Las Vegas Real Estate News: The Second HFA Hardest Hit Fund for Hardest-Hit Housing Markets

In February 19, 2010, President Obama, with
Senate Majority Leader Harry Reid, announced the first HFA Hardest Hit Fund
with up to $1.5 billion in funding for innovative measures to help owners,
buyers and realtors of Las Vegas homes. Those that are not eligible for
the second HFA Hardest Hit Fund are the states that were allocated funds under
the first HFA Hardest Hit Fund. For those HFAs in states qualifying for the
second Hardest Hit Fund, it will be required to submit plans to Treasury for
assessment before becoming qualified for funding. The Treasury determines that
the plans meet the requirements under the Emergency Economic Stabilization Act
of 2008 (EESA) as soon as HFAs have submitted plans to Treasury for assessment.
And then, the plans will become worthy of being chosen for funding up to a
predetermined allocation cap.

Recently, the Administration expanded this
initiative to address five additional states with high shares of their
populations residing in local areas of deep economic distress, building on the
first Housing Finance Agency Innovation Fund for the hardest hit housing
market. This second HFA Hardest Hit Fund will consist of up to $600 million
funds for innovative measures that will help families to stay in their homes or
in other way prevent foreclosure in states that have been affected by the
economic depression.

Click Here: See All Las Vegas Foreclosures

Due to unemployment or underemployment, responsible families throughout the nation have realized that they are not capable of keeping their mortgages up to date, and paying on time. Though the first HFA Hardest Hit Fund addressed five states with home price declines higher than 20 percent, the second Hardest Hit Fund will target five states that will highly focus on the people living in economically-affected areas. These areas include counties in which the unemployment level was higher than 12 percent in 2009. There is less than 15 percent of the nations population living in such high unemployment counties. North Carolina, Ohio, Oregon, Rhode Island and South Carolina are the states that will receive allocations based on this criterion.

Expansion of Help for the Hardest Hit Housing Markets

1. $600
Million to Work with State Housing Agencies to Further Innovate and Help
Address the Challenges Facing the Hardest-Hit Housing Market

• Excluding states already eligible for help for the hardest Hit Housing Market Funds, funding will extend to those states that have topmost unemployment rate exceeded 12 percent last 2009.
• Program designs to Treasury must be submitted by the HFAs. Appeals that respond to issues regarding the concentrated economic distress will be particularly welcomed.
• HFAs plans must
  meet the requirements for funding under EESA to receive funding.
• The funding will
  help avoid foreclosure and unemployed homeowners.

2. Accountability and Transparency

• All funded program
  designs will be accessible online.
• Program
  effectiveness measures and results will be released online to create liability
  for results.
• The activity of the
  program will be subject to effective supervision under EESA.

3. Allocation Caps

The following allocation caps have been measured in
proportion to the number of people in these five states living in counties with
high unemployment rate:

• State Allocation
  Camp (millions)
• North Carolina $159
• Ohio $172
• Oregon $88
• Rhode Island $43
• South Carolina $138

Illustrations of the Types of Programs that May be
Funded in the States

The HFA Hardest Hit Fund is accomplished to allow the
utmost possible adaptability to HFAs in building programs that are modified to
the needs of each participating state. All programs must promote the purposes
of EESA and be coherent with its requirements to be qualified for Troubled
Asset Relief Program (TARP) funds.

According to Section 2 of EESA, the purposes of EESA
are to renew liquidity and stability to the financial system and to utilize
TARP funds in a way that, among other things: Protects home values; Preserves
homeownership and promotes jobs and economic growth; and Provides public
accountability.

Allowing the HFAs to develop creative, effective
approaches that consider local conditions is the objective of the HFA Hardest
Hit Fund. Treasury has described some of the possible types of transactions
that would satisfy the requirements of EESA to guide HFAs in designing
programs. While states are heartened to submit proposals that provide targeted
relief to areas or localities with high focus on the economic distress, each
state should respond to local requirements:

• Unemployment
  Programs – Programs may assist
  unemployed borrowers to help them prevent foreclosures.
• Mortgage
  Modifications – Programs may
  support for modification of mortgage loans sustained by HFAs or other financial
  institutions, or give incentives for servicers or investors to modify loans.
• Mortgage
  Modifications with Principal Forbearance – In order to facilitate additional modifications, programs may support
  for paying down all or a portion of an overleveraged loan and taking back a
  note from the borrower for that amount.
• Short Sales /
  Deeds-In-Lieu of Foreclosure – In order
  to prevent preventable foreclosures, programs may provide for assistance with
  short sales and deeds-in-lieu of foreclosure.
• Principal Reduction
  Programs for Borrowers with Severe Negative Equity – For homeowners with critical negative equity,
  programs may provide incentives for financial institutions to write-down a
  portion of unsettled principal balance.
• Second Lien
  Reductions – Programs may
  provide incentives for the reduction or modification of second liens.

This is not meant to be a complete list of acceptable
transactions. Other innovative ideas and types of transaction (including
innovations related to the Making Home Affordable Program) will be assessed
depending on the case for compliance with EESA. Treasury may publicize
additional types of transactions that would meet the requirements of EESA.

The target population should be limited to residences
with unsettled principal balances equal to or less than the current government
sponsored enterprise (GSE) conforming limit of up to $729,750 for programs
designed to help individual homeowners. HFAs may target low and average income
borrowers at their judgment consistent with that HFAs state enabling
legislation.