Posted on Tuesday, February 23, 2010
The administration announced a new initiative Friday to help the nation’s hardest hit housing markets. President Obama has allocated $1.5 billion in aid for states where unemployment is high and home prices have fallen more than 20 percent in the aftermath of the housing bubble. Great concept now lets see the details!
Home prices across the country are beginning to stabilize but local conditions vary considerably. The president is setting up an “innovation fund” for state housing agencies to develop assistance programs for underwater, as well as unemployed homeowners in their communities. There will be a formula for allocating funding among eligible states based on home price declines and unemployment rates. The Treasury must approve each Housing Finance Agency’s (HFA) program design, which can include direct assistance for the unemployed and borrowers who owe more than their home is worth, as well as programs that address the challenges of second liens. “The funds must be used to pay for mortgage modifications or for other permitted uses under” federal guidelines, the White House said in a statement. One use of funds would be for HFAs to begin programs to help unemployed homeowners until they have secured a new job.
HFA funds can be used to pay incentives to second mortgage holders and ensure collaboration. State HFAs will determine the priorities facing their local markets. The Treasury is expected to announce maximum state level allocations in the next two weeks, along with rules governing the submission of program designs by HFAs.