Greater Access to $80,000 Mortgage Relief in California

Greater Access to $80,000 Mortgage Relief in California

Angela Morrow was just eight months into her fresh flight attendant career when the COVID-19 pandemic struck, causing her to lose her job and putting her on the brink of losing her three-bedroom, two-bathroom house in San Bernardino County, California.

Morrow, a 63-year-old, managed to save her home in Bloomington by tapping into the resources provided by the California Mortgage Relief Program. This initiative, worth a whopping $1 billion, enabled Morrow to pay off more than $54,000 of her mortgage debt, effectively reducing her monthly payments for an extended period.

The grant was a significant relief for Morrow, she expressed, “Receiving that grant has been a monumental blessing for me. It created a solid foundation for my kids, and their future, after I’m gone.”

In a move aimed at expanding this life-altering program, state officials are set to announce later today a plan to broaden the eligibility criteria to include those who have taken out second mortgages.

The Mortgage Relief Program, established in December 2021 using federal funding from the American Rescue Act, has already granted $300 million to approximately 10,000 homeowners. As such, around $700 million in aid remains available for eligible borrowers.

This expansion of the program comes in response to the challenges presented by the pandemic-era housing market. The uncertainty of the economy, coupled with high home prices and increasing mortgage interest rates, could jeopardize homeownership in California. Lower- and middle-income families are especially vulnerable in this situation.

California reports fewer than 56% of residents live in homes owned by them or their families, making it the state with the second-lowest owner-occupied home rate in the country, just slightly ahead of New York.

Rebecca Franklin, president of the California Housing Finance Agency’s Homeowner Relief Corp., emphasizes the program’s mission, “People shouldn’t be penalized, and lose something that they’ve worked so hard to obtain, and lose that opportunity for generational wealth, due to circumstances outside of their control. That’s what this program is about To catch people up, to erase that long-term financial impact that the pandemic maybe had on them.”

Despite the pandemic’s adverse impacts, California foreclosures remain at some of the lowest rates in the last twenty years. However, this does not eliminate the financial hardship families have faced during the pandemic.

The economic downturn brought by the pandemic led to mortgage companies and banks becoming more flexible with borrowers by deferring payments and creating additional home loans. Although high home prices can help deter foreclosure as homeowners can sell their properties, high rents often make selling an unattractive option for families.

Under the expansion of California’s mortgage relief program being announced today:

  • Homeowners who have already utilized the program and need additional aid can reapply, with total grants reaching up to $80,000.
  • The program can be used to pay off second home loans, or loan deferrals, negotiated during the pandemic.
  • Homeowners possessing properties with up to four units can avail the program, given they live on the property.
  • The program’s reach is being extended to those who missed at least two mortgage payments and one property tax payment before last summer until March 1.
  • There are income and wealth restrictions in place to regulate the assistance program.

The U.S. Treasury Department administers this relief program at the national level, depending heavily on individual states for funds distribution. As far as California’s performance in distributing funds to borrowers is concerned, the state has proven to be “nimble” and “responsive,” in the words of Lisa Sitkin from the National Housing Law Project, a non-profit advocating for tenants and low-income households.

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