The California Mortgage Relief Program: Protecting Homeownership for Communities of Color

The California Mortgage Relief Program (California Mortgage Relief) has helped 23,000 homeowners, many of them Latino, with millions of dollars to avoid losing their homes.

However, when funds run out, more homeowners will be at greater risk of foreclosure than ever, even more so because many don’t even know it exists.

During the video conference: “New threats to homeownership target communities of color – Keeping the family home will be more difficult than ever,” hosted by Ethnic Media Serviceshousing rights attorneys and mortgage experts discussed the threats homeowners face and what they can do to resist.

“The main threats vulnerable homeowners face are keeping the family home when a parent or grandparent dies; PACE clean energy programs that put the borrower’s home at risk if not paid; and “zombie” second mortgages “that haunt borrowers with unexpected bills and threats of foreclosure,” said Joe Jaramillo, an attorney for Housing & Economic Rights Advocates (HERA).

He noted that the death of a home-owning relative poses a threat when there is no will or trust, so loved ones have to go through a long and expensive probate court to inherit it, while property taxes, insurance and mortgages accumulate with unclear responsibility as to who is responsible for paying.

Jaramillo said Latinos and African Americans are at higher risk of foreclosure because of this problem.

On the other hand, he said many home improvement sellers have targeted older Californians, primarily from communities of color, assuring them that those jobs can be done through a government program, which is false.

“This has resulted in many homeowners seeing their property taxes increase, at a cost they cannot afford, and losing their homes.”

Fortunately, he said, California’s Mortgage Relief program recently began a pilot program with a Hero (Home Energy Renovation Opportunity) loan that helps homeowners finance energy and water efficiency improvements.

“We hope this Mortgage Relief program can provide much-needed relief to homeowners struggling to avoid falling behind on their property taxes and mortgage payments as a result of predatory loans.”

He assured that the key is to keep this program funded to ensure that victims of usurious financing know how to apply.

Regarding zombie mortgages, he said that they are second loans for the house that are frequently received at the same time as the main mortgage.

“Typically the home loan is split to prevent buyers from having to put down large deposits and this is basically paid with the second loan. Many do not realize that they were two loans, generally from the same lender, that they were given for the purchase of their property, which were divided into two, and usually included usurious terms.”

What’s troubling is that these types of second loans were largely given to communities of color in low-income neighborhoods before the housing crisis.

He added that unfortunately, second mortgages are not covered by the California Mortgage Relief program.

“These are the toughest loans we try to help people with and along with other groups we are pushing for policy changes so there is more information for people applying for the PACE (Property Assessed Clean Energy) program.”

Rebecca Franklin, president of the California Housing Finance Agency (CalHFA), recalled that the Mortgage Relief program was established in March 2021 when President Biden created the Housing Assistance Fund.

“We offer help of $80,000 that does not have to be paid back, and is for those who have not been able to make their mortgage payments because they or a family member became ill or lost their job.”

He said they basically help people catch up on their mortgage payments and property taxes.

“We can also offer help with what we call partial claims or loan modifications that homeowners entered into in the fall of ’21.”

So through this program they work with the lender to take the active balance and move it to the back of your loan.

“We call those partial claims or deferrals a COVID loan modification.”

Franklin said that those people who face problems paying their housing bills, even if they do not agree with this program, can connect them with legal services that guide them with the options they have to save their home.

Johanna Torres, coordinator of the California Rural Legal Assistance program

(CRLA), said that the pause periods to pay mortgages are coming to an end, so it is important that homeowners take responsibility for making a repayment plan.

“What we have seen with people who speak Spanish is that they have many difficulties understanding their options, and many times lenders do not inform them, so they do not know that they have the alternative of receiving aid from the state of California under the program of Mortgage Relief to avoid foreclosure.”

He stated that they are also seeing many scams especially against low-income people of color.

“Spanish-speaking people, with very low incomes, are those who have mortgages lower than second loans and it is very difficult for them to access their equity in the property because, in addition, the interest rates are very high. “This makes it difficult to combine the second with the first loan to avoid foreclosure.”

Saul de la Cruz said that he is part of a Mexican family that came to the United States looking for a better life, and that is how they decided to invest in a house in Salinas, California that would give them security.

“We got two mortgage loans to complete the money we needed to buy the house.”

However, the second loan was given to them by the Countrywide company that later disappeared, and then they began receiving calls from another business that bought the mortgage with threats for having stopped payments.

“What happened is that one of our loans was regulated by law, but the other was not and the company that bought it wanted to do whatever they wanted without sending us any informative report so that we could even know how much is owed and be able to pay their taxes. to the property.”

Mary Day, an attorney with HERA, said it works to help homeowners maintain their homes during times of crisis.

He recalled the case of Dany with whom he has worked with, on behalf of her mother, who suffers from mental health problems.

“When he came to see me, the city of Richmond had fined him $56,000 for code enforcement; and he had an income tax debt associated with it.”

Luckily, working with the City of Richmond they discovered that the $56,000 was an error, which was reduced to 30,000. “Danny was able to access $80,000 in aid from California”

Danny Bishop, a HERA client, said without Mary’s help he wouldn’t have done it because they were basically trying to take over his mother’s house.

“Mary really helped me. “We are currently working with the City of Richmond to see if we can negotiate some of the penalties to assist the family who placed an out-of-pocket bid for over $10,000 to clear their property tax arrears.”