Update on the 'Keep Your Home California' program.
This $2 Billion program, announced a few months ago to great fanfare but little result, has determined it's time to expand the programs due to it's thus far limited reach. The program is designed for low and moderate income borrowers who refinanced their home, took out a home equity line of credit (HELOC), or are underwater on their loans and now find themselves in trouble (duh). The program features four separate sections to help these borrowers including one to get caught up on their loan, another to reduce their principle, one to provide relocation and transition assistance and one to subsidize payments to unemployed homeowners.
Administered from a federal grant by the California Housing Finance Agency, the programs director says they started slow by design. Before jumping in with both feet they wanted to gage the response, see what kind of people were applying and why they were not qualifying. The director expects the program ultimately to help 100,000 Californians.
Of course as I noted in an earlier post when the program was announced, the program is voluntary for lenders. Yeah, you read that right. Lenders will voluntarily agree to accept partial back payments or reduced principle for borrowers who took cash out of their homes during the boom times. Low to moderate income buyers, who are in financial trouble. Yeah, the banks haven't demonstrated much pro-activity in helping anybody at all, let alone low to moderate income folks. I'm sure this will all work out fine. Even the director admits that 'only some lenders are participating'. Go figure.
Oh well, I guess if we can keep 100,000 low to moderate income people in their homes here while other demographic groups are ignored by HAMP and HAFA and other bail-outs, that's a good thing, eh?