In a big change, the state-run Keep Your Home California program will use federal money to reduce an eligible homeowner’s mortgage balance by up to $100,000 without requiring a matching reduction by the bank servicing the loan.
Many more underwater California homeowners will get principal reductions when the change takes effect in early June, but there’s a catch: The reduction is structured as a forgivable loan. If they sell their house within five years, any profit will go toward repaying the principal reduction. After five years, there is no repayment requirement. Under current rules, the loan is forgiven after three years.
Loans backed by Fannie Mae and Freddie Mac are potentially eligible for principal reduction under this program.
The money is coming from a $2 billion grant the state was awarded in 2010 from the U.S. Treasury Department’s Hardest Hit Fund. The grant provides four types of assistance to low- and moderate-income homeowners who can document a financial hardship.
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, demonstrate a financial hardship and owe no more than $729,750 on a first mortgage originated on or before Jan. 1, 2010. (The previous cutoff date was Jan. 1, 2009.)
In San Francisco the household income limit is $121,900. For other counties see keepyourhomecalifornia.org/files/income.pdf.
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This is simply outrageous. If in San Francisco you make $121,901, you have the privilege and honor to pay taxes so the federal government can turn money over to the state government(forget all the carrying charges here and there) to give your neighbor who overextended himself or lied on his loan application a gift of $100,000. This is fair?
JAJ48@aol.com http://www.smashwords.com/books/view/109312
