Did CA's mortgage program help these homeowners?
Escondido resident Adam Alotaibi stands in front of his home. He among the San Diego beneficiaries of the Keep Your Home California program. — John Gastaldo
San Diego County assistance
Unemployment mortgage assistance: 1,582 homeowners, $25 million.
Mortgage reinstatement: 333 homeowners, $6.5 million.
Principal reduction: 283 homeowners, $22 million.
Transition assistance: 33 homeowners, $167,000.
Applicants must: Source: KeepYourHomeCalifornia.org
To apply, call 888-954-KEEP (5337) or your mortgage servicer - the company to which you send you monthly mortgage payments. Each program requires the participation of the company or agency that holds the mortgage. For more, visit KeepYourHomeCalifornia.org.
To apply, call 888-954-KEEP (5337) or your mortgage servicer - the company to which you send you monthly mortgage payments.
Each program requires the participation of the company or agency that holds the mortgage.
For more, visit KeepYourHomeCalifornia.org.
Escondido resident Adam Alotaibi spent months without work, slogging through dead-end job interviews and teetering on the edge of losing his home. The military veteran’s situation turned around when a little-known state program covered his $1,800 mortgage for nine straight months.
By the time those benefits ended last spring, Alotaibi not only found a well-paying job as an information technology manager, but he and his wife also sold their Vista thrift store for a profit. They’ve been able to afford to make their loan payments again.
“We’re back to normal,” he said around Christmastime.
Alotaibi’s case is an ideal one for the managers of Keep Your Home California, a roughly two-year-old, $2 billion program in California that helps struggling borrowers stay afloat until they can find their footing again. But the results aren’t always perfect. Although 98 percent of homeowners in the program are still in their homes a year after receiving benefits, they can still be in tenuous financial situations. Some are unemployed, underemployed or at risk of slipping on their payments merely because of the fragile economy.
San Diego County’s unemployment rate in November — the latest month for available data — fell to 8.3 percent, but that’s factoring in holiday hiring. It’s expected to rise in January because of seasonal factors.
Unemployment benefits for those in San Diego and throughout the state were at risk of being eliminated during fiscal-cliff talks in Congress, nearly jeopardizing benefits for almost 30,000 San Diegans. And even though mortgage defaults in the county have dropped consistently, they have yet to return to pre-recession levels.
“California still has a fairly high unemployment rate,” said Di Richardson, program director for Keep Your Home California. “So clearly, a lot of families are still struggling.”
Take Melanie and Leland Cole of Paradise Hills.
The statewide program paid for their mortgage, which is $700 a month, for nine straight months. After their assistance ended last summer, they’ve managed to stay in their home. But the Coles are still out of work. They scrape by with odd jobs, unemployment aid and rent money from a relative, who lives with the couple. Sometimes it’s barely enough.
“I’ve been doing dog grooming,” said Melanie Cole, who last month worried about her husband’s potential loss of jobless benefits.
“There is no business” this time of year because it’s cold, she added. “I’m staying positive and hopeful. I think things are looking better out there, and there are more opportunities now than there were last year.”
Poway resident Gloria Lawrence, who struggled to make her $3,000-a-month mortgage payment two years ago because of medical issues and car troubles, had her principal cut by $50,000 through Keep Your Home California. The reduction resulted in a $300 savings every month, but it’s now gobbled up every month with a car payment.
Car issues had persisted with her 10-year-old Pontiac Grand Am, said the retired state worker who lives on a fixed income. Because the cost of repairs skyrocketed and she needed reliable transportation in the suburbs, she bit the bullet and bought a new Ford Fusion.
“I was struggling to pay that note,” said Lawrence, referring to her mortgage. “I’m still struggling now and still have a high payment. But it’s a lot better now than if I had the old payment and this new car payment.”
Richardson, of Keep Your Home California, said she sees encouraging signs that the foreclosure-prevention effort is working and has improved since its inception. Twenty-six percent of homeowners who received unemployment mortgage help through the program were re-employed after their assistance ended, she said.
In addition, 46 loan servicers, companies to which homeowners send their mortgage payments, are now in the sub-program that reduces principal balances for homeowners. That’s up from 13 in June.
Still, it’s difficult to gauge the success of Keep Your Home California and similar programs offered in 17 other states and Washington, D.C. The federal Treasury Department, which created these foreclosure-prevention programs for the hardest-hit states in the nation, never set goals for the states. So it’s never been clear what success looks like.
According to a government audit released in the summer, one Treasury official said: “This is not our program. These are their programs.” But funding for these programs originated from the federal government, specifically stimulus money.
The audit, conducted by the Special Inspector General for the Troubled Asset Relief Program, also criticized the Treasury for taking too long help struggling homeowners, being too slow in doling out the stimulus funds and failing to secure the support of important stakeholders from the start.
Keep Your Home California did establish a primary benchmark of its own — that it would help 100,000 residents. So far, about 19,800 households have received some form of assistance: mortgage aid for unemployed borrowers, help for those who’ve fallen behind on payments, moving expenses for people who’ve completed short sales or reductions in principal for homeowners who are severely underwater.
Roughly 11 percent of those who’ve received help in the state are from San Diego County.
Ali Tarzi, manager of the foreclosure-prevention program at the housing nonprofit group Community HousingWorks in San Diego, describes Keep Your Home California as “adaptive.” The program was riddled with issues during its inception stage, he said, but 2012 marked a year of vast improvement.
One major change that happened last year was the participation of Fannie Mae and Freddie Mac in the principal-reduction program. Fannie and Freddie own or guarantee about 60 percent of mortgages in California, so their participation was crucial. It also paved the way for several loan servicers to sign onto various aspects of Keep Your Home California.
It’s key to note that Freddie and Fannie joined only after mortgage servicers were no longer required to match program money dollar-for-dollar in order for a principal reduction to happen. Essentially, Keep Your Home California foots the whole bill.
“It means more people are taking advantage of the program,” Tarzi said. “The alternative is that we don’t spend (the program) money at all.”
Tarzi said Keep Your Home California, though not perfect, has come a long way for families in San Diego and statewide.
“The program ultimately ... bridges them to a point where hopefully they can secure employment,” he said. “Opponents of the program ask, ‘Are we just delaying the inevitable?’ ... If we don’t do this, the other side of this is that families could potentially default on their credit, default on their student loans, which often leads to foreclosure, which could lead to blight.
“I feel this is the best way to get out of the crisis.”