WASHINGTON—The U.S. Treasury Department said Wednesday it had approved five states’ plans to aid homeowners in the hope of thwarting foreclosures in communities hit hard by the recession.
State housing agencies in Arizona, California, Florida, Michigan and Nevada will receive a total of $1.5 billion from the Obama administration’s “Hardest Hit Fund.”
“These states have identified a number of innovative programs that will make a real difference in the lives of many homeowners facing foreclosure,” said Herbert Allison Jr., Treasury assistant secretary for financial stability.
Proposals approved Wednesday include programs to help struggling homeowners who owe more than their homes are worth by reducing the principal owed on their loans; to help unemployed or underemployed homeowners make mortgage payments; to facilitate the settlement of second liens, short sales or deeds in lieu of foreclosure; and help with payments in arrears.
The fund—dubbed the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets—was established in February. It aims to provide assistance to states with the highest shares of their populations living in counties in which the unemployment rate exceeded 12% in 2009.
According to Treasury, the states approved to receive aid experienced a 20% or greater decline in average housing prices.
.
