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Lawmakers urge banks to allow aid for jobless

Five Northern California members of Congress are pressuring mortgage servicers to work with a new federally funded program in California intended to help unemployed homeowners pay their mortgages and avoid foreclosure.

The Keep Your Home California Unemployment Mortgage Assistance Program provides qualified unemployed homeowners up to $3,000 a month for up to six months to help pay their mortgage. But according to the office of Rep. George Miller, D-Martinez, if the monthly mortgage exceeds $3,000, the servicers won’t accept any payment at all, even if the homeowner could send a second check to cover the difference between what is owed and what the program covers. As a result, unemployed homeowners who could avoid foreclosure proceedings thanks to this program are instead at risk of failing to pay their mortgage and landing in foreclosure.

“If this program is to have meaningful success, mortgage servicers are going to have to get on board with processing these payments,” Miller said in a news release. “Refusing to accept dual payments is unacceptable and is a disservice to the homeowners who are doing everything they can to stay in their homes while they look for work. Homeowners shouldn’t have to forfeit their homes because of bureaucratic intransigence by banks and servicers.”

Rep. Zoe Lofgren, D-San Jose, another of the letter’s signers, said “it’s time that banks and servicers become part of the solution and not the problem.

“It’s ridiculous that servicers and banks are unwilling to participate in a program that will help protect the value of the very asset on which their loan is based on,” she said. “I find it deeply troubling that servicers would have borrowers default rather than simply accepting payment.”

In their letter – also signed by Rep. John Garamendi, D-Walnut Grove; Rep. Jackie Speier, D-Hillsborough; and Rep. Sam Farr, D-Santa Cruz – they wrote that, “we believe refusing to accept supplementary payments from homeowners is inexcusable and we strongly urge you to remedy this problem expeditiously… It is unacceptable that servicers in California are unwilling or unable to figure out a workable resolution to this problem, particularly given that two viable options to address the issue exist.”

Those options, they say, are either to accept two checks (one from the program and one from the homeowner) or to forebear the amount of the mortgage that exceeds the $3,000 program payment.

Posted on Tuesday, February 15th, 2011
Under: George Miller, housing, Jackie Speier, John Garamendi, Sam Farr, U.S. House, Zoe Lofgren | 13 Comments »