Home Loans and Support

Hardest Hit Fund Principal Reduction for CA

Discussion in 'Making Home Affordable' started by NorthBay, Sep 6, 2010.

  1. NorthBay

    NorthBay LoanSafe Member

    Hello Everyone,

    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:
    • 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.
    I spent yesterday being really depressed that we're not going to qualify.

    The HHF is going to be good for those who do qualify, though. If:

    • 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.
    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.

    I really hope some will take advantage of this.

    I think I start looking at rentals now.
  2. Evan Bedard

    Evan Bedard Call 1-800-779-4547 Loan Safe Mortgage

    Hello Northbay,

    Thanks very much for sharing this helpful information. This can be very beneficial if lenders will agree to abide by the guidelines and offer principal reductions to those who qualify.

    Have you considered other options to help lower your mortgage payments besides the HHF program?.
  3. NorthBay

    NorthBay LoanSafe Member

    Hi Evan,

    We applied to CalHFA earlier this year when I was on maternity leave and asked for a couple payments to be tacked on to the end of our mortgage. We were denied for a couple of reasons:
    1. The loan was based soley on my husband's income and his income has not stopped or dropped. The fact that my income stopped for five months with our first child and then four months with our second child doesn't count.
    2. Our expenses have skyrocketed since having 2 children (currently 22 months and 7 months old). We now pay $344 per week for childcare plus diapers, clothes, extra food, etc. CalHFA doesn't count this as a hardship because the choice to have children was voluntary.

    We do not qualify for HAMP et al because we have a CalHFA owned loan. CalHFA is not a participant in the federal programs.

    As part of our purchase and loan agreement, we are not allowed to refinance our house. We received special loans and grants from the state and local governments for 1st time, moderate income buyers that preclude refinancing. But even if we were allowed to refi, we are $137,000 underwater. No one would touch us.

    We're not eligible for the HHF as stated in my 1st post.

    Bascially, we're either stuck paying for the titanic or we attempt a Short Sale or just allow it to go to foreclosure.

    We're still going to apply for the HHF come Nov 1st, but I'm 99.9999% positive we'll be denied. At that point, we'll attempt to go to Short Sale. If that doesn't work, we'll attempt Deed in Lieu. If that doesn't work, we'll go to foreclosure.

    Our combined gross income is in excess of $110k per year. Based on 31% front end DTI, we can afford to stay her because our payments are only $2050 per month including the escrow for taxes & insurance. My issue is that our exact home is selling for $250k. We paid $430k and stil owe $399k. By all estimates, the soonest we can break even on this house is 10 years and the latest is 23 years. We do not and never intended to stay here more than 6-7 years total.

    We can buy this exact house four doors down for $250k or go rent a comparable or better home for $300-$600 per month less than our mortgage payment.

    What woud you do in our situation?
  4. OnMyWay2theFuture

    OnMyWay2theFuture LoanSafe Member

    Isn't this program only available to those who are unemployed?
  5. NorthBay

    NorthBay LoanSafe Member

    No, it isn't.

    The HHF in California contains four programs, one of which is aimed specifically at the unemployed, but the others are not.

    The programs are:

    UMA = Unemployment Mortgage Assistance
    MRAP = Mortgage Reinstatement Assistance Program
    PRP = Principal Reduction Program
    TAP = Transitional Assistance program

    Here's the link to the program descriptions:
    CalHFA Keep Your Home - Program Summaries

    Each of the HHF states was allowed to design their own programs. This thread is specific to California. If you're in a different HHF state, google it.
  6. OnMyWay2theFuture

    OnMyWay2theFuture LoanSafe Member

    thanks NB - I'm here in Cali and trying to work with Wells Fargo.
    I have 1 loan and am about $100,000. underwater - tryiing to hang on with a 15% paycut - I work for the State of California.
  7. OnMyWay2theFuture

    OnMyWay2theFuture LoanSafe Member

    Just read the guidelines and it is exciting to learn about. However, it describes the program as a "dollar for dollar" match with "participating lenders" - I wonder if Wells Fargo will be one of the lenders that will agree to participate.
    I seriously doubt it - what's in it for them? :confused:
  8. NorthBay

    NorthBay LoanSafe Member

    I feel your pain. I'm anywhere from $149k to 109k under water depending on the comps ones uses. I work for my county government. We had furloughs amounting to about a 2% pay cut last year and another one for about 4% this year. We haven't taken the huge cuts state workers have taken, thank Gawd.

    The CalHFA website I pointed you is supposed to add the list of participating lenders sometime in the next couple of months. I can't imagine why WF wouldn't participate. They are a huge lender in California and originated a lot of CalHFA loans. They would get basically the same benefit under the HHF that they get under HAMP et al.

    If I were you, I'd start gathering my financial info now so you're ready to go when Nov 1st comes. Because your pay is cut so much by the furloughs, I'd think that along with the massive decline in your house value would qualify as a hardship.
  9. OnMyWay2theFuture

    OnMyWay2theFuture LoanSafe Member

    My first strategy would be to postpone my tentative sale date scheduled for 9/20, then ask if I would be qualified to apply.
  10. Fregoo

    Fregoo LoanSafe Member

    Just adding some thoughts to the CalHFA mod issues. Our situation:
    In 2004, we bought our Sacramento suburb home for $280 and some change with a 97/3 First-time homebuyer loan - CalHFA bond-funded (originated with Countrywide, then -per contracts- purchased by CalHFA, with Countrywide as servicer -- now B of A / BAC).
    We got a "subsidized" interest rate of 5.25% on the first loan of $274k, a conventional, fixed-rate loan with PMI. The second was silent / "payment deferred" loan with a fixed 5% rate from CalHFA's down-payment assistance program and was for $8500. We qualified at the top-end of the income bracket, which allowed 120% of median income for the area.

    Currently owe about $260k, home valued at about $140k-$160k. We missed our first payment September 1, and got a few form letters from BofA. After 60 days, we got a certified letter about their right to file a NOD at 90 days late - on Nov 17. So B of A has met the CalHFA requirement to make contact with counseling and mod options and contact included. I'm now pulling my hardship letter, budget and other docs together in anticipation of the Nov. 1st date, hopefully having set myself up with a negotiator at BofA by then.

    Anyone else dealing with Bank of America / BAC Home Loans / CalHFA mods? I know that when we bought the house, there were only a few individuals in Countrywide who were experienced and thorough enough to get all the extra CalHFA paperwork right and get the loan funded. I'm guessing I need to really push BofA to find the right person who could be knowledgeable about the CalHFA stuff. Any current feedback or info would be great. Thanks!

    In the six years we've been here, we had increases in expenses (medical, cost of living, gas, car payments, etc), but have not had a reduction in income since purchasing, in fact have had enough of an income increase to put us just above the current limit. Having been conservative about buying (we thought!), we kept the payments manageable, but we assumed (duh,... I know) that we would have dropped PMI by now, that I would have a job, we'd be able to finance the new roof and replacement windows that the home will need soon, and that we wouldn't have slowly drained our savings on the rising cost of living (especially health insurance costs and gas).
    I've been researching the HHF program CalHFA is rolling out on Nov 1, and found some language in their April proposal (now approved as "the plan") that says we prove our eligibility income-wise just by having the CalHFA loan and the income cap can be met from either our current income level OR the level at the time of loan origination (which we obviously did). We may get screwed by some other requirement (still figuring out how to frame the hardship since we've not had a big "incident," just a slow dive to the poorhouse). Our debt-to-income ratio is too high (student loans, car loans, and some credit cards we've cut up and have been paying off), but our PITI payment-to-income ratio is still under the 31% limit - though I don't recall the guidelines for the CalHFA mod options being as stringent as the fed programs.
    Another point I'm researching is the contractual obligations of the servicer (BofA) to the lender (CalHFA and their bond investors) to negotiate (or not) with borrowers. I read somewhere that B of A has to present all applications for mods to CalHFA for written approval, and also that mods (perhaps only those that create a loss for the lender) have to be approved by 60% of the CalHFA bond investors.
  11. pakca

    pakca LoanSafe Member

    i did not find infomation; how to apply for Principal Reduction Program?
    web site said
    CalHFA Keep Your Home - Frequently Asked Questions

    The programs will be available in the coming weeks.
    Additional information regarding how to apply for these
    programs will be posted on this Keep Your Home California web site soon.
    Until that time, no application or method for applying is available.
  12. Fregoo

    Fregoo LoanSafe Member

    Today was a punch in the gut from CalHFA. Two calls to them, and both stated they won't be opening the program for applications until January 1st! What?! Apparently, they're still setting up the program infrastructure. How can they be so far off in their estimated timeline that two months is tacked on without so much as a press release, as far as I could find. For a while, I saw their website said HHF programs were not yet open to applications, but would be available no later than Nov. 1. Today, the message had removed the date, and left it open-ended.
    I was so upset at the lack of a better explanation, I called the Sacramento Bee, my congressman and state reps and the local GAO officer. It may be in self-interest, but I know I couldn't be the only one who's seen the Nov. 1st date quoted in multiple locations (news articles and CalHFA memos and website). We'll be 30-days from a notice of sale at that point (if things move along like they have). This sucks.
    In the meantime, if you're looking for info on what the program will look like, the details are in the pdf of their proposal for the funds - available on the main page of the "keepyourhomecalifornia.com" website (the words "CalHFA's plan" linked to file). I dug around the site and found useful info within the "partners" section (info for lenders) - there are more guidelines and processes - good stuff to know. Also try their press release page: CalHFA - What's new
  13. NorthBay

    NorthBay LoanSafe Member

    Yeah, I called on Nov 4th asking why the programs weren't available and all I was told was that it was delayed until Jan 1st. Figures. They've only had at least FIVE MONTHS to prepare. But I guess they need at least SEVEN MONTHS. Gimme a few qualified programmers & developers and I could have had this thing ready go a long time ago, but alas, we're taking about the government here and they can't do anything without sending 648,000 memos, consulting dozens of "stakeholders", waiting for 137,000 responses to meaningless questions, having 49 training sessions, testing it over a 12 month period, resending 206,000 memos to update everyone on the progress (or lack thereof), spending 3 months fixing the bugs, having 56 supplemental training sessions (which must include diversity and cultural sensitivity topics) all over the G-- D--- state and possibly the world, then rolling it out 2 months later only find out that the whole thing is a flop.

    I'm a bitter, 13 year veteran of government employment. Excuse my venting.

    I need to research the DTIs for the HHF programs again because I can't recall what the backend DTI was. I know for sure we don't qualify even using the backend DTI, but it might be helpful to others.
  14. Lainy09

    Lainy09 LoanSafe Member

    Hi NorthBay...thank you for all of this great info. I was just reading thru that pdf on CalHFA's site....we too had been not-so-patiently waiting for that Nov 1st deadline, and now I'm worried with the delay we'll be stuck. I just read something that made me nervous, in the exclusions section: General Program Exclusion Criteria:

    Notice of trustee sale has been recorded and trustee sale scheduled for the subject

    That hasn't happened to us YET but it's just around the corner...so I guess if the NTS gets recorded before Jan 1st we'll be screwed? It certainly looks like that will happen...............gosh this all sucks.
  15. Lainy09

    Lainy09 LoanSafe Member

    Thanks, Fregoo, for that info on their site....
  16. NorthBay

    NorthBay LoanSafe Member

  17. NorthBay

    NorthBay LoanSafe Member

    I just finished my initial application for the HHF. Here's the phone number: (888) 201-5304. Their hours are M-F from 7am to 7pm. You talk to two interviewers.

    The first one takes some basic information (vitals, loan balance, income & assets). S/he wants to know which program you want to apply for. The 1st interview takes about 10-15 minutes. If it appears you might qualify for a program, you get transferred to the 2nd interviewer.

    The 2nd interviewer confirms the info from the 1st and asks more detailed info about your loan (origination date, interest rate, servicer, unpaid balance, and current market value of your home), your household composition and income (gross pay, tax dependents, balances in your bank accounts), and wants you to explain your hardship. The 2nd interview takes about 30-45 minutes. They pull your credit, too. My interviewer asked me if my home was worth $330k. I laughed. I said it's worth about $255k based on active and recent sales comps. I don't know which program she used to value my home, but it's way off. Have your own number.

    If it appears you might qualfiy, they will send you a packet of forms to complete and return with documentation of income, assets, and hardship. You can get the packet by mail, fax or email (I opted for email) and you're supposed to return it within 5 days.

    She said the final determination takes 30-45 days from the time they receive the complete package. You know what that means. It means they'll be asking you for something else every 3rd day.

    I don't have my packet yet so I don't know exactly what they are asking for, but I'm sure it's the usual suspects. I'll post the package items when I get mine.

    A warning: The interviewers I spoke to don't sound like they know a heck of a lot. They sound young and newly hired. Know your stuff before you call.

    Good luck everyone! Get on it!
  18. What state are you in?
  19. NorthBay

    NorthBay LoanSafe Member

    Um, California....... ;-)
  20. Sorry, after I posted that I realized the thread was for CA.

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