Government Programs for Home Foreclosures in California
For California homeowners facing foreclosure, it is important to know there are options. Assistance is available in the form of government programs. Besides the national government programs, the state of California provides residents with several foreclosure programs to help save their homes. Homeowners facing foreclosure should immediately contact their lender to assess their situation.
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History
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The state of California has various assistance programs to help struggling homeowners stay in their homes. Most lenders want homeowners to stay in their homes. Foreclosure is expensive for the lender. It is more beneficial for a homeowner to maintain the home and continue making the monthly mortgage payment. Since foreclosures began rising in 2009, new programs have been established to help with the foreclosure crisis in California.
Qualifications
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Homeowners typically must meet certain requirements to qualify for most government programs in California. For example, the Making Home Affordable Refinance Program requires the homeowner to be current on their monthly mortgage and the loan must be guaranteed by Fannie Mae or Freddie Mac.
Some programs operate on an income basis. The California Housing Finance Agency, also referred to as CalHFA, provides the Keep Your Home program. The program helps low-income and moderate-income families stay in their homes. Homeowners who suffer a financial hardship and are unable to make their mortgage payment are eligible to apply. The U.S. Treasury Department approved the organization's plan to use nearly $700 million in federal funding to aid California families facing foreclosure. The program helps homeowners access government funds and lender contributions. The program begins assisting homeowners on November 1, 2010.
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Types
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Government foreclosure assistance in California comes in several forms, such as legal aid and counseling. The State Bar of California and Public Interest Clearinghouse teamed up to introduce ForeclosureInfoCA.org. The site offers links to free legal aid and features advice from attorneys. There is information on the loan modification process, tips and contact numbers. In addition to information for homeowners facing foreclosure, the website provides useful information and advice for renters currently living in a home in foreclosure.
The Housing Education Program is a HUD-approved counseling agency. The program provides guidance on approaching the lender to avoid foreclosure. The Housing Education Program acts as a liaison between the homeowner and lender, offering alternatives to foreclosure. The program covers topics like budgeting, refinancing, writing hardship letters and proposing forbearance agreements.
Applying
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Homeowners in need of assistance must directly contact the government organization offering the program. A hardship letter and proof of income is usually needed to apply for assistance. Funds are usually limited. Money and services are often awarded on a first-come, first-served basis. It is important for homeowners facing foreclosure to seek assistance immediately.
Considerations
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Even if a homeowner is approved for a government program, the lender must agree to participate in the program. Short sales and deed-in-lieu of foreclosures must be authorized by the lender. Since California is considered one of the states hit the hardest in the foreclosure crisis, the U.S Treasury awarded $699.6 million to provide fast assistance to homeowners. The funds are available to help reduce loan principle, address delinquent loan arrearages--an amount unpaid--and provide relocation funds to families that sell their home in a short-sale or give up ownership in a deed-in-lieu of foreclosure. If the lender does not agree to participate in the program or offer relocation money, the homeowner will be unable to receive the funds.
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