This week the California Housing Finance Agency announced the full implementation of four programs to help families remain in their homes. The programs, under the umbrella title of Keep Your Home California, are federally funded as part of the U.S. Treasury Department’s Hardest Hit fund, and are aimed at helping low and moderate income homeowners struggling to pay their mortgages. California received a total of nearly $2 billion through the Hardest Hit fund.All four programs are intended to help avoid foreclosure: three offer several forms of mortgage assistance, as well as a separate program that will provide transition assistance to borrowers who execute a short sale or deed in lieu transaction. All of the programs are designed specifically for low or moderate income homeowners who are either unemployed or are facing another financial hardship, have fallen behind on their mortgages and owe significantly more than the value of their homes.Specifically, the Keep Your Home California programs provide:

• Mortgage assistance of up to $3,000 per month for unemployed homeowners who are in imminent danger of defaulting on their home loans.
• Funds to help homeowners who have fallen behind on their mortgage payments due to a temporary change in a household circumstance. The program will provide up to $15,000 per household to reinstate mortgages to prevent foreclosures.
• Money to reduce the principal owed on a mortgage for a home where the low or moderate income homeowner is facing a serious financial hardship and owes significantly more than the home is worth. The program requires lenders to match any assistance provided by the Keep Your Home California program.

The programs will be limited to homeowners who meet a number of criteria, including owning and occupying the home as their primary residence, meeting income limits, and facing a financial hardship. Homeowners who consummated a “cash-out” refinance are not eligible for Keep Your Home California programs.To apply for the assistance, a homeowner should contact the Keep Your Home California call center toll-free at 888.954.KEEP (5337) or their mortgage servicer – the company to which the borrower sends monthly mortgage payments. Each of the mortgage assistance programs requires the participation of the mortgage servicer.As of February 9, the following servicers are participating in all four Keep Your Home California programs:

• GMAC
• Guild Mortgage
• California Housing Finance Agency
• California Department of Veterans Affairs

Other servicers, including Bank of America, JPMorgan Chase, CitiMortgage and Wells Fargo are currently participating in some, but not all, programs at this time.Full Details can be found at: http://www.keepyourhomecalifornia.org 

Fannie Mae has launched an interactive video simulation tool to inform struggling homeowners about their options and how to avoid a foreclosure. This is very entrancing as I found myself going through the videos over and over and coming to different conclusions each time. Some might find this cheesy but those that are in this situation will find it incredibly informative and helpful.

The video segment is called WaysHome, and the tool is part of KnowYourOptions.com, a consumer site Fannie Mae set up for homeowners who are underwater or having trouble paying their bills or mortgage payments. If this sounds like

It’s a travesty when people lose their homes because they don’t know or understand their options. Homeowners who are proactive about working with their mortgage company, housing counselors, or using consumer tools like WaysHome have a significantly better chance of finding a solution that allows them to avoid foreclosure.

Again the link for this great video is:
http://www.knowyouroptions.com/ways-home#

If you need any help or would like to talk through your own situation please give us a call.

Sincerely,
Danielle Contreras
408.460.1849

Before the economy changed in 2008 not many had heard of a Short Sale, and even fewer had known of anyone who bought or sold with this type of transaction. Short sales became the norm when the subprime mortgages began to reset and home values began to drop, leaving about a quarter of American homeowners “upside down,” or owing more on their homes than the homes are worth.

Today I field questions from my buyers as to why the banks have the right to come back and ask for additional funds in order to purchase a property after we have a signed purchase agreement from both parties.

I have to answer “The seller’s bank absolutely does have the right to change the terms of your transaction, even though you have a contract signed by both buyer and seller, and even if you’re a month, two months or six months into the transaction.

Because the banks are not recouping enough from the sale to pay off the mortgage lenders, all lenders with an interest in the house must give their permission for the transaction to close. And many will not do so unless they can get just a little bit more from the deal.

I will always recommend offering $5,000 to $10,000 below market value because as a buyer you will have to make the simple decision on whether you’d still want the house at the cost of $5,000 to $10,000 more, or not. And if your already $5k to $10K below market value that decision is a lot easier.

A San Jose buyer’s agent like myself is skilled at managing buyers’ understanding and expectations of short sales. So try and make sure you run through all the scenarios with your Realtor and know that the banks will most always ask for additional funds to get the Short Sale deal closed.

(SACRAMENTO) – Assemblymember Ted Lieu (D-Torrance) announced the California Foreclosure Prevention Act, ABX2 7 (Lieu), takes effect June 15, 2009.  Beginning today, a foreclosure moratorium will give distressed homeowners an additional 90 days unless the lender implements a comprehensive and systematic loan modification program designed to keep people in their homes.

“We must put a stop to the unending tidal wave of foreclosures that has crippled our economy,” said Assemblymember Ted Lieu.  “This law will help people stay in their homes by giving lenders a serious incentive to modify loans.”

“We’re seeing signs that the economy may be stabilizing and I’m hopeful AB X2 7 can get more homeowners to the light at the end of the tunnel,” said Speaker Karen Bass. “This important bill by Assemblymember Lieu will keep more Californians in their homes and stabilize neighborhoods, which is a necessary step for economic recovery.”

The California Foreclosure Prevention Act is designed to force Wall Street to help the citizens of “Main Street.”  The Act will give lenders a choice:  either enact a systematic and comprehensive loan modification program or face an additional 90 day foreclosure delay on all of your loans.

In order to avoid the foreclosure moratorium, a lender’s comprehensive loan modification program would have to be based, in part, on criteria set forth by the Federal Deposit Insurance Corporation.  Additionally, loans could only be modified in a couple ways, including interest rate reductions, extension of the loan term, or principal reduction.

Homeowners in California continue to experience record foreclosures, a direct result of irresponsible lending. According to RealtyTrac, in April 2009, California posted the highest foreclosure rate in the nation, with one in every 138 housing units receiving a foreclosure filing during the month.  Total foreclosure activity was up 42% from April of last year.

The California Foreclosure Prevention Act is the first law in the nation to impose a foreclosure moratorium and encourage quality loan modifications.