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In February, President Obama outlined a plan to steer $1.5 billion in TARP funds for housing aid in five states considered “hardest hit” by the housing bust. The recipients—California, Florida, Michigan, Arizona and Nevada—have now submitted to the Treasury their proposals for how they would use that money.
So what are states proposing?
Florida, which received $418 million, proposed using the majority of its allocation towards making mortgage payments for up to nine months for up to 12,000 unemployed borrowers. Eligible homeowners have to show hardship–loss of income due to a lay-off or divorce–and there are income restrictions. Homeowners will get an interest-free loan that will be forgiven in stages if the homeowner remains current on the home over the following six years.
Florida has also proposed committing $40 million towards providing up to $15,000 in down payments for 4,000 prospective home buyers. The state also would create fund to provide legal services to distressed borrowers seeking to avoid foreclosure.
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