A small but growing number of distressed homeowners in California are keeping their houses because of a state program funded with $2 billion in federal stimulus money.

Keep Your Home California's launch in February was marred by procedural delays and criticism from consumer groups that said the eligibility requirements were too narrow and that the program wouldn't serve enough people.

Since then, however, participation has grown quickly to about 7,000 homeowners statewide. The program has provided more than $128 million in benefits, or roughly $18,000 per homeowner.

In the four-county Sacramento area, Keep Your Home California has helped 760 distressed homeowners.

"After working out kinks in the system … we're really starting to pick up speed," said Diane Richardson, Keep Your Home California's program director.

The effort still has a long way to go. It has helped only a fraction of the thousands of California homeowners whose houses slip into foreclosure each month. And if spending doesn't pick up, it's doubtful the state can meet a federal deadline to use all the money.

The most aggressive type of assistance offered under the program – reduction of loan principal – hasn't been used much, because many lenders have been reluctant to participate.

But for the people who have received benefits, Keep Your Home California has offered a crucial lifeline. Take Orangevale resident Jack Hill, who credits the program for saving his home.

The 65-year-old mortgage industry executive lost his job in 2008 and had been trying to make ends meet with his unemployment and Social Security benefits.

Hill said he turned to the state program this summer. The state agency agreed to cover his $1,200-a-month mortgage payments for nine months.

"This really gave me some breathing room," Hill said.

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