By John Voket, RISMedia Columnist
RISMEDIA, July 31, 2010—These days, economic hardships are universal and often unavoidable. But, according to the U.S. government, issues related to housing market fluctuations and the ability for homeowners to keep up-to-date on mortgage payments hit certain states harder than others.
It was reported that on July 1, 2010, State Housing Finance Agencies (HFAs) in Arizona, California, Florida, Michigan and Nevada were authorized to begin using $1.5 billion in “Hardest Hit Fund” foreclosure-prevention aid. This funding is intended to support innovative local initiatives to assist struggling homeowners in those states, as part of the first round of funding available under this new program.
The Housing Finance Agency Innovation Fund was established for the hardest hit housing markets (“Hardest Hit Fund”) in February 2010 to provide targeted aid to families in the states hit hardest by the housing downturn. These states were approved to receive aid as part of the first round of funding as they each experienced a 20% or greater decline in average housing prices.
The initiatives include programs to assist struggling homeowners with negative equity through principal reduction; assist the unemployed or underemployed make their mortgage payments; facilitate the settlement of second liens; facilitate short sales and/or deeds-in-lieu of foreclosure; and assist in the payment of arrearages.
Florida, which received $418 million, will offer up mortgage payment assistance to the unemployed and underemployed while they seek re-employment. The state will also offer principal reduction or second lien extinguishment if necessary to achieve a mortgage modification.
Michigan will use its $154.5 million to subsidize an unemployed borrower’s mortgage payments while they search for employment; assist with loan arrearages for those who can sustain homeownership and have undergone a financial hardship as well as homeowners with negative equity through earned principal forgiveness.
In March 2010, the federal government announced a second round of Hardest Hit Fund aid totaling $600 million for five additional states with high areas of concentrated unemployment: North Carolina, Ohio, Oregon, Rhode Island and South Carolina. The proposals that these states submitted are currently being reviewed.
A state-by-state summary of the Hardest Hit Fund proposals is available here.
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