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Foreclosure-relief funds for California mostly unspent

A federal foreclosure-prevention effort that earmarked nearly $2 billion in taxpayer money
to help troubled California homeowners has delivered only about one-sixth of that money in three
years. But officials from the Keep Your Home California program say the pace of payouts is finally set to increase. That’s because more banks, including the largest mortgage servicers, have agreed to use the funds to slash the loan principal amounts for certain borrowers. Until now, many borrowers seeking aid from the program have been frustrated.

Borrowers have faced major hurdles in trying to access the aird. Joshua and Catherine Brewster
sought help after Josh lost his job as a legal assistant at Hilton Hotels when his division was moved out of state. They battled for a year for a modification from the servicer, Bank of America, to help with their $2,300 – a month mortgage payment. Then they got transferred to the state Housing Finance Agency.

Many additional battles over the loan terms followed, they said, before the Keep Your Home
California program approved $47,000 in principal reduction. Their interest rate also was cut to 3.75% and in January payments fell to $1,676 a month, which they say they can handle. “We had to fight,” Josh said. “People are not conditioned to challenge the banks. It was brutal.”