Obama Announces $1.5 Billion for Mortgage Help

By:: Kirk Haverkamp | February 19, 2010

The Obama administration has announced a new initiative that will provide $1.5 billion in assistance for homeowners in the nation’s hardest-hit housing markets.

The program will provide funding for efforts to assist unemployed homeowners, those who are “underwater” on their mortgages and those having problems with second liens, among others.

The funds will be provided through state and local housing finance agencies in states where the average home price has fallen more than 20 percent since the peak of the market in 2006. Presently five states meet that requirement: California, Nevada, Florida, Arizona and Michigan.

Under the program, housing finance agencies will determine priorities for their local markets and submit program proposals to the Treasury Department for approval. To be approved, program proposals must be designed to provide meaningful support for homeowners in the hardest-hit housing markets.

Although it will be up to state and local housing finance agencies to develop actual proposals, the administration identified three specific problems that might be addressed with the funds. One example would be providing temporary assistance to unemployed homeowners until they find a new job.

Other situations might include helping homeowners who owe more than their homes are worth to negotiate loan modifications with their lenders in order to lower their home payments. Another suggested use was for incentives to encourage lenders holding second liens to modify their positions in order to enable homeowners to obtain loan modification on their primary mortgage.

President Obama announced the initiative today at an event in Las Vegas.

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