Tony Salem, of San Jose, thinks he's a great candidate for "Keep Your Home California," a new state program that has almost $2 billion in federal grants to help underwater homeowners stay in their homes.
He's unemployed, and his jobless benefits expire soon. His home is worth less than he paid for it, and he's barely making his mortgage payments. Yet with a little help he thinks he could make it through to better times.
But California's housing finance agency, CalHFA, won't begin a limited rollout of the program until January -- several months later than expected. Even then, it won't start with all of the state's many loan servicers, raising a question of how many people the program will help in the short run.
California is one of 18 states with money from the Treasury Department's fund for states hardest hit by the mortgage crisis. Four states have programs up and running, and four others, including California, are running pilot programs, according to the Treasury Department.
The program would make money available to help low- and moderate-income homeowners avoid foreclosure, catch up on overdue mortgage payments, reduce the amount they owe, or, as a last resort, help them transition to rental housing.
Lately, the California agency's phones have been ringing with calls from homeowners wanting to sign up.
Salem, 35, called this week and was told to hang on. "I said what about all these people running out of employment benefits? She said there's nothing we can do for those people." He said he was advised to contact a Department of Housing and Urban Development counselor.
Coordinating between the participating states and lenders is taking time, said Diane Richardson, president of Keep Your Home California, which has about 300 people enrolled in the pilot program. "We understand the urgency, and we understand their need for us to do it quickly, but we also understand the importance of doing it right," Richardson said. "But people should not be waiting. They should be working with a HUD-certified counselor and their servicer." HUD counselors provide advice to people facing foreclosure.
CalHFA said that under federal guidelines, it can't disclose the names of the banks it is working with. Two major lenders, Wells Fargo and Chase, said they're "evaluating" or "reviewing" the various states' programs, including California's.
"Whenever a major initiative like this is implemented, we must first determine if it is consistent with investor guidelines," said Jason Menke with Wells Fargo Home Mortgage Communications.
The agency learned about a week ago that the government-sponsored mortgage firms Fannie Mae and Freddie Mac will participate in the program.
Still, the effort is likely to help only a small fraction of those who could use it. CalHFA expects to help about 100,000 Californians, but there are 2.2 million California homeowners underwater on their mortgages.
The program has four components:
