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States offer mortgage aid

By Marcie Geffner ·
Monday, September 20, 2010
Posted: 2 pm ET
Home with blue sky

The federally funded programs offer new help to homeowners.

Holden Lewis is on vacation.


States such as Michigan, Arizona and Florida that have been hard hit by unemployment and foreclosures are introducing new programs to help homeowners who can't manage their mortgage payments.

The federally funded programs offer new help to homeowners who may have been disappointed by other federal government assistance programs.

The Michigan State Housing Development Authority was the first to launch its program, which started July 12. It has $280 million to distribute and has already approved at least 70 applications.

On offer are:
• Mortgage subsidies of up to $9,000 for unemployed homeowners.
• Grants of up to $5,000 for homeowners who need to make up missed payments.
• Up to $10,000 in principal reduction, on a lender-matching basis, for homeowners who've suffered a loss of income.

The program has no income restrictions, but is limited to homeowners whose mortgage is held by a participating lender. On that list are more than 100 of the state's own banks and credit unions, but does not include any of the big national names such as Wells Fargo, Chase or Bank of America.

The Arizona Department of Housing has drawn up a four-page proposal that summarizes the guiding principals and recommendations for its program, "Save My Home AZ." The program has yet to launch, but will distribute $125 million to homeowners in the state.

The Florida Housing Finance Corp. expects to hand out $656.8 million, which will go to unemployed homeowners who need help to make their mortgage payments or to catch up on payments they've missed. The program is scheduled to start in Lee County on a pilot basis in mid-October. A statewide rollout is tentatively planned for February 2011.

Other states and localities that will receive a piece of the action include California (discussed in more detail in an earlier blog post, "California to pay mortgages"), Alabama, Georgia, Illinois, Indiana, Kentucky, Mississippi, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee and Washington, D.C.

The numbers of recipients are likely to be small, perhaps on the order of 10,000 or 20,000 people in the larger states.

If you've applied for relief through a state program, do you have a story to share?

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Deanna Thompson
October 12, 2010 at 3:36 pm

What to do when a mortgage co. will not work with you and goes up instead of down knowing that you cannot meet the new payment, even though you can get government help?

Marcie Geffner
October 06, 2010 at 2:20 pm

Update: As of Oct. 4, Chase has announced it will participate in Michigan's "hardest hit" fund.

Marcie Geffner
September 30, 2010 at 5:08 pm

Asute observations, indeed. Regardless of how these smaller-scale government attempts to help stuggling homeowners play out, the larger implications of the mortgage crash/crisis will take years to be know, and will, I think, affect all generations, though in different ways.

Ben Brugmans
September 28, 2010 at 10:33 pm

Commendable as helping the ailing morgagees is, there is not enough money in the universe to undo the inflated house prices.
In the end we all wish for time to heal the discrepancies between borrowed worth and present market value.
Unfortunately, a mortgage keeps on demanding its monthly cost of interest. Likely a lot more houses will foreclose, with commensurate loss of loan capital invested in the mortgage market.
Which, incidentally will leave an older generation with insufficient years to make up for their losses before they get to (hoped for) retirement age. " The Lost Generation" perhaps?