Government Mortgage Assistance for California Homeowners

Taxpayers from all over the country are chipping in to help unemployed California homeowners with their mortgage payments. More or less. The Unemployment Mortgage Assistance Program (UMA) will use federal funds to give mortgage-payment assistance to unemployed homeowners in California. This will undoubtedly be a popular topic among Californians in 2011, so we have put together a fact sheet with the pertinent details.

Mortgage Assistance for the Unemployed

The Unemployment Mortgage Assistance Program went into effect this month, January 2011. The program is managed by the California Housing Finance Agency (CalHFA). This program uses federal funds to provide temporary mortgage assistance for California homeowners who have lost their jobs. Homeowners must meet other eligibility criteria, in addition to being unemployed. A partial list of criteria can be found below.

The purpose of the program is to provide financial assistance to California homeowners who have lost income due to unemployment. The funding allows the homeowners to make their mortgage payments for a period of time, while they seek additional employment. So it’s an unemployment and foreclosure-avoidance program rolled into one.

California homeowners who are unemployed and meet other eligibility criteria could receive $3,000 per month or 100 percent of their mortgage payment, whichever is less, for up to six months. Again, the goal here is to provide enough mortgage assistance to help homeowners avoid foreclosure, until they are able to find new employment.

Eligibility Criteria for California Homeowners

In order to be eligible for the mortgage assistance program, California homeowners must meet the following criteria (at a minimum):

  1. Income limitations: The unemployed homeowner must meet the program’s definition of “low- to moderate-income” household. This means the borrower’s income cannot be more than 120 percent of the HCD Area Median Income for a family of four, in the county where the homeowner currently lives. Learn more (PDF)
  2. Hardship: The unemployed homeowner must complete a form that documents the reasons for their financial hardship (e.g., reduced income resulting from a job loss). This form is called the Hardship Affidavit / 3rd-Party Authorization. This is the start of the paperwork process for the California mortgage assistance program. Borrowers will be asked to provide a variety of other financial documents as well. The loan servicer or housing counselor will provide a list of these documents.
  3. Unemployment: The homeowner must be eligible to receive unemployment benefits in the state of California.
  4. Default: The unemployed homeowner’s mortgage loan must be delinquent (behind on payments), or at risk of “imminent default.” This must relate to the loss of employment, and it must be clearly outlined in the hardship letter described in item #2 above.
  5. Origination: The homeowner’s first mortgage must have been originated on or before January 1, 2009.
  6. Balance: The current mortgage balance (unpaid principal) cannot be more than $729,750. This number might look familiar. It’s the conforming loan limit for high-cost areas such as California, set forth by Fannie Mae and Freddie Mac.
  7. Participation: Your mortgage lender or loan servicer must be actively participating in this program. Participation is option for lenders. At present, only a handful are involved. But the CalHFA expects more loan servicers to join in soon.

Homeowners who meet all of the criteria listed above may be eligible for the California mortgage assistance program. Final eligibility will be determined by counselors with the California Housing Finance Agency, or the loan servicer who is currently servicing the mortgage loan.

Where to Learn More

If you would like to learn more about the mortgage assistance program for California homeowners, please contact the California Housing Finance Agency. You can also visit the website they’ve set up for this program: www.keepyourhomecalifornia.org. At the time this article was published, they were instructing homeowners to call: 888-954-KEEP. But you should check the aforementioned website for current instructions and guidelines.