[BlackBird]

LA Times: http://www.latimes.com/business/la-f...,2404099.story

More than 100,000 struggling homeowners could get help from a $2-billion program that California is launching, including about 25,000 borrowers who owe more than their properties are worth and could see their mortgages shrink.

The Keep Your Home California program, which uses federal funds reserved for the 2008 rescue of the financial system, has the potential to make a sizable dent in California's foreclosure crisis and help the general housing market. State officials hope to fend off foreclosure for about 95,000 borrowers and provide moving assistance to about 6,500 people who do lose their homes.

Consumer advocates have criticized other attempts at foreclosure prevention as falling short, particularly the Obama administration's $75-billion program to help troubled borrowers. They were heartened by the scope of California's effort but concerned it would be hampered if the state can't get major banks on board.

Out of the five major mortgage servicers — Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co., Ally Financial and Citigroup Inc. — only Ally has formally signed on to a key part of the plan: reducing mortgage principal on homes that are "underwater," or worth less than the size of the mortgage. A Bank of America spokesman said the bank intends to participate but hasn't yet reached a formal agreement with the California Housing Finance Agency, which designed the program.