Five states have been granted access to a $1.5 billion federal fund to provide aid to families most affected by the housing crisis.
The Treasury Department approved proposals from Arizona, California, Florida, Michigan and Nevada on Wednesday. These states will now use the “Hardest Hit” foreclosure prevention fund to help debt-ridden and unemployed residents make good on their mortgage payments.
"These states have identified a number of innovative programs that will make a real difference in the lives of many homeowners facing foreclosure," Herbert M. Allison, Jr., Treasury Assistant Secretary for Financial Stability, said in a press release.
The Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets or, simply, the "Hardest Hit Fund" was set up by the Obama administration in February. State Housing Finance Agencies from the selected states were required to submit proposals to the Treasury Department in April. These proposals included a clear outline of the programs that would be implemented to help homeowners struggling with their mortgage payments. The states selected to receive first-round aid experienced a 20% or greater decline in average housing prices during the past year.
Of the five states selected, California received the largest bulk of the funding. The Golden State will receive $699.6 million to offer mortgage payment subsidies to unemployed families, refinance delinquent loan arrangements and assist those who executed a short sale or deed-in-lieu transition to a stable housing situation.
Florida will receive $418 million, primarily to offer mortgage payment assistance to the unemployed while they look for work. The Sunshine State also plans to help families pay off second-lien loans, which put borrowers in debt to two different lenders.
Michigan, Arizona and Nevada will receive $154.5 million, $125.1 million and $102.8 million respectively for similar initiatives. You can reach each state’s full proposal here.
In March, the Obama administration announced a second round of “Hardest Hit” funding would be offered to states who have areas of concentrated unemployement . North Carolina, Ohio, Oregon, Rhode Island and South Carolina have all submitted proposals that are currently being reviewed by the Treasury Department. If approved, these states will receive be granted access to $600 million.