California Foreclosure Moratorium: Here’s What You Should Know (2022)

The COVID-19 pandemic caused financial strain for many Californian homeowners, making it difficult for them to pay their mortgage costs each month. As a result of the crisis, the Coronavirus Aid, Relief, and Economic Security (CARES) Act made provision for a foreclosure moratorium, which gave mortgage holders the ability to temporarily suspend their payments for a period of time during which no foreclosures could occur. The rationale behind this was to avert the possibility of widespread default by borrowers on their mortgages.

Although the foreclosure moratorium ended on July 31, 2021, banks can still agree to a mortgage forbearance where they allow borrowers to pause their mortgage payments or pay a reduced amount for a set period of time. This service is discretionary, and will not erase the amount that is owed as any missed payments will still have to be repaid in the future. In this article, we will look further into the options that are available to homeowners in California.

California Mortgage Relief Program

The  California Mortgage Relief Program is a federal government funded program that allocates $1 billion towards mortgage relief as part of the 2021 American Rescue Plan. The program was established to offer relief to borrowers who are in arrears on their mortgage payments as a result of  pandemic-related financial hardship.  

Through the California mortgage relief program, California homeowners that are struggling to keep up with their housing payments during the COVID-19 pandemic may qualify for relief on their mortgage without having to pay back the funds. 

The program provides for past due mortgage payments to be fully paid, with each household receiving cover of up to $80,000.

 Who Is Eligible for Assistance?

In order to qualify for a one-time grant, California homeowners must meet all of the following requirements: 

•   You occupy and own only one property in California, and it is your home and primary residence

•   Your property is a single-family house, condo or manufactured home that is permanently affixed

•   You suffered financial hardship due to COVID-19 after January 21, 2020

•   You are in arrears on at least two mortgage payments as of December 27, 2021

•   Your household income is the same as or under the area median income in your country

•   Your original mortgage loan was not greater than the “conforming loan limit”

In addition to these criteria you must also meet at least one of the following conditions: 

•   You receive some form of public assistance such as welfare or food stamps; or 

•   You are “severely housing burdened”, meaning your mortgage costs take up more than 40% of your income

•   You have been denied an “alternative workout option” by your mortgage lender 

The California Mortgage Relief Program is available to homeowners even if they have previously received financial assistance from the government. For example, under the CARES Act, the American Rescue Plan or other COVID-related programs

You can check your eligibility to apply for the California Mortgage Relief Program at camortgagerelief.org 

Application Deadline

As there is no set date for the program to end, funds will be deployed until they have been fully allocated. This is predicted to be by 2025.  Submitting your application as soon as possible will ensure it is reviewed and approved faster allowing you to receive your funds sooner.  

With the information in this article, you may be able to receive the financial support you need at this time.