California leaders unveiled plans to keep pandemic-impacted homeowners from losing their homes, offering up to $80,000 in grants to owners behind on their mortgage payments.
The one-time grants are part of a new $1 billion federally-funded program to aid homeowners facing the threat of foreclosure because they lost income during the pandemic.
This is on top of forbearance programs that allowed homeowners to defer mortgage payments for up to 15 months.
And it’s also on top of $1.7 billion already doled out to more than 145,000 California renters since last spring.
State housing officials said during a Wednesday, Jan. 5, Zoom conference they expect an estimated 20,000-40,000 homeowners to receive an average of $40,000 in one-time grants to bring their mortgage payments current. The money is a gift that won’t have to be repaid, they said.
By comparison, rental assistance grants to California tenants have averaged just under $12,000 a piece.
“Struggling homeowners can now apply and get mortgage relief and get caught up on the housing payments they have missed,” said Tiena Johnson Hall, executive director of the California Housing Finance Agency. “We are committed to doing all we can to help Californians keep a roof over their heads.”
Applications must be filed online at CAMortgageRelief.org. Residents can get assistance from a housing counselor by calling 800-569-4287.
The grants are available only to homeowners earning the median income or less in their area, who are two months or more behind on their mortgage and who can attest to suffering a COVID-19-related financial impact. Assistance will be provided only for an owner’s primary residence, and the home must be either a house, townhome, condo or permanently affixed manufactured home.
Applicants also must be either a public assistance recipient, must pay more than 40% of their income in housing costs or must have been denied an alternate mortgage workout plan by their servicer.
The funding is part of a $10 billion federal homeowner relief package included in the American Rescue Plan approved last March.
“Forbearance, while helpful during the pandemic, was not going to be sufficient,” said U.S. House Rep. Maxine Waters, D-Los Angeles, who helped get the funding package added to President Biden’s American Rescue Plan.
Despite economic gains in the past year, people still are suffering from the pandemic, said Lourdes Castro Ramirez, secretary of California’s Business, Consumer Services and Housing Agency.
“We must do everything in our power to ensure Californians don’t lose their home,” Castro Ramirez said.
State officials cited recent U.S. Census data showing more than 528,000 California homeowners – or about 6% of homeowners with a mortgage — have missed their most recent mortgage payments. Castro Ramirez added that about 12% of the state’s homeowners remain financially impacted by the pandemic and face the potential of foreclosure
Actual foreclosures have been scant, however. Irvine-based RealtyTrac reported the state had 12,931 borrowers in some stage of the foreclosure process at the end of November.
While most homeowners facing foreclosure could sell their homes for more than they owe on the mortgage, the new program is designed to save them from having to sell to avoid foreclosure, said Rebecca Franklin, head of a newly formed non-profit corporation that’s administering the homeowner grants.
“This program is focusing on helping Californians catch up on missed payments to prevent displacement and foreclosure,” Frankling said.
Franklin said the state reserved 40% of its allocation for “socially disadvantaged communities.”
That’s consistent with the state-run rental assistance program, with 85% of rent relief recipients coming from households earning less than half the median income for their area.
Officials conceded during the Zoom conference there was some “stumbling with the rental assistance program” during its early stages, but said they’ve learned a lot and don’t expect similar delays to occur with the homeowner program.
“No homeowner should go homeless due to the impacts of the COVID-19 pandemic,” said Cloey Hewlett, Commissioner of the state Financial Protection and Innovation Department.
