State HFAs Submit Proposals to Spend $1.5bn Hardest Hit Fund

Three of the five state Housing Finance Agencies (HFAs) receiving $1.5bn from the Treasury Department through the Hardest Hit Fund released proposals on how they would spend the money. In March, the Treasury cleared the HFAs of states where house prices dropped 20% from the peak to submit proposals to use the funds from the Troubled Asset Relief Program (TARP). The Florida Housing Finance Corp. received $418m from the funds. According to its proposal submitted April 16, $353m will go toward helping unemployed or underemployed by partnering with financial institutions to give the borrowers extensions to find another job. Another $40m will be spent to protect home values by providing incentives to potential homebuyers. And $25m will go to providing legal representation in a foreclosure case. The Michigan State Housing Development Authority received $154.5m through the fund. It will spend about $100m to help the unemployed as well, subsidizing up to half of the required monthly mortgage payment for jobless borrowers of up to $750 for a maximum of 12 months. Another program will spend $15.5m to provide up to $5,000 to households to catch-up on delinquent mortgage payments if they can prove hardship. A principal curtailment program will use about $31m to fund principal writedowns on underwater mortgages. The Arizona Department of Housing received $125.1m of funding. Those funds will go to a permanent modification program, which has similar guidelines to the Home Affordable Modification Program (HAMP). The money will also go to a program to settle second liens and a program to provide up to 24 months of assistance to the unemployed. Both the California Housing Finance Agency, which received $699.6m through the fund and the Nevada Housing Division, which received $102.8m, did not release their submitted proposals. A spokesperson for the Arizona Department of Housing told HousingWire that they hope to hear a response from the Treasury in four-to-six weeks. Write to Jon Prior.

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