Washington, D.C. – June 23, 2010 – (RealEstateRama) — Rep. Raúl M. Grijalva today applauded the White House decision to approve $1.5 billion to help five states, including Arizona, create and promote home foreclosure prevention plans. Arizona will receive $125.1 million through the initiative.
The administration established the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets – generally known as the Hardest Hit Fund – in February to provide targeted aid to families in the states hit hardest by the housing downturn. The states approved to receive aid as part of the first round of funding (Arizona, California, Florida, Michigan, and Nevada) have each experienced a 20 percent or greater decline in average housing prices.
“This funding is timely and much-needed,” Grijalva said of the announcement. “The federal presence on the foreclosure crisis has not matched the scope of the problem so far, but this is a step toward meeting the challenge. This continuing spiral should prompt further legislative and financial action as soon as possible.”
Grijalva in April introduced a “Right to Rent” bill to allow homeowners facing foreclosure to remain in their homes as renters if they pay a fair market rate determined by a judge. He has also called on Treasury Secretary Tim Geithner to create a new federal agency modeled on the Depression-era Home Owners’ Loan Corporation (HOLC), which bought up troubled mortgages and returned a profit to the federal government. During the Great Depression, HOLC successfully acquired, refinanced, serviced and sold more than a million mortgages, preventing untold foreclosures. Grijalva has proposed to fund a new HOLC with remaining money from the Troubled Assets Relief Program.
Each state Housing Finance Agency (HFA) gathered public input and created Hardest Hit Fund programs designed to meet the unique challenges facing struggling homeowners in their respective housing markets. The five HFAs receiving money today submitted their Hardest Hit Fund proposals to the Department of the Treasury on April 16. Department officials reviewed each state’s proposals and offered technical assistance to develop performance and reporting metrics. The five states will now roll out their Hardest Hit Fund programs, with implementation timing depending on the programs offered, state-level procurement procedures and other factors.
With its funding, Arizona will:
- Provide assistance in the form of principal reduction, interest rate reduction, and/or term extension programs with the goal of allowing borrowers to enter into a permanent modification program.
- Provide assistance toward elimination of a second lien in circumstances where a second lien is prohibiting modification of a first lien.
- Offerfinancialassistance to the under-employed while they seek new employment, which may be used to pay monthly mortgage payments or remove second mortgages where that second lien is prohibiting the modification of a first lien.
In March, the White House announced a second round of Hardest Hit Fund aid totaling $600 million for North Carolina, Ohio, Oregon, Rhode Island, and South Carolina. Those states’ proposals are currently being reviewed.
A state-by-state summary of the Hardest Hit Fund proposals approved today is available by clicking here.