—You experienced a COVID-related financial hardship after Jan. 21, 2020.
—You have at least two past-due mortgage payments as of Dec. 27, 2021.
—Your household earns no more than the area median income in your county, which you can look up on the program’s website. You must also have a limited amount of cash and other assets that can easily be converted to cash.
—The first mortgage you took out on your home was a “conforming loan,” which meant it was small enough for Fannie Mae or Freddie Mac to purchase it from your lender. The limit rises annually; last year in Los Angeles County it was $822,375.
—At least one of these three things is true for you: You receive all or a significant portion of your income from welfare, food stamps and other forms of public assistance; you are “severely housing burdened” — your mortgage and related costs consume more than 40% of your income; or your lender has denied an “alternative workout option” that would have helped you avoid foreclosure.
People who received other forms of government assistance or loan forbearance from their lenders are still eligible to apply for the new program. But struggling homeowners should talk to their mortgage servicer about other options, such as a formal loan modification that lowers their payments, Franklin said in an email. In some cases, she said, those options may be more advantageous to the borrower than the state program.
Notably, aid will also be available for qualifying people with reverse mortgages — that is, they are borrowing against a fully paid-off home — who have fallen behind on property taxes or premiums for home insurance coverage mandated by their lender.
One other major caveat: Because the money goes directly to the company servicing your loan, you won’t be able to obtain aid if that company isn’t participating in the program. As of late December, state officials said that 43 servicers handling an estimated 83% of the eligible loans in the state were participating, and an additional 13 servicers handling 3% of those loans were entering the program. The state has reached out to the remaining servicers to try to get them to sign up as well.
Susan Milazzo, chief executive of the California Mortgage Bankers Assn., said it makes more financial sense these days for lenders to take the state aid than to foreclose. “Mortgage bankers want to take every step necessary and available to them to keep homeowners in their homes,” she said.
What sort of financial hardships count?