California Launches COVID-19 Mortgage Relief Program, Accepting Applications

A house for sale in South Pasadena, Calif., on April 24, 2020. - The coronavirus pandemic has worsened the US housing crisis as millions now unemployed must now figure out how to pay their monthly mortgages. (Frederic J. Brown/AFP via Getty Images)

SACRAMENTO, Calif.—California’s new $1 billion mortgage relief program is now accepting applications, state officials announced during a press conference on Jan. 5.

The relief program can provide up to $80,000 per household in direct payments to mortgage providers to help homeowners who have fallen behind on their mortgage payments as a direct result of the COVID-19 pandemic, though the average payment will be closer to $30,000 per household. Homeowners will not need to repay the funds.

“COVID-19 has severely affected homeowners who may have lost their jobs or had to reduce their work hours and essentially fell behind on their housing payments,” Lourdes M. Castro Ramírez, secretary of the California Business, Consumer Services and Housing Agency said during the press conference.

The funding comes from the American Rescue Plan Act’s Homeowner Assistance Fund, with all $1 billion dispersed to homeowners until all funds are allocated, officials said, noting plans to help 20,000 to 40,000 low to moderate-income homeowners.

Eligible applicants must have a total household income at or below 100 percent of the county’s area median income, own and occupy the mortgaged property as their primary residence, be able to prove they experienced a qualified financial hardship between Jan. 21, 2020, and Dec. 27, 2021, and have missed at least two mortgage payments.

Also, applicants must meet one of the following conditions; they must be receiving public assistance, spending more than 40 percent of income for mortgage, or lacking an alternative solution through their mortgage service provider.

Because of the pandemic, 12 percent of California homeowners are currently facing foreclosure, while 6 percent are falling behind with their mortgage payments, and those in “underserved communities were often hit the hardest,” Castro Ramírez said.

The mortgage relief program works to round out the state’s “Housing is Key” initiative, which has been providing rental and housing assistance to renters and homeless people financially affected by the pandemic.

Rep. Maxine Waters (D-Calif.) said during the conference: “After President Biden secured control of the House and Senate, I was able to secure $10 billion in the American Rescue Plan to create a national Homeowner Assistance Fund to help homeowners stay stably housed during these very difficult times.

“These funds will be able to have Californians modify their loans, including with principal reductions so that they can remain stably housed. I’m very pleased that California received over $1 billion of this funding and has begun to help homeowners with the launch of a state program today.”

Those looking to apply can begin their application at CAMortgageRelief.org.