Are you a homeowner in California? Is your home underwater? Are you struggling to make your monthly mortgage payments? Well good news was just released for you!
Fannie Mae (FNMA) and Freddie Mac (FHLMC) are on board to play a role in the California Housing Finance Agency’s “Keep Your Home California” program. The whole goal of the program is to reduce the principal balance for homeowners who are underwater on their mortgages.
Both Fannie and Freddie made the announcement that they would do principal reductions, but they’d been reluctant to do so in California because officials of the “Keep Your Home California” program required that banks match taxpayers funds for principal reductions. Principal reductions are not write downs, the bank does not just forgive this money. When a reduction does occur, the principal is actually paid down using funds from programs like “Keep Your Home California”. Until now, banks had to match those funds in California, but now that requirement has been lifted. This saves the banks billions of dollars by not having to match the reduction.
The funds that come from the Federal Government to reduce principal is from a fund named the “Hardest Hit Fund” or HHF. This fund was set up originally by the US Treasury to help homeowners in states where housing prices had dropped at least 20%. It is being projected that before the Hardest Hit Fund program expires in 2017 that more than 459,000 homeowners will have received some help.
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