ALEJANDRO LAZO | Contributor

Angela Morrow was only eight months into a new career as a flight attendant when she was laid off from her job due to the COVID-19 pandemic, putting her at risk of losing her three-bedroom, two-bathroom home in San Bernardino County.

Morrow, 63, said she was able to save her home in Bloomington through the $1 billion California Mortgage Relief Program, which enabled her to pay off more than $54,000 worth of mortgage debt — relief that lowered her monthly payments for the long-term.

“Receiving that grant has been a monumental blessing for me,” Morrow said. “It created a solid foundation for my kids, and their future, after I’m gone.”

Today, state officials will announce they are expanding who is eligible for the program, including some who took second mortgages.

With $300 million already given out to 10,000 homeowners, as much as $700 million worth of aid remains available for borrowers who qualify for the program, which was created in December 2021 using federal dollars from the American Rescue Act.

The expansion comes as state officials say the pandemic era housing market — characterized by an uncertain economy, high home prices and now higher mortgage interest rates — could still imperil homeownership in the Golden State, particularly for lower- and middle- income families.

Fewer than 56% of Californians live in homes they or their families own, the second lowest rate of any state and just slightly higher than New York.

“People shouldn’t be penalized, and lose something that they’ve worked so hard to obtain, and lose that opportunity for generational wealth, due to circumstances outside of their control,” said Rebecca Franklin, president of the California Housing Finance Agency’s Homeowner Relief Corp., which is administering the mortgage relief program. “That’s what this program is about: To catch people up, to erase that long-term financial impact that the pandemic maybe had on them.”

California foreclosures remain at one of their lowest rates over the last two decades, with only 0.12% of homes in foreclosure as of last November, the most recent monthly data available, according to housing data firm CoreLogic. That compares to a high of 3.21% of homes in November 2010, during the last housing bust. Nevertheless, California families did face financial hardship during the pandemic, the CoreLogic data shows, with 3.72% of all homes in serious delinquency in August 2022, a recent high.

The difference in the pandemic economic downturn, state officials and experts said, is that mortgage companies and banks were willing to work with borrowers to defer payments and create additional home loans. High home prices can also help prevent foreclosure as homeowners can often sell their properties. But with high rents, selling is often not a good option for families, said Lisa Sitkin, a senior staff attorney with the National Housing Law Project, a nonprofit that advocates for tenants and low-income households.

Under the expansion of California’s mortgage relief program being unveiled today at a Sacramento nonprofit:

• Eligible homeowners who have already used the program and are in need of additional assistance can reapply, for as much as $80,000 in total grants.

• Homeowners can use the program to pay off second home loans, or loan deferrals, that they negotiated in the midst of the pandemic.

• The program will also be available to homeowners who have properties of up to four units, as long as those small landlords live on those properties.

• While the program was previously only available for people who had missed at least two mortgage payments and at least one property tax payment before last summer, it will now be available to those homeowners until March 1.

The program includes income and wealth restrictions. People can only receive assistance if their combined household income is not more than 150% of their region’s median income. Households that have cash or other assets worth $20,000 more than the total funds they are requesting are disqualified. (For more information, there’s a help page.)

The relief program is administered nationally by the U.S. Treasury Department, which relies heavily on individual states to distribute the money. As far as California’s track record getting its funds to borrowers, the state has been “nimble,” and “responsive,” said Sitkin, of the National Housing Law Project, which is monitoring all of the states’ programs.

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As the pandemic continues to affect Americans across the country, many are facing financial hardship.

For homeowners with a Freddie Mac loan, COVID-19 mortgage assistance is available in the form of “forbearance,” which temporarily suspends or reduces your mortgage payment without penalty so you can get back on your feet.

Here is how forbearance works and what happens when it ends:

How do I request forbearance? To request forbearance, you must contact your loan servicer (the company listed on your mortgage statement) who will help you understand your options. Forbearance is available for up to a year, though servicers will typically start you on a shorter forbearance plan and reassess to see if your financial situation has changed.

What happens when forbearance ends? It’s important to remember mortgage forbearance is not the same as mortgage forgiveness and you will have to repay your missed payments. About 30 days before the forbearance plan is scheduled to end, you and your servicer will determine next steps. This could include additional forbearance or a workout option to make up the missed payments. Just remember, you are never required to pay back missed payments in a lump sum if your loan is owned by Freddie Mac.

How does repayment work? Even though you must pay back payments that were missed during forbearance, you have several options for doing so. Additionally, you won’t accrue additional fees, penalties or interest beyond the amounts already scheduled or calculated based on the terms of your mortgage. For example, let’s say you enter into a forbearance agreement of three months. If your monthly mortgage payment is $1,000, you will owe about $3,000 in missed mortgage payments at the end of your forbearance term. Your servicer can help you determine the workout option that works best for you, including:

• Full repayment, where you pay back the missed payments all at once.

• Repayment plans, which allow you to catch up gradually while you are paying your regular monthly payment.

• Payment deferral, which allows you to resume making your normal monthly payment. Your servicer can work with you to leverage alternative ways for you to pay back the missed payments from your forbearance period at a later date and in a manner that is affordable.

• Modification of the loan, which changes the terms of your loan, usually to reduce your original monthly payment amount. Your servicer can help with a modification that might suit your new circumstances.

Additional Information: To stay on track with paying down your loan balance and less interest over the life of the loan, it’s important that you resume your payments as soon as you’re financially able. Keep in mind that while you’re not charged “extra” interest, you won’t be paying down your principal, and the interest will continue to accrue on your unpaid mortgage balance.

For information on forbearance and how to get help with your mortgage, visit My Home by Freddie Mac at myhome.freddiemac.com.

Remember, contacting your servicer is the first step in getting help with your mortgage payments if you are facing financial hardship due to COVID-19 or for other reasons. They can explore available options with you and determine what works best for your circumstances.

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