Up to 40,000 California homeowners that have fallen behind on their house payments during the pandemic will get a “fresh start” through a $1 billion mortgage relief program approved by the U.S. Treasury.
In the coming weeks, the California Mortgage Relief Program will begin allocating one-time grants of up to $80,000. The financial support will go directly to mortgage lenders to cover payments missed by borrowers due to pandemic-related financial hardships. The grants do not have to be repaid and can be applied to both forward and reverse mortgage payments.
“During this pandemic, Californians have lost their jobs or had their paychecks cut, leading many to wonder how they can keep up with their housing payments,” said Lourdes M. Castro Ramírez, Secretary of the Business, Consumer Services and Housing Agency in a press release. “This program will help families keep their homes and provide the stability they need to recover from the financial, physical and emotional toll caused by the pandemic.”
According to a press release from Governor Gavin Newsom’s office, the grant is only available to homeowners that:
- Are at or below their county’s area median income (AMI)
- Own a single-family home, condo, or manufactured home
- Must be a primary residence
- Eligible homeowners may not own more than one property
- Faced a “pandemic-related financial hardship” after January 21, 2020
Qualified financial hardships include income reductions or increased living expenses directly related to the coronavirus pandemic.
Forty percent of the total funds are reserved for socially disadvantaged homeowners in Qualified Census Tracts defined by the Department of Housing and Urban Development.
Funding for the California Mortgage Relief Program comes from the American Rescue Plan’s Homeowner Assistance Fund that earmarked a minimum of $50 million for each state, including Washington D.C. and Puerto Rico..
California is one of many states rolling out homeowners assistance programs using these funds. However, at $1 billion, California’s program is by far the largest in the nation and nearly double the $559 million available in the New York State Homeowner Assistance Fund.
The mortgage relief comes as many homeowners are exiting forbearance periods, and is another tool to avoid foreclosure and distressed home sales.