subject: Arizona, Florida, California and Michigan lead with anti-foreclosure ideas – ForeclosureConnections [print this page] Arizona, Florida, California and Michigan lead with anti-foreclosure ideas ForeclosureConnections
Obama's $2,1 billion grant is generating innovative ideas
Arizona, Florida, California and Michigan lead with great ideas
But will the lenders play their part too?
Washington has announced its intention to hand over $2.1 billion in grants to 10 States considered worst hit by the property market debacle, specifically charging them with getting their citizens back in work and above water again.
The States that qualified in principle but will benefit only if they are able to come up with convincing, innovative ideas are:
Arizona
California
Florida
Michigan
Nevada
North Carolina
Ohio
Oregon
Rhode Island
South Carolina
To date, only Arizona, California, Florida and Michigan have gone public on their proposals. Their ideas include variations around the themes of principal loan reductions and mortgage subsidies. Nevada has submitted a proposal that is still under wraps, while North Carolina, South Carolina, Ohio, Oregon and Rhode Island are still working on their ideas.
The Obama Administration's hand-outs are sufficient only to assist a small percentage of American households battling with the twin devils of economic fall-out and the collapse of the property market the pain being felt at the State Capitals right now is how best to justify helping the fortunate few.
This is what the first four States out of the starter's blocks are planning to do:
Arizona
State Officials in the Grand Canyon State (where there were approximately 74,000 foreclosures in 2009) hope to use their $125.1 million share to assist 4,000 compliant households, by matching lender forgiveness dollar-to-dollar up to a total contribution of $50,000 over 10 years. Assistance will also be provided to unemployed home owners in the form of helping reduce their loans to water-level, and then covering up to 30% of their new monthly payments for 24 months (up to a maximum value of $12,000). To qualify in principle, applicants must be in imminent danger of default, and be able to prove both household income on par with or below 12% of median local income, and that their hardship is not self-inflicted.
California
The Golden State of California is planning on spending its $699 million on the futures of 38,095 people, by servicing 50% of an unemployed borrower's mortgage payments to a maximum of $1,500 a month and for up to 6 months only. Homeowners who can start paying again, but have arrears may qualify for a one-off reduction of $15,000 in their principal amount, as long as the lender matches this, and what is paid to them is not more than 50% of their total outstanding debt. Loan amounts may not exceed $729,000; beneficiaries must live in their own homes, and also be able to sustain their new monthly payments.
Florida
In the Sunshine State where 153,540 foreclosure notices were filed last year, Washington's $418 million has been earmarked to assist up to 12,000 American families. Unemployed delinquent borrowers could qualify for 100% subsidies for up to 9 months provided the bank concerned comes to the party too. A further $25 million has been set aside for legal support and another $40 million for down-payment assistance to first-time buyers.
Michigan
Officials in the Great Lakes State have similar ideas on how to spend their $154.5 million bonus, this time focusing on borrowers who have become delinquent following medical emergencies, income contraction or unemployment. The State's plan is to subsidize up to 50% of a qualifying lender's mortgage payments (up to $750 a month), plus granting a $5,000 payment bonus when they are able to resume full payments once again. Consideration may also be given to making $10,000 contributions to principal reductions, provided that the lenders are willing to play ball as well.
