The Treasury Department announced on Wednesday that Arizona, California, Florida, Michigan, and Nevada – the five states hurt most by the housing downturn – can begin to use the $1.5 billion in the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (“The Hardest Hit Fund”).
“These states have identified a number of innovative programs that will make a real difference in the lives of many homeowners facing foreclosure,” said Treasury Assistant Secretary for Financial Stability Herbert M. Allison, Jr. “While we’ve made important progress stabilizing the housing market and keeping responsible families in their homes, the Obama Administration will continue to do everything it can to help those who are struggling the most during this difficult time. Today marks an important milestone for delivering relief to homeowners through the Hardest Hit Fund program.”
Each state Housing Finance Agency (HFA) surveyed residents and conducted research to design a program to help struggling homeowners in their respective state, and then submitted their programs to the Treasury for approval. The state proposals include programs to help homeowners with negative equity mortgages, homeowners not being able to make mortgage payment due to being unemployed or underemployed, help with short sales, and help for mortgages in arrears.
The Hardest Hit Fund was established by President Obama in February 2010 to help states with an average decline in real estate prices of 20% or more. The amount awarded to each state HFA is: Arizona – $125.1 million, California – $699.6 million, Florida – $418 million, Michigan – $154.5 million, Nevada – $102.8 million.
Michigan State Housing Development Authority (MSHDA) Director of Homeownership Division Mary Townley said that Michigan will be the first of the five states to implement its plan on July 12 when the funds become available. The $154.5 million in funds award to Michigan is expected to help 17,000 homeowners – 11,000 of whom are drawing unemployment benefit – avoid foreclosure.
“We are eager to invest the resources provided by the Obama Administration to help Michigan homeowners prevent foreclosure as quickly and efficiently as possible,” Townley said. “Banks and credit unions will play an integral role in the success of the new program because they will work with homeowners to determine eligibility criteria and best available options. The smartest advice we can give potential applicants is to contact their mortgage servicers to ensure they make an informed decision.”
But Nevada Governor Jim Gibbons is being realistic about what the funding can accomplish for his state, which currently has the highest foreclosure rate in the nation.
“While we applaud the U.S. Treasury’s initiative to help bring elements of its Hardest Hit Funding program to Nevada and we certainly welcome the $102 million, no one should expect that this amount of federal funding will resolve the mortgage crisis Nevada faces now and into the immediate future,” Governor Gibbons said. Testimony at public hearings indicated, for example, that the underwater problem – mortgages in excess of current home values – in Clark County (the home of Las Vegas) alone stood at over $44 billion as of March, 2010.
Obama announced a second round of Hardest Hit Fund aid totaling $600 million for five more states with high areas of concentrated unemployment – North Carolina, Ohio, Oregon, Rhode Island, and South Carolina. The proposals for these states have been submitted and are currently being reviewed.
Sources:
U.S. Department of the Treasury
Michigan State Housing Development Authority
State of Nevada
