated a $2 billion fund, as mortgage-aid. The government hopes to help about 10,000 distressed homeowners in California, including the San Diego county, with this initiative. This would include 25,000 underwater mortgage borrowers as well.

The program is aimed to help out the homeowners in California, who come under the low and moderate income category, facing mortgage issues, keep their primary homes.

It will focus on prevention of foreclosures, which could be avoided, and reduce the figures in delinquencies and thus stabilize the Californian community.

To be eligible under the scheme, homeowners who, for example, in the Los Angeles County, the income of the family should not be more than $75,600 per annum. The maximum aid for any one household under the scheme is fixed at $50,000 as well. While homeowners who had taken cash out of their estates and refinanced their property, would also not be eligible under the program for an aid.

The four elements under the program would:

-          Provide out-of-work homeowners, falling under the low and moderate income category, with up to $3,000 per month, for benefits up to six months.

-          Offer $15,000 for each household that has fallen behind the payment schedule, due to unavoidable financial hardships.

-          Offer assistance with relocation for homeowners, who would have to give up their property in a short sale.

-          Help those borrowers struggling to meet the worth of the homes, with capital for outstanding balances in principal.

The scheme, however, is only available to select participating mortgage providers. The Guild Mortgage, California Housing Finance Agency, GMAC, Ally Financial and the Department of Veteran Affairs in California, have currently signed up on the program.

Wells Fargo, Bank of America, CitiMortgage and JP Morgan Chase have joined in a few schemes as well. The program also urges the homeowners, whose mortgage servicers are not under the list, to encourage their providers to join in.

The Keep Your Home California initiative employs the funds reserved by the federal government for rescue from the financial crisis in 2008. It has the capability of helping the state avoid foreclosures, and thus help out the general housing market recover.