Two weeks ago, the Obama administration announced that California is one of five states that will receive a portion of the new $1.5 Billion federal aid package to be distributed in hopes of slowing the tidal wave of home foreclosures.
However, some real estate experts are saying the funds will do damn little to dam the flood of foreclosures in the hard-hit states of California, Nevada, Florida, Michigan and Arizona.
From the Christian Science Monitor report on the new aid package:
“It’s just not a lot of money in the context of what we’re talking about here,” says Richard Green, director of the University of Southern California Lusk Center for Real Estate. Especially, he says, “in a place like Nevada, where an astonishing number of homeowners are underwater on their mortgages.”
The formula for allocating the funds to each state will be based on declines in home prices and unemployment rates, and will be distributed via each state’s Housing Finance Agency (HFA). CalHFA must submit a program to the U.S. Treasury that includes:
- Measures for unemployed homeowners;
- Programs to assist borrowers owing more than their home is now worth;
- Programs that help address challenges arising from second mortgages; or
- Other programs encouraging sustainable and affordable homeownership.
More information on the new program can be found here.