If you have fallen behind on your mortgage payments because of a financial hardship, California's Mortgage Reinstatement Assistance Program might help you reinstate (bring your loan current in one lump sum payment) your mortgage. The program is part of Keep Your Home California. Read on to get an overview of the Mortgage Reinstatement Assistance Program, learn how much assistance is available, and find out if you are eligible.
In 2010, the U.S. Department of the Treasury created the Hardest Hit Fund to provide targeted aid to homeowners in those states most affected by the housing market crash. As part of this program, $7.6 billion in aid was allocated to the 18 states, along with Washington, DC, that experienced the most extreme home price declines and high unemployment rates as a result of the economic crisis.
(Learn more about the Hardest Hit Fund.)
Through the Hardest Hit Fund, California was awarded nearly $2 billion in funds to help eligible homeowners avoid foreclosures by way of four programs, which are collectively called Keep Your Home California (get an Overview of Keep Your Home California). Each program provides a different type of financial assistance to low and moderate-income homeowners. The four programs are:
(To learn about the other programs in Keep Your Home California, visit our California Foreclosure Law Center.)
The Mortgage Reinstatement Assistance Program (MRAP) helps homeowners avoid foreclosure by providing funds to reinstate a delinquent mortgage loan. (Learn more about the California foreclosure process.)
The program provides a one-time payment of up to $54,000 to cover principal, interest, taxes and insurance (PITI), as well as any escrowed homeowners' association dues or past-due assessments.
The assistance is provided in the form of a non-recourse, non-interest bearing subordinate loan secured by a junior lien that is recorded against the property. After five years, the subordinate lien will be released. You only need to repay the loan if you sell the home for a profit or refinance (and take cash out) during that time.
MRAP can act as a gateway to other Keep Your Home California programs, including the Principal Reduction Program (subject to the overall program benefit cap of $100,000 per household).
To be eligible for MRAP, you must qualify as a low or moderate-income household based certain criteria, such as (but not limited to):
Additionally, your existing mortgage and the property securing that mortgage must meet the below criteria.
Mobile homes are eligible if they are permanently affixed to the real property that is secured by the first lien. (Learn more about what happens if you are struggling to pay your mobile home loan.)
You are not eligible for assistance through MRAP if one of the below conditions applies to you.
Servicer participation in the program is voluntary. (A mortgage servicer is the company that collects monthly mortgage payments from borrowers on behalf of the owner of the loan, as well as tracks account balances, manages the escrow account, handles loss mitigation applications, and pursues foreclosure in the case of defaulted loans.) Almost all servicers have signed on for MRAP participation.
To find out if your servicer is participating in MRAP, go to http://keepyourhomecalifornia.org/participating-servicers.
To apply for MRAP assistance, you can: