If you're underwater or behind on your mortgage payments, you might be able to get some help. The $2 billion Keep Your Home California program hopes to give relief to about 95,000 homeowners that are on the brink of foreclosure as well as provide moving assistance to around 6,500 families that do end up losing their homes. The program is also hoping to involve major mortgage lenders by having them reduce the principal on underwater mortgages. So far, only Ally Financial has signed an agreement but the program has hopes for 4 other major lenders including Bank of America and Wells Fargo. The agreement of the banks will really hold the fate of the program in its hands. A large part of the proposed program would involve preventing more homes from entering foreclosure. By keeping more of the lower priced homes out of the market, it would not only help those homeowners, but the market in general. The higher the volume of low priced inventory available, the lower the average price will be driven down, depressing the market further. The program is split into 4 major parts, each aimed at aiding homeowners:
1. $875 million would be allocated to homeowners who have taken a significant paycut or have lost their jobs. They would be eligible for aid of up to $3,000 for a maximum of 6 months to cover mortgage payments.
2. $790 million would be for principal reduction on an estimated 25,135 homes with underwater mortgages.
3. $129 million would be to help homeowners get current on their mortgage, at up to a maximum of $15,000 per household.
4. $32 million would be allocated to provide moving assistance to people who could not afford to stay in their homes.
The program is aimed at low to moderate income borrowers with only one property. Homeowners who have done a cash-out refinance of their home would not be eligible for the program. The program would also match dollar-for-dollar the amount that the banks reduce on principal, which has brought the criticism that the program is a handout for the banks. With only one bank on board, we'll have to wait and see if the program even gets off the ground,
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