In 2009, 205,705 Californians declared bankruptcy. This was up 37 percent from 2008 and 66 percent from 2007, when the first inklings of a troubled economy began to trickle in.

Today, California has a 12.1 percent unemployment rate - nearly two percent higher than the national average - and thousands of homeowners are faced with mortgages that are underwater. In fact, California is one of five states in which average home prices have dropped more than 20 percent.

In a plan to help struggling homeowners stay in their homes, President Obama has announced a $1.5 billion fund to provide additional support to the hardest hit states, like California.

The funding would help those Californians who:

  • are currently unemployed and in debt
  • owe money on an underwater mortgage, those in which the homeowner owes more money on a piece of property than its current market value
  • have opened a second mortgage on their property

Because of these three issues, Chapter 7 and Chapter 13 bankruptcies have soared in California.

The money from the fund would go to state and local housing-finance agencies and, from there, would hopefully help put a stop to many preventable foreclosures. In order to receive government money, these housing-finance agencies must send a proposal to the U.S. Treasury Department, where the need for funding will be evaluated.

In San Diego County, 9.9 percent of all homeowners with mortgages are two months late or more on making payments and at risk of falling into foreclosure. Still, even at nearly 10 percent delinquency, San Diego County still lags behind the state average of 11 percent.

It's numbers like these that President Obama hopes to drop with his $1.5 million in funding. Time will tell whether it's enough.

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