With a budget of $772 million, the California Housing Finance Agency’s Keep Your Home California program was ready to reduce over 15,000 underwater homeowners’ loan principal by up to $50,000 as long as loan servicers agreed to match any reductions.
With lenders balking and less than 1,000 California homeowners having qualified for a reduction, the required matching from loan servicers will be eliminated next month.
Homeowners can still get up to $100,000 in principal reduction, but it will all come from the federal money.
To qualify under the new rules, homeowners must use the home as their primary residence, owe more than it’s worth, fall below the income limit for their county [which is $121,900 in San Francisco], demonstrate a financial hardship and owe no more than $729,750 on a first mortgage originated on or before Jan. 1, 2010.
The program originally prevented people who had taken cash out of their homes – through a cash-out refinance or home equity loan – from getting a principal reduction but it lifted that restriction last fall.
Reductions will be structured as a five-year forgivable loans versus the current three.
∙ Keep Your Home California [keepyourhomecalifornia.org]
∙ Underwater California homeowners to get more help [SFGate]
D10 is saved!
Great !…….Let’s now reward all of those ‘smart’ folks who have used their homes as ATM machines to purchase second homes, luxury cars and boats plus taken numerous trips to foreign lands by reducing their debts while leaving those who didn’t squander their equity and scratching their heads.
This may sound harsh as there are always exceptions to the rule but I personally know many, many home owners who have taken cash out of their homes foolishly, thinking the party would never end.
radar wrote:
> This may sound harsh as there are
> always exceptions to the rule but
> I personally know many, many home
> owners who have taken cash out of
> their homes foolishly, thinking the
> party would never end…
Most (but not all) the people underwater in the US pulled out a ton of cash using the “refinance ATM”. The reason we read about so many people that didn’t pull out any cash or pulled out cash to pay for an uninsured child’s cancer treatment is that not many people want to admit that they blew $200K on eight balls and trips to party in Ibiza or bought a fishing boat and jet skis for the whole family…
Ha………”eight balls”, haven’t heard that one for awhile FormerAptBroker. Brought a smile and a cringe !
This is a f’ing travesty. Think of all the useful things that could be done with that money instead of just p*ssing it away on these hare-brained schemes.
I have a better idea. As a first time home buyer who knew better than buying during the bubble the banks and the Feds reward me and give me a hundred thousand dollars free and clear and I use it to buy a house at the underwater price. I need the extra cash because every body is making cash offers these days.
They aren’t pissing it away. They hand it to the bankers, and the bankers kick back 5% in campaign contributions. The homeowners aren’t going to see dime one of this money. It all goes to the bankers.
“I have a better idea. As a first time home buyer who knew better than buying during the bubble the banks and the Feds reward me and give me a hundred thousand dollars free and clear and I use it to buy a house at the underwater price. I need the extra cash because every body is making cash offers these days:
@Cll123:
I am in the same boat as you bro
While it’s not clear that the program described above is the same one, at least one program to “help” underwater homeowners is going to get cut or significantly reduced by the new state budget as proposed by the Governor. From The Chronicle earlier today:
Emphasis added to relate the article to the subject of this thread. Notice the rhetoric our state attorney general uses, “help Californians stay in their homes”, as if some kind of natural disaster happened that is putting people out of their homes just occurred at random.
Getting the state budget back in balance is going to help all Californians. Giving money to people who purchased homes just because they owe more money than than those homes are worth contributes to moral hazard and hurts Californians who were/are fiscally prudent by delaying price discovery and the return of the housing market to its equilibrium state.
^Here comes the “grab any source of funds you can” form of government. I’m surprised at the complete turnaround!