A nationwide program, the Hardest Hit Fund, is helping to curb mortgage debt and lower monthly mortgage payments for underwater home owners. The fund has provided $7.6 billion to Housing Finance Agencies in 18 states, as well as the District of Columbia, for establishing programs to help home owners avoid foreclosure and more comfortably afford their mortgage payments.
The U.S. Department of the Treasury recently recognized these efforts in a public statement about such programsÂ in California, where nearly 30 percent of all home owners are underwater on their mortgage. The state has received $2 billion of the total $7.6 billion of the Hardest Hit Fund.
California has used the money to launch a series of programs under â€œKeep Your Home California.â€ The programs help home owners who are facing financial hardshipâ€”such as through a job loss or medical expenses. One allows home owners who are out-of-work to get their mortgage payments covered for up to $3,000 per month for up to nine months.Â
Another program has â€œprovided home owners with an average of $13,000 to catch up on their mortgage payments to avoid foreclosure,â€ according to the Treasury Department's statement. â€œFor home owners who undergo a short sale or deed-in-lieu of foreclosure, a transition assistance program helps initiate a graceful exit from a home.â€Â
California is also offering the Principal Reduction Program, in which eligible home owners who have faced financial hardship can receive a reduction in their mortgage principal balance to help make their monthly mortgage payments more affordable. Eligible home owners have seen the median principal balance on their mortgage drop an average ofÂ 30 percent, from $320,000 to $223,000. Nearly 60 mortgage servicers in the state are now participating in the Principal Reduction Program.
Source:Â U.S. Department of the Treasury