Jonathan Frutkin Bankruptcy Law Blog on Lawyers.com

Excess TARP Funds to Help Homeowners

Wednesday, March 3, 2010 by Jonathan Frutkin

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President Barack Obama has announced a plan to help rescue homeowners in five states that were greatly affected by the collapse of the housing market by using excess funds from the TARP bank bailout fund.  Arizona, California, Florida, Michigan and Nevada will all receive part of a combined $1.5 billion that will be pumped into state and local housing agencies.  These funds will be used for a variety of purposes, including modifying the loans of underwater homes, helping homeowners avoid foreclosure, and buying up foreclosed homes.  Unemployed homeowners may also be getting a bulk of the assistance.  By giving the public funds to local agencies, the President believes the money will be spent wisely and appropriately as they have the best understanding of their own markets.

Critics of the new plan argue that these locally directed funds will still not solve the “national” housing problem.  The money will be directed towards states whose home prices have dropped more than 20% from their peak.  It will not be divided equally to each state but instead on specific criteria including unemployment rate and home price decline.

Note that the exact program, and the exact plan, will be proposed by each individual state.  We do not know how the state agencies will propose to help Arizona homeowners specifically, but an update will be provided when available.

 
Posted at 15:44 PM
Topic: Bankruptcy
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