Struggling to make your mortgage payments each month? Worried that your lender is preparing to start the foreclosure process? You might be able to save your home -- and reduce your monthly mortgage payments at the same time -- with the help of your state government.

You probably know that the federal government, through its Making Home Affordable program, offers loan modifications and other assistance for homeowners struggling to make their mortgage payments each month. But you might not be aware of the mortgage-assistance programs offered by your local state government.

Plenty of states offer financial help to struggling homeowners. That's the good news. The bad news? As with the federal government's programs, you'll need to meet certain criteria to qualify for state help. This means that even if you are in danger of falling behind on your mortgage payments, you might not qualify for any help from your state government.

But if you do qualify? Your state might offer one more tool to help keep you and your family in your home despite your financial challenges.

"A lot of people, unless they go to legal clinics or other workshops held by nonprofits are not aware of the programs offered through their states," said Leslie Tayne, an attorney and debt specialist with Tayne Law Group in Long Island, N.Y. "There might be programs available that they don't know about that can help them."

State help

The assistance programs offered by these local programs vary, but many are offered through a state's housing finance authority. If you are in need of additional financial assistance, contacting your state's authority, then, is a good place to start.

Georgia, for instance, offers the HomeSafe Georgia program, funded by dollars provided by the U.S. Department of Treasury. The program offers three types of assistance. Struggling homeowners can receive up to 24 months of mortgage-payment assistance, a one-time payment that can erase the mortgage debt that homeowners owe or up to $30,000 in a one-time payment to lower balance of a mortgage loan and leave homeowners with a lower monthly payment.

Each of these types of assistance, though, requires homeowners to meet certain guidelines. Some require that homeowners face a hardship resulting from unemployment or underemployment and a monthly mortgage payment that is at least 25 percent of their household income. Homeowners who are more than 12 monthly mortgage payments behind do not qualify for the program. Homeowners must also have been current with their mortgage payments before they suffered the financial hardship -- such as a job loss -- that caused them to begin missing payments.

California offers Keep Your Home California, which provides principal reductions -- reducing the amount that homeowners owe on their mortgage loans -- to homeowners facing financial hardships. Homeowners with 140 percent or greater loan-to-value ratios meet the financial hardship requirement for Keep Your Home California's Principal Reduction Program.

In Connecticut, struggling homeowners can apply for mortgage assistance through the Emergency Mortgage Assistance Program. The program provides monthly mortgage payment assistance for up to five years to homeowners in the state who are facing possible foreclosure because of a financial hardship. The loan is secured by a fixed-rate subordinate mortgage on the owners' residence.

This program does not provide free cash, though. Homeowners must repay the loan once their financial condition improves. To qualify, homeowners must have no more than three 30-day-late payments in the 12 months before suffering their financial hardship. Eligible homeowners must also be unable to make their mortgage payments.

Getting started

Other state programs are similar. Tayne, though, says that the assistance provided by these programs might not be a cure-all for the financial problems that homeowners face.

Programs that reduce the principal balance of homeowners' mortgages, though, might not provide enough financial relief to owners who have lost their jobs. Even if a principal reduction drops homeowners' payments by $300 a month, it might not be enough to make the payments affordable.

"Sometimes you have to look at whether a mortgage modification is worth it," Tayne said. "There are times when homeowners are in such a rough financial shape, a loan modification won't provide much help."

Tayne recommends that homeowners immediately contact their mortgage lenders once they begin falling behind on their mortgage payments. Lenders might be able to provide relief or point homeowners to assistance sources. That relief, perhaps in addition to assistance from the state, might be enough to allow homeowners to keep their residences.

Published on July 23, 2014