According to a report in The Bay Citizen, the Keep Your Home California program is designed to reduce debt levels for people with underwater mortgages and subsidize mortgage payments for unemployed borrowers. But the program, which is administered by the California Housing Finance Agency (CalHFA), has spent more than a quarter of its federal funding on administrative needs, including marketing, outsourced services such as legal counsel, and salaries and travel for the program's staff.
Diane Richardson, legislative director at CalHFA, blamed the lack of substantial results on the refusal of the nation's largest banks – including Wells Fargo, JPMorgan Chase, Citibank and Ally Financial – to participate in the program's $779 million principal reduction requirements. The program's design has CalHFA providing up to $50,000 to write down a borrower's debt if the bank matches it – but, as of April 30, only 221 borrowers have benefited from this part of the program.
‘I thought, honestly, when we said, 'We'll match you,' that there would be takers,’ says Richardson. ‘I thought they'd be jumping up and down, but the interest wasn't there.’