Federal tax dollars to pay for delinquent mortgages in California
Treasury Department backs plan by Gov. Gavin Newsom to help delinquent mortgage holders.
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Thousands of California homeowners who fell behind on mortgage payments during the COVID-19 pandemic could receive relief grants as part of Gov. Gavin Newsom's $1 billion plan that was federally approved on Monday.
The U.S. Department of Treasury on Monday backed Newsom's $1 billion mortgage relief grant program, clearing the way for its launch in just a few weeks. The governor estimates that between 20,000 to 40,000 California homeowners could benefit from the program, dubbed the California Mortgage Relief Program.
"We are committed to supporting those hit hardest by the pandemic, and that includes homeowners who have fallen behind on their housing payments," Newsom said in a statement Monday. "No one should have to live in fear of losing the roof over their head, so we're stepping up to support struggling homeowners to get them the resources they need to cover past due mortgage payments."
The program will fully cover overdue housing payments of up to $80,000 per household. According to the governor's office, the funds will go directly to the homeowner's mortgage services via a one-time grant funded by the American Rescue Plan Act's Homeowner Assistance Fund.
Those eligible for assistance include California residents at or below 100% of their county's Area Median Income, own a single-family residence or condo, and faced pandemic-related financial hardship after Jan. 21, 2020, according to the governor's office. Applications will be accepted through an online portal in the coming weeks.
"Homeowners who have had their mortgage payments paused during the pandemic are now facing the end of those forbearance periods," Tiena Johnson Hall, executive director of the California Housing Finance Agency, said in a statement. "The California Mortgage Relief Program will alleviate some of that anxiety and give eligible homeowners a chance to get caught up on those housing payments and regain that sense of security."
The program comes after thousands of Californians were pushed out of a job and a paycheck during the pandemic. As lockdowns and business closures ensued, about 3 million Californians sought unemployment benefits and Newsom enacted an eviction moratorium to protect tenants who could not afford to pay rent.
At its peak, California's unemployment rate spiked to 16% in April 2020 and has slowly trickled down since. The state's unemployment rate fell to 6.9% in November 2021, but still remains well above the nation's unemployment rate of 4.2%, according to the Bureau of Labor Statistics.