Nine months after launching a pandemic assistance program to help cash-strapped renters avoid evictions, California has launched a new program to help homeowners protect their properties from foreclosure or forced sale. Did.
Mortgage assistance is needed in comparison to the amount of help being sought by renters, however, showing how most homeowners have largely been spared the financial wrath of the pandemic.
Fewer homeowners lost their jobs or income during the coronavirus-related shutdown. And for those who did get into trouble, the programs were far more successful in helping owners regain their financial standing.
Meanwhile, the state’s Housing Is Key program is almost out of rent relief.
As of Wednesday, January 19, two-thirds of the state’s rent assistance allocation was given to less than a quarter of the renters who applied for state aid. The state reported that 151,000 of the 625,000 applicants received approximately $1.8 billion in rental assistance, not counting applications operated by four dozen local and tribal rental assistance programs.
The relatively new $1 billion mortgage relief program, expected to help just 20,000 to 40,000 homeowners who face foreclosure or forced sales.
Since restaurant, hotel and tourism jobs, which saw the biggest cuts during the pandemic, are primarily filled by tenants, renters have been hit far harder than homeowners, said an executive at RealtyTrack, an Irvine company. Vice President Rick Sharga, who oversees foreclosures.
In addition, by allowing homeowners to skip their house payments for up to 18 months, forbearance programs saved more than 7 million Americans from losing their homes.
“I think the endurance program has been a phenomenal success,” Sharga said. “Nearly 8 million people have entered the program since it was launched, … (and) less than a million have survived.”
The Mortgage Bankers Association reported on Tuesday, January 18, that 1.4% of all US mortgages, or less than 750,000, were forfeited at the end of December, down from a June 2020 high of about 8.6%.
According to the MBA, sixty percent of borrowers who had run out of forbearance eventually started making payments and either repaid their missed payments or deferred them until the end of their loan. Another 21% either got a loan modification, refinanced to a new loan or sold their home and paid off their debt.
Stricter income limits would further reduce the number of homeowners seeking state mortgage relief. Eligibility is limited to those who earn no more than the total median income in their area. For example, a family of four cannot earn more than $118,200 in Los Angeles County, $134,500 in Orange County, or $79,900 in Riverside and San Bernardino counties.
However, U.S. Census data show that the median income for California homeowners is 23% higher than the statewide average for all homes, renters, and owners.
To qualify, homeowners must either be on some form of public assistance (welfare, unemployment or Medi-Cal, for example); must pay 40% or more of your income for housing costs; Or may have been unable to obtain a loan modification to keep your home out of foreclosure.
Landlords who lost rental income during the pandemic do not qualify because the program is limited to those who own just one home.
thousands still need help
Nonetheless, there are still thousands of owners who could benefit from the state’s mortgage relief program.
According to RealtyTrack, as of the end of December, 13,400 California homeowners were in some stage of the foreclosure process, and 6,190 of them were in the counties of Los Angeles, Orange, Riverside, and San Bernardino.
“What happened to them? They lost their jobs or their incomes have been negatively impacted,” Sharga said. Or they had two incomes, “and one of the parents had to stay at home because schools were closed. “
Besides COVID-19, common calamities often drive people into foreclosure, he said: job loss, death in the family, medical bills, divorce.
“There is something that has affected the house and (due to) the financial devastation,” Sharga said.
Those numbers are still low, however, representing about three homeowners with a mortgage for every 1,000. And that’s well below pre-COVID times when the number of Californians facing foreclosure ranged from 21,675 at the end of 2019 to 41,543 at the end of 2017.
However, you do not need to be in foreclosure to qualify for mortgage relief. You only need to miss two mortgage payments.
The Census Bureau’s Household Pulse survey showed that more than 460,000 Californians — or one in 11 with a mortgage — were behind on their house payments as of mid-December. About 293,000 homeowners in Southern California missed payments.
Chris Sour, spokesman for the California Mortgage Relief Program, said Tuesday, January 18, 4,098 homeowners filed mortgage relief applications, and the state has approved only 67 homes for less than $2.5 million. This averages out to about $37,000 per family so far.
But the program was only accepting applications for three weeks at the time.
Unlike renters, homeowners often have the option of selling their homes to pay off their mortgage.
RealtyTrac reports that more than 87% of American homeowners in the foreclosure process hold some equity in their homes, meaning their property is worth more than their mortgage loan. About 73% of them have equity in excess of 20%, enough to sell their home for a profit.
However, having equity is no guarantee that a home won’t go into default or even end up in foreclosure, Sharga said.
Some people who are in default are hanging out at their home because they worry about where they are going to live if they sell out, he said. Others may not realize that they have options or may not know that they have equity in their homes.
“It’s not unusual in that situation to panic, to be in denial,” he said.
Even so, it’s rare that homes with notice of default or even an auction date will actually go through foreclosure. In California, owners can pay off their debt and “fix” their default, as long as “the gavel doesn’t come down,” Sharga said.
“In this cycle, most properties that enter foreclosure will probably be sold before they even come up for auction, because there is so much demand for properties and there is so much equity in homes,” he said.
To apply for mortgage relief, visit camortgagerelief.org. Or you can call 1-800-569-4287 to find a housing counselor.
To see if your income qualifies for mortgage relief, visit bit.ly/HomeownerIncomeLimits.