Since hearing about the HHF in April of this year, I've been eagerly following and reading the developments in hopes that this would help us modify our loan using the principal reduction program. I've read CalHFA's proposal to the US Treasury at least four times, all 50 pages, and scanned it many other times in an attempt to understand as much about it as possible. I think I'm now somewhat of an expert on the HHF. ;-)
I was really hopeful for my situation. I'm not anymore. Here's why:
I spent yesterday being really depressed that we're not going to qualify.
- If your loan is owned by CalHFA or another government entity (for example you make your monthly payment directly to CalHFA), you are not eligible for the matching funds from your lender. This means the max help you can get is $50,000 (instead of the $100,000). Since our home is underwater by about $130,000, a $50,000 principal reduction isn't going to help us.
- The principal reduction program looks at the outstanding loan balance on your 1st lien only. If the balance owed on your 1st lien exceeds 125% of the net present value (NPV) of your home, you may qualify. We have a total of five liens on our property (all were loans or grants from government agencies for 1st time homebuyers) totaling $399,600. However, the 1st lien balance is only $293,000. The excludes us since $293,000 is not in excess of 125% of the NPV of our home.
The HHF is going to be good for those who do qualify, though. If:
They say the principal reduction program is a gateway aimed at allowing borrowers to re-fi their homes into better terms. If they write-down your principal to no more than 125% of the NPV, this will allow you to then re-fi to a lower interest rate and therefore reduce your monthly payment.
- Your loan is not owned by a government entity (you make your payments to a traditional lender like BofA, Chase, or WF). Even if you received help from CalHFA, as long as your loan isn't owned by CalHFA or another government entity, you are eligible for the matching funds which means you could be eligible for up $100,000 in HHF help including the principal write-down.
- Your 1st lien was not a re-fi and is in excess of 125% of the NPV of your home.
- You didn't do a cash-out re-fi on your home.
- You bought your home prior to 01/01/2009.
- You have a hardship. For example, you had an involuntary reduction of income or an increase in your monthly payment coupled with a severe decline in your home's value.
I really hope some will take advantage of this.
I think I start looking at rentals now.