Patt Morrison for February 11, 2011

How is it that California can afford to give away $2 billion to struggling homeowners?

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The California State government has a plan to help homeowners avoid foreclosure and stay in their homes.

Well it’s not exactly giving it away, but improbably the state of California does have $2 billion stashed away with the goal of helping more than 100,000 struggling homeowners avoid foreclosure. The $2 billion comes from the federal government, stashed away by California in 2008, as part of the TARP financial bailout and is only now being rolled out under a state program called “Keep Your Home California.” The program relies on banks working with the state and homeowners to help renegotiate mortgage terms in return for a generous incentive, but similar ideas have been tried in the past three years with little success. California’s plan is actually four separate approaches, the biggest part allocating $875 million in temporary financial help to people who have lost their jobs to help them cover their home payments. Another part of the plan would provide as much as $15,000 per homeowner to help them get current on mortgages. It’s ambitious and it sounds promising but there’s a lot of uncertainty—can “Keep Your Home California” actually keep Californians in their homes?

Guest:

Steven Spears, executive director of the California Housing Finance Agency (CalHFA), the agency running the Keep Your Home California program

Lisa Sitkin, staff attorney for Housing and Economic Rights Advocates, a California statewide, not-for-profit legal service and advocacy organization. Their core practice areas are predatory or unfair mortgage lending, foreclosure prevention and fair housing.


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