State Housing Finance Agencies Uneven in Plans to Use $1.5bn Federal Fund
Only two out of the five State Housing Finance Agencies (HFAs) currently crafting proposals to tap the $1.5bn Hardest Hit Fund have outlined clear plans on how to use the money to help resident distressed homeowners. Last week, the US Treasury Department cleared select state HFAs to submit proposals for the fund. President Barack Obama announced the plan in February to use $1.5bn of the Troubled Asset Relief Program (TARP) funds to help homeowners in states where house prices have dropped 20% from the peak. Nevada, California, Arizona, Florida and Michigan are making plans to target unemployed or underwater borrowers and provide second-lien relief. The Treasury allocated $102.8m in funds to Nevada, $699.6m to California, $125.1m to Arizona, $418m to Florida and $154.5m to Michigan. Lon DeWeese, chief financial officer of the Nevada Housing Division told HousingWire that a strategy is being clarified through a series of public hearings. They are currently developing programs focused on home retention for unemployed, underemployed, and borrowers who cannot reconfigure current first mortgages due to a second-lien debt load. The HFA is also looking to use the funds to tweak foreclosure mitigation programs through the court system and to give “technical and financial boosts” to improve performance under the Home Affordable Modification Program (HAMP). “Our draft plan will be circulating sometime the first week of April for submission to Treasury the following week,” DeWeese said. The California Housing Finance Agency (CalHFA) will develop initiatives to use nearly $700m to help struggling homeowners. Steven Spears, acting executive director of CalHFA said the agency is working to develop programs to help low and moderate-income homeowners. He expects the program to be ready and implemented by the middle of 2010 or sooner. “This funding alone will not solve the significant problems in the housing market that California families face, but combined with other initiatives by state, local and federal governments as well as the private sector, this will contribute to stabilizing California’s housing market,” Spears said. Although no details could be provided, a spokesperson for CalHFA said it is possible that the programs will be designed for unemployed or underemployed homeowners. The other three states are not as far along. A spokesperson for the Arizona Department of Housing said the agency is working on a proposal for the April 16, 2010 deadline and details will be available then. Both the Florida Housing Finance Corp. and the Michigan State Housing Development Authority had no available details on program developments. Write to Jon Prior.