Last week the Treasury Department approved proposals from California, Arizona, Florida, Nevada and Michigan to help distressed lenders who don’t qualify for mortgage modifications and released $1.5 billion in funds to those states of the $2.1 billion set aside by the Obama administration earlier this year.
The California Housing Finance Agency got $700 million for its plan, which is expected to be put into effect by November 1.
California’s plan includes three mortgage assistance programs as well as a moving assistance service for borrowers who have exhausted every option to stay in their homes. Mortgage assistance initiatives include making temporary monthly mortgage payments for qualified borrowers, providing funds to help borrowers pay their arrears and reductions in loan principal to help underwater borrowers.
Total aid is capped at $50,000 per household; the ceiling on monthly mortgage help is $1,500. CalHFA officials say they hope to help up to 40,000 homeowners with the new program.