PrintPresident Obama today announced he will send $1.5 billion to housing agencies in states where the average home value for all homeowners in the state has dropped more than 20% from its value at the height of the housing bubble.
Under the formula, five states have home-price declines steep enough to qualify them: Nevada; California; Arizona; Michigan; and Florida.
However, the latest foreclosure data shows foreclosure rates are falling in three of the five states where he is sending the aid but rising in heartland states which have not previously experienced widescale foreclosures
According to RealtyTrac, foreclosure filings are down in California, Florida, Michigan and barely rising in Arizona and Nevada.
Instead, foreclosures are penetrating the heartland and Texas and Illinois foreclosure filings have soared 25 percent since last year. With 2,603 filings in January, Idaho’s foreclosure filings are up 72 percent. With one in every 231 housing units receiving a foreclosure filing, Utah registered the nation’s fifth highest state foreclosure rate. Georgia ranked tenth nationally, with one in every 351 homes receiving a foreclosure filing.
Montana and New Mexico led the nation in terms of year-over-year increase in foreclosures. Montana’s filings were up 708 percent and New Mexico’s, 681 percent, though both numbers that might change with improved data collection. Montana’s rate of one foreclosure for every 1,107 homes and New Mexico’s rate of one in every 680 homes are both well below the national average.
New Jersey’s 6,146 foreclosure filings made the top ten nationally. Its foreclosure rare of one in 572 units ranks 16 nationally.
The money would be distributed by state and local housing finance agencies in each state. The $1.5 billion would be allocated according to a formula based on home-price declines and unemployment.
States can use the money in a variety of ways, including unemployed homeowner assistance, mortgage workouts or new home purchase assistance. But the Treasury Department, which would bankroll the program with unused money from the Troubled Asset Relief Program, must approve a state’s plans.
Obama is asking state housing agencies to come up with individual plans to address the housing crisis in their state. Plans must include measures for unemployed homeowners, help for borrowers who owe more on their home than it is worth, and programs to deal with second mortgage challenges.
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