Aiming to help struggling homeowners
For homeowners that are unemployed and underwater, they don’t always qualify for traditional loan modifications or governmental assistance, so last month, the Obama administration set aside $2.1 billion in assistance for ten of the worst hit states. Each state had to submit plans that were innovative in order for their method to be approved. The plans varied from subsidizing mortgage payments for up to 2 years to paying down principle.
Today, the Treasury Department approved proposals for $1.5 billion of these federal funds in Arizona, Florida, California, Nevada and Michigan. While most of these plans are reportedly similar, some pay off second liens and others actually facilitate the short sale process in the name of avoiding foreclosures. Some states will be matching funds from loan servicers but there is no word yet on which servicers are in agreement with the agencies.
The programs will be headed up by each state’s housing finance agency and will be put into place over the coming weeks. Although these plans have seen their share of criticism, the Administration is moving forward in an effort to help homeowners, thus the residential real estate sector and the economy’s health overall.
The remaining monies will go to North Carolina, South Carolina, Ohio, Oregon and Rhode Island whose plans will be ruled on by the Treasury by August.
CC Licensed image courtesy of think panama via Flickr.com.