(LoanSafe.org) – WASHINGTON, DC — Today, the Obama Administration released the next steps in the recently-announced Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (“HFA Hardest-Hit Fund”).
On February 19, 2010, President Obama announced additional funding for innovative measures to help families in the states that have been hit the hardest by the aftermath of the burst of the housing bubble. States where house prices have fallen more than 20% from their peak are eligible for this funding. Those states are Nevada, California, Florida, Arizona and Michigan. The HFA Hardest-Hit Fund will help housing finance agencies (“HFAs”) in these states further respond to the most pressing problems in their communities. HFAs have an understanding of the most urgent local challenges and an ability to address them expeditiously.
For that reason, the Obama Administration has committed $1.5 billion in funding under the Emergency Economic Stabilization Act of 2008 (“EESA”) to help HFAs expand their assistance to struggling homeowners and innovate new ways to address housing challenges.
Today the Administration released detailed guidance for eligible HFAs to submit program proposals for funding. The HFA Hardest-Hit Fund is designed to allow the maximum possible flexibility to eligible HFAs in designing programs that are tailored to the needs of their state. Today’s guidance provides instruction to HFAs to ensure that program proposals meet basic guidelines and comply with the purposes of EESA. All programs must protect home values, preserve homeownership, promote jobs and economic growth, and provide accountability to the public.
Funding allocations were also released today based on a formula to provide relief in direct proportion to the scale of each state’s housing challenges. Funds have been allocated based on home price declines, unemployment rates, and mortgage delinquencies.
Eligible HFAs may submit program proposals to the Department of the Treasury up to the April 16th deadline, after which the review period will begin. Treasury will provide additional updates to the public as the program progresses.
What are HFAs and what do they do?
Housing Finance Agencies or HFAs are agencies or authorities created by state law that are charged with helping persons and families of low or moderate income attain affordable housing. HFAs provide responsible and affordable housing resources to low and moderate income borrowers who might not be served elsewhere. Some of their primary activities include: financing mortgages at low rates, funding development of affordable rental properties and refinancing or modifying mortgage loans for at-risk borrowers. HFAs have established a strong track record of offering effective foreclosure prevention and sustainable homeownership opportunities for working families. According to the National Council of State Housing Agencies (NCHSA), its member agencies have provided mortgage financing for nearly 3 million homes in America and helped finance construction of approximately 3 million affordable rental properties. Combined, State HFAs typically fund about 100,000 mortgages a year.
What is the objective of the HFA Hardest-Hit Fund?
The HFA Hardest-Hit Fund was designed to allow the maximum possible flexibility to HFAs in designing locally-focused programs that address the needs of a specific state or region within a state. All programs must have foreclosure prevention and housing market stability as their primary objectives.