A New Safety Net From "Keep Your Home California"

Homeowners that cashed out the equity in their home now could qualify for the "Keep Your Home California" programs.  (source:  CAR Market Matters)

• Keep Your Home California is a state-run program funded with $2 billion from the U.S. Treasury’s Hardest Hit Fund.  It is designed to help low- and moderate-income people who are unemployed or owe more than their home is worth pay their mortgage.

• There are four individual programs that fall under Keep Your Home California.  Eligible homeowners can get up to $50,000 in assistance from one or more of the four programs combined.
• Under the new rules, people who took equity out of their homes will be eligible for the unemployment mortgage assistance, mortgage reinstatement assistance, and transition assistance programs if they meet all the other program requirements.  Homeowners who cashed out equity will continue to be ineligible for the principal reduction program.
• When the program first started, homeowners who had tapped the equity in their homes were ineligible for the programs.  CalHFA decided to include these homeowners due to the large number of homeowners who were being turned away for assistance.
• Under the program revisions, homeowners who originated mortgages after Jan. 1, 2009 also are eligible for the same three programs.  Originally, these borrowers were excluded because they also are excluded under the federal Home Affordable Modification Program, so CalHFA wanted to be consistent with HAMP.
• To qualify for any of the four programs, homeowners must fall below certain income limits, must be living in the home, and cannot own a second home, among other criteria.  For additional requirements, visit www.keepyourhomecalifornia.org/eligibility.htm.

I find it interesting that the government has yet to offer assistance for homeowners that are current on their mortgage.  Shouldn't we all benefit from these "programs" designed to boost the economy?  What about the homeowners that purchased or refinanced when  mortgage rates were higher?  I have one client that purchased in 2006 and now owe more than the house is worth.  They are current on their mortgage, but do not qualify for a loan mod because they cannot prove there is a hardship and cannot refi because there is no equity.  So they now are stuck in a 6.5% mortgage.  Is it fair that those who do it right be penalized?