Loan Modifications for Homeowners in the State of California

Only 1 in 4 Homeowners applying for a loan modification will have their application approved. Let us help you increase your chances of receiving a loan modification with the best possible rate and terms.


Most homeowners are behind on their payments when they attempt to apply for a loan modification. However it is important to note homeowners do not have to be behind to receive a loan modification.

Talk with the Right Person
When you first get behind on your payments, a customer service rep or a person in the collections department will contact you about the reason you are behind on your payment, when you can make a payment and the consequences of missing another payment.

These are not the folks to talk to regarding a loan modification.

Many times they will ask for your financial information i.e. your gross and net income, your expenses, how much money you have in the bank, information about your assets, etc. Do not give your financial information to your lender until you have calculated the information on a worksheet.

This is the most important step in the process. You need to present your financial information to your lender in the best possible terms that match your loan's modification guidelines.

The loan modification process is a negotiation between you and your lender. To negotiate the best possible modification terms you need to know what your lender can and cannot offer you.

One of the advantages of working with an experienced loan modification company is we will know or find out your lender's modification guidelines first and then tailor your financial information accordingly.

Always take notes of each person's name, phone extension, the time you talked with them and the subject of your discussion. When you fax documents always note the number of pages and time. Good record keeping is essential.

Strategy is Key
When applying for a loan modification, you need a well thought out game plan to have any chance of a successful negotiation.

The representative at your lender is trained to minimize losses and extract the maximum amount of money and the best possible terms out of you. If you understand this, then you know you must be prepared, your workout plan must be documented and you must be very careful in what you say and how you say it.

Every lender has a workout package that must be filled out completely. Not providing all the documentation your lender requests is a sure-fire way to get your workout package stonewalled or denied. Another advantage of using a knowledgeable third party is that they may suggest inclusion of documentation that may not be requested by your lender but can have a positive impact on your negotiations.

The crucial element to this whole process is your Budget. Your budget will show a detailed account of your monthly expenses and income. If your budget looks too tight you may not get approved. If your budget shows too much extra income you can bet the modification may be denied or the terms will much higher than they could have been.

The last thing to remember is you only get one chance. Once you submit your proposal and documentation there's no changing stories, recalculating budgets or coming up with new reasons why you got behind in the first place.

Our 10 years of experience and working relationships with all the major banks and servicing companies will give you the advantage you need. If you want further advice call us, will be more than happy to discuss your situation and possible solutions at no charge.


In-house loan modification programs offer a variety of home retention programs for borrowers whose mortgage loans are secured by first and second liens and who are experiencing a qualifying financial hardship. The goal of all of these programs is to create payments that are more affordable and sustainable. The loan modification may involve some or all of the following changes to your mortgage loan:

  • Bring your account current
  • Reduce the interest rate on your loan
  • Extend of the term on your loan
  • Delay your repayment of a portion of the mortgage principal until the end of the term

General Eligibility
You may be eligible to modify your home loan if you are experiencing a financial hardship, such as a job loss, you wish to keep your home and your property is currently occupied.

To reach an affordable payment the lender may follow the following steps:

Step 1: Capitalize the past due amounts to bring your loan current

Step 2: Reduce the Interest Rate
The interest rate can be as low as 2%

Step 3: Extend the Term
The maturity date can be extended as long as forty (40) years from the origination date.

Step 4: Forebear or Forgive Principal
A portion of your principal balance may be postponed or reduced, temporary or permanently.

If your loan is owned by Fannie Mae or Freddie Mac you may be eligible for the new Fannie Mae and Freddie Mac Flex Modification Program.

To verify Fannie Mae owns your loan click - Fannie Mae Loan Lookup

To verify Freddie Mac owns your loan click - Freddie Mac Loan Lookup

The Flex Modification Program replaced the Standard and Streamlined Modification offerings after Oct. 1, 2017.

If you are less than 90 days behind on your mortgage you must submit a Borrower Response Package (BRP) in order to be evaluated for a Flex Modification, which will target a 20% monthly payment reduction and a 40% Housing Expense-to-Income (HTI) Ratio.

If you are more than 90+ days delinquent, the program targets the same 20% payment reduction, but requires no “borrower documentation.”

The program will also allow for principal forbearance to an 80% mark-to-market loan-to-value ratio (MTMLTV), but this amount must not exceed 30% of the unpaid principal balance.

Flex Modification Eligibility

  • Mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac
  • Must be 60 or more days delinquent unless owner-occupied and in imminent default
  • Must submit a Borrower Response Package*
  • Must have an eligible hardship
  • Must verify income
  • Must have been originated 12 months prior to evaluation date
  • Must target a 20% principal and interest payment reduction and 40% front-end DTI

*If 90 days+ delinquent, a Borrower Response Package is not required, and servicer is not required to confirm a borrower’s hardship or income.

Ineligible for Flex Modification

  • FHA, VA, and USDA loans
  • Mortgages subject to recourse
  • Mortgages secured by second homes or investment properties less than 60 days late
  • Mortgages that have been modified three or more times previously
  • Mortgages approved for a short sale or deed-in-lieu
  • Mortgages under a different modification program
  • Mortgages that don’t make it through the trial period or aren’t brought current

This plan works for borrowers who are experiencing a temporary hardship, such as a sudden living expense increase or income loss.

Your lender may allow you to reduce or suspend payments for a short period of time and then agree to another option to bring your loan current. A forbearance option is often combined with a reinstatement plan when you know you will have enough money to bring the account current at a specific time. The money might come from a hiring bonus, investment, insurance settlement, or tax refund.

We will negotiate with your lender to explain why a forbearance plan is an applicable solution which will allow you time to get back on your feet, or sell your property.


Making Home Affordable is a key part of the Obama Administration's effort to help homeowners avoid foreclosure. The Home Affordable Modification Program was designed to help as many as 3 to 4 million financially struggling homeowners avoid foreclosure. But as of October 2011 the number is less than 800,000.

You may be eligible to apply if you meet all of the following:
1) You occupy the house as your primary residence.
2) You obtained your mortgage on or before January 1, 2009.
3) You have a mortgage payment that is more than 31 percent of your monthly gross (pre-tax) income.
4) You owe up to $729,750 on your home.
5) You have a financial hardship and are either delinquent or in danger of falling behind.
6) You have sufficient, documented income to support the modified payment.
7) You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or
    tax evasion, in connection with a mortgage or real estate transaction.

If you are having a tough time making your mortgage payments for reasons not related to unemployment, you may qualify for HAMP. HAMP lowers your monthly mortgage payment to 31 percent of your verified monthly gross (pre-tax) income to make your payments more affordable. The typical HAMP modification results in a 40 percent drop in a monthly mortgage payment. Eighteen percent of HAMP homeowners reduce their payments by $1,000 or more.

You do not have to be behind on your mortgage payments to qualify. If you're struggling now, or believe it will soon be difficult for you to make your mortgage payments on time (“imminent default”), you may qualify under the Home Affordable Modification Program. As a homeowner, you may find yourself in this situation because of a significant increase in your mortgage payment, a significant reduction in your household income, or some other hardship that makes it difficult to pay your mortgage. You will be required to document your income and expenses and provide evidence of the financial hardship.

Your credit score be affected by accepting a trial period plan or loan modification. Your loan will be reported as paying under a partial payment plan during the trial plan, and as modified after the final modification agreement.


PRA was designed to help homeowners whose homes are worth significantly less than they owe by encouraging servicers and investors to reduce the amount you owe on your home.

You may be eligible for PRA if:

  • Your mortgage is not owned or guaranteed by Fannie Mae or Freddie Mac.
  • You owe more than your home is worth.
  • You live in the home carrying the mortgage you want to modify.
  • You obtained your mortgage on or before January 1, 2009.
  • Your mortgage payment is more than 31 percent of your gross (pre-tax) monthly income.
  • You owe up to $729,750 on your 1st mortgage.
  • You have a financial hardship and are either delinquent or in danger of falling behind.
  • You have sufficient, documented income to support the modified payment.
  • You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.

Program Availability
More than 100 HAMP participating servicers are required to evaluate homeowners for principal reduction. Participating servicers are required to develop written standards for PRA application. The largest servicers include Bank of America, CitiMortgage, JP Morgan Chase, and Wells Fargo.

Program Effective Date
Effective Oct. 1, 2010 – Dec. 31, 2012.

The median loan-to-value ratio on modifications that went through principal reduction was 158%. After the workout was complete, the borrower held an LTV of 115%, meaning he or she owed 15% more on the mortgage than the home was worth rather than being 58% underwater.

The average amount reduced is more than $65,000 or 31% of the unpaid principal balance. Through PRA, the Treasury pays investors for every dollar of principal forgiven on a sliding scale depending on how far underwater the borrower is.

PARTIAL CLAIM (FHA loans only)
If you have an FHA Loan, and can document temporary financial hardship, we can negotiate with your lender for a Partial Claim.

We can help you get a one-time interest-free loan from your mortgage guarantor to bring your account current. You may be allowed to wait several years before repaying this loan. You qualify for an FHA partial claim if:

  • Your loan is between 4 and 12 months delinquent
  • You are able to begin making full mortgage payments again
  • The property is your primary residence

When your lender files a partial claim, HUD will pay your lender the amount necessary to bring your mortgage current. You must sign a promissory note, and a lien will be placed on your property until the promissory note is paid in full.

The promissory note is interest-free and is due when you pay off the first mortgage or when you sell the property.

The program is now closed and no longer accepting applications for assistance.

In 2010 California received $2 billion from the Treasury's Hardest Hit Fund to help homeowners avoid foreclosure and keep their homes. On February 07, 2011 The California Housing Finance Agency launched the four Keep Your Home California programs.

1. Unemployment Mortgage Assistance
Mortgage assistance of up to $3,000 per month for 18 months for unemployed homeowners who are collecting or approved to receive unemployment benefits from the State of California’s Employment Development Department (EDD).  Click Here to Learn More

2. Mortgage Reinstatement Assistance Program
For eligible homeowners who have fallen behind on their mortgage payments. Funding of up to $54,000 to help qualified homeowners catch up on their mortgage payments.  Click Here to Learn More

3. Principal Reduction Program
Financial assistance to help pay down the principal balance of a mortgage loan and allow for a more affordable monthly payment. Up to $100,000 per household (average funding has been $67,000).

If a qualifying, first-lien mortgage loan is delinquent, the servicer must utilize the PRP monies to bring the mortgage loan current before applying PRP monies to the homeowner’s principal balance.

Change in PRP program as of October 2014:
Homeowners with a loan-to-value ratio of 120% or greater – for example, the unpaid principal balance of the first mortgage is $360,000, but the current value of the home is only $300,000 – meet the qualified hardship requirement for the Principal Reduction Program.  Click Here to Learn More

4. Transition Assistance Program
For eligible homeowners who are undergoing a short sale or deed-in-lieu of foreclosure program. Up to $5000 per household.  Click Here to Learn More

For Participating Servicers – Click Here. Your servicer is the company that you make your mortgage payments to each month.

In order to qualify for the programs:

  • Borrower's home must be in California
  • Must be primary residence
  • 1st Mortgage must be less than $729,750
  • Borrower must meet county income requirements Click Here.
  • Experienced a financial hardship
  • Can not be in active bankruptcy

As of 2015 Keep Your Home California has only delivered less than half of the $2 billion in federal aid to help victims of the housing crash.
Any funds not awarded to homeowners before December 31, 2017 must be returned to the U.S. Treasury.

Frequently Asked Questions About Keep Your Home California

When a servicer accepts Keep Your Home California benefit assistance on behalf of a first mortgage loan, are they required to stop collection activity and/or suspend foreclosure action?
Yes. When a servicer accepts Keep Your Home California benefits on behalf of a homeowner , they are required to stop foreclosure referral activity and/or suspend foreclosure action. Keep Your Home California will notify a servicer of a homeowner’s conditional approval after it has completed a full review of the file; typically 30-45 days from the date of a homeowner’s counseling session, which is considered their application for program assistance. Keep Your Home California does not notify a servicer when a homeowner applies for assistance; only after they determine a homeowner is conditionally approved to receive benefits. Homeowners who are severely delinquent, including those with a scheduled foreclosure sale date, are strongly encouraged to contact their servicers immediately to let them know that they have applied for Keep Your Home California benefit assistance.

For PRP, are servicers required to solve to an affordable payment equal to or less than 38% DTI?
Yes, all loan modifications that receive assistance must result in a post-assistance DTI ratio of 38% or less. Servicers are encouraged to provide the homeowner with the most affordable payment option in conjunction with investor, insurer and Keep Your Home California guidelines.

With PRP, who is responsible for determining the property value and LTV ratio that is used to calculate benefit assistance – the servicer or Keep Your Home California?
Keep Your Home California is solely responsible for determining the property value and LTV ratio that is used to determine eligibility and calculate program benefits. Servicers are not required to obtain a property value and/or calculate the LTV ratio to verify program eligibility or benefit amount.

With PRP, may a servicer use principal forbearance to help a homeowner qualify for loan modification?
Yes. Servicers may use principal forbearance in conjunction with a loan modification that includes PRP benefit assistance if principal forbearance is required to achieve an affordable payment per Keep Your Home California guidelines. Please note that any principal forbearance balance will be included in the LTV ratio calculation used by Keep Your Home California to determine eligibility and/or the benefit assistance amount.

May servicers apply PRP benefits to reduce an existing principal forbearance balance?
Yes, Keep Your Home California guidelines permit servicer use of PRP benefits to reduce or eliminate the balance of an existing principal forbearance provided the interest bearing mortgage payment meets Keep Your Home California’s definition of an affordable payment (DTI =<38%). PRP benefits are designed to help the homeowner achieve an affordable payment and/or reduce the outstanding debt on their first mortgage loan.

May I use my own appraisal to determine the value of my home for Keep Your Home California benefit assistance?
No, Keep Your Home California is responsible to determine the value of your home when it calculates benefit assistance in conjunction with the Principal Reduction Program (PRP).

What type of hardships will be considered?
If you have suffered a severe reduction in your household income or an increase in expenses beyond your control, these hardships will be taken into consideration. Hardships include: unemployment, underemployment, death in the family, significant medical bills, divorce and severe negative equity, among others. Severe negative equity is considered a hardship indicative of imminent default for the Principal Reduction Program only.

I only have a Home Equity Line of Credit, my first lien mortgage was paid off, do I still meet requirements?
No, home equity lines of credit (HELOCs), or other junior liens, are not eligible for consideration even if they are in first lien position.

What if I am delinquent on my homeowner association dues?
It is very important that you keep your homeowner association (HOA) dues paid current. If you are delinquent in paying your HOA dues and your HOA files a lien on your property, you are not eligible for Keep Your Home California benefit assistance until you pay your delinquent HOA dues and the HOA lien is released.

If a homeowner is actively participating in a Home Affordable Modification Program (HAMP) with their mortgage loan servicer, are they eligible for additional Principal Reduction Program (PRP) assistance through Keep Your Home California?
Homeowners who are actively participating in a HAMP may be eligible for Principal Reduction Program assistance from Keep Your Home California. The active HAMP participation period spans from the time a homeowner has made at least one trial payment until five (5) years after their permanent HAMP date.

If my loan is in foreclosure, am I still eligible to receive Unemployment Mortgage Assistance?
Homeowners may be eligible to receive Unemployment Mortgage Assistance even if their loan is in foreclosure. Please call Keep Your Home California at 888-954-5337 to see if we can help. Keep Your Home California will not accept an application for any program if the foreclosure Notice of Sale date is less than 21 days from the date the homeowner applies for assistance.

If my California Employment Development Department benefits run out during the time that I am actively receiving Unemployment Mortgage Assistance benefits, will Keep Your Home California continue to provide me with benefits?
Yes, Keep Your Home California will continue to pay Unemployment Mortgage Assistance benefits to homeowners even if a homeowner exhausts their California Employment Development Department benefits during the time of Unemployment Mortgage Assistance. Keep Your Home California will stop benefit payments if the homeowner becomes fully re-employed or if it determines that the home is listed for sale or the homeowner is actively negotiating a Short Sale or Deed in Lieu of foreclosure with their Servicer.

Program Extended to the end of 2018

If you are current on your mortgage and have been unable to obtain a traditional refinance because the value of your home has declined, you may be eligible to refinance through HARP. HARP is designed to help you refinance into a new affordable, more stable mortgage. The HARP loan is a new loan and will require a loan application and underwriting process. Loan refinance fees will apply.

Eligibility - You may be eligible to apply if you meet all of the following:

  • You have a mortgage owned or guaranteed by Fannie Mae or Freddie Mac.
  • You do not have an FHA, VA or USDA loan.
  • You are current on your mortgage payments and have not been more than 30 days late making a payment over the last year.
  • The refinance will improve the long-term affordability or stability of your mortgage.
  • You have the ability to make the new payments.

Program Availability
The HARP program is offered by many servicers. Homeowners should check with their mortgage servicer (the company to which homeowners make their mortgage payments) to determine if they are participating in HARP. If their mortgage servicer is not participating, the homeowner may contact other lenders that participate in HARP to determine if they are eligible for a refinance.

Steps to HARP Refinance

  • Determine whether your mortgage is owned or guaranteed by Fannie Mae or Freddie Mac.
  • Contact your current mortgage servicer or another that is approved by Fannie Mae or Freddie Mac to inquire about HARP.
  • Compare rates and costs with additional mortgage companies to ensure best refinance terms.

Why California Homeowners Hire Us:

  • We have more experience. For over 6 years we've been helping California homeowners modify their loans and lower their monthly payments.
  • We know how each lender works. We've worked with almost every lender and service company there is, the majority of them on a daily basis.
  • We understand the situation from both borrower's and lender's point of view and work to mediate a successful solution for all parties.
  • You don't have to worry about something going wrong. We have the experience and knowledge to guide you through the process.
  • We will address your concerns and worries throughout the process and update you on a weekly basis.
  • We position your case to take advantage of the best possible terms your lender can offer.
  • We keep you updated throughout the process. Modifications take anywhere from 30 to 90 days.
  • We don't take NO for an answer. We demand your lender offer a modification that's doable and affordable.
  • Even after you've signed your modification documents we make sure your lender implements your modification correctly.
  • You can call us anytime. We're available from 9:00 am to 8:00 pm Monday to Friday and Saturday from 9:00 am to 3:00 pm PST.

Let us be your Advocate.
We are Licensed Real Estate Professionals with the experience and knowledge of the lending industry to resolve your situation in the most favorable terms possible.

Although lenders in most cases do not want to foreclose on your home, you may be experiencing frustration in dealing with their bureaucracy and having your concerns and questions addressed in a professional and competent manner.

A recent Freddie Mac, Roper survey of delinquent borrowers found nearly two-thirds were unaware of their workout options. Why? Because their lender didn't bother to inform them.

In many cases, borrowers end up agreeing to a workout plan, far less favorable than otherwise possible, due to a lack of experience and knowledge in negotiating with lenders.

Warning:  Do Not Under Any Circumstances Add Anyone to the Title of Your Property, Who Promises to Stop Your Home from Foreclosure.
Call Us First for Free Advice.

IMPORTANT NOTICE: This site is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.

Disclaimer - All information is provided for informational purposes only and is Not legal advice, consult an attorney or financial expert for legal advice. This is general information and is not intended to provide advice on any specific question or transaction. Parties to any real estate transaction should seek competent legal and/or tax counsel to determine the legal, credit and tax consequences of buying or selling a home. Listing your home for sale and attempting to do a California Short Sale is a possible solution to avoiding foreclosure but not a guarantee that your lender won't foreclose or pursue other means of collecting the unpaid debt between what you owe and what the home may sell for.

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