California Releases $699m Hardest Hit Fund Proposal
The California Housing Finance Agency (CalHFA) is the latest to release its proposal sent to the Treasury Department, laying out a plan to spend $699.6m from the Hardest Hit Fund. In March, the Treasury cleared HFAs of five states where house prices dropped 20% from the peak to submit proposals to use the funds from the Troubled Asset Relief Program (TARP). Florida, Michigan and Arizona were the first to release their proposals, while Nevada has still not released its plan to spend $102.8m from the fund. CalHFA placed a $50,000 cap on the benefit one household could receive from the four proposed programs. Like the other three states, CalHFA will subsidize mortgage payments for the unemployed. The funds would provide a monthly benefit of up to $1,500 or 50% of the existing monthly mortgage payment for up to six months. The program would have a $9,000 cap per household. CalHFA expects the program to cost $64m. CalHFA will also provide funds to bring delinquent mortgages current to prevent more foreclosures. Each qualifying household could get up to $15,000 or 50% of the past-due amount with a required dollar-for-dollar match from the lender, servicer and/or borrower. The program is expected to cost $128m. A third program would provide cash on a matching basis with financial institutions to reduce principal balances for qualifying underwater borrowers. Each household could get as much as $50,000, or whatever is left under the overall cap after using money from the previous programs. The program is expected to cost $419m. Through a final program proposed by CalHFA, borrowers could receive up to $5,000 in transition assistance if it is found that he or she can no longer afford the monthly payments. Borrowers would be required to occupy and maintain the property until the home was resold or returned to the lender as a real estate owned (REO) property. The program is expected to cost $32m. CalHFA set aside another $20m to fund local initiatives to prevent foreclosures. A spokesperson for the Arizona Department of Housing told HousingWire the HFAs hope to hear a response from the Treasury in four-to-six weeks. Write to Jon Prior.