In an effort to avoid foreclosures in the states “hardest hit” by the mortgage crisis, in 2010 the federal government issued grants in order to help unemployed or delinquent homeowners. Among the 10 states receiving aid, California received the largest grant with $699.1 million to spend on its own programs.
There is still money left from the grant, and California currently offers homeowners up to $50,000 in assistance through four different programs:
- The Unemployment Mortgage Assistance Program, in which temporarily unemployed California residents can get up to $3,000 per month for six months if they are on unemployment benefits
- The Mortgage Reinstatement Plan, where funds will provide up to $15,000 per household with a matching contribution from the lender or borrower
- The Principal Reduction Program, where mortgages in arrears are reduced through matching contributions from the program and the lender, up to $50,000
- The Transition Assistance Program is used with a short sale or deed-in-lieu of foreclosure to help those who are about to lose their home find housing
Banks Not Cooperating with Some Programs
While the programs are currently issuing benefits to homeowners, the process is not always going smoothly. For example, lenders paid through the Unemployment Mortgage Assistance Program are refusing to take partial payments if the monthly mortgage is greater than the $3,000 maximum the state will pay. In some cases a lender will reject the payment even if the homeowner sends in an additional payment to pay the difference between the mortgage and the $3,000 benefit. Since the banks are rejecting these payments, unemployed homeowners in CA are needlessly being put at risk of foreclosure when the program could otherwise have prevented delinquency.
An Attorney Can Help
While these programs can potentially help troubled homeowners, the problem with lender cooperation is indicative of how homeowners can still find themselves in trouble even with government aid. If you are falling behind on mortgage payments, you may wish to consider Chapter 13 bankruptcy, which can be a reliable way to save your home under the right circumstances. There are powerful lien strip options where you can reduce or eliminate the 2d Deeds of Trust, if this option is presented properly. Only an experienced bankruptcy attorney can help you best decide if this kind of Ch. 13 bankruptcy or an alternative is right for you.