In March, the Treasury cleared Housing Finance Agencies (HFAs) of five states where house prices dropped at least 20% from the peak to submit proposals to use funds from the Troubled Asset Relief Program (TARP) to help their homeowners. These states are Arizona, California, Florida, Michigan and Nevada. It's been six months, the proposals have been filed, and the programs are under way. If you live in one of these states, what kind of aid might there be for you?

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Arizona got $125.1 million to help its homeowners. It will use the money as follows:

  • The state will pay for principal reductions, interest rate reductions, and/or term extensions, allowing borrowers to enter into a permanent modification program.
  • The state will provide partial or complete extinguishment of second liens when they prevent modification pf first mortgages.
  • The state will also offer assistance to the under-employed while they seek new employment. This assistance may be used to pay monthly mortgage payments or remove second mortgages where that second lien is prohibiting the modification of a first lien.


California got $699.6 million, and will direct it toward:

  • Assistance to reduce principal with earned principal forgiveness.
  • Funds to bring delinquent loans current.
  • Mortgage payment subsidies to unemployed families.
  • Provide moving assistance funds to families going through a short sale or deed-in-lieu of foreclosure so they won't be homeless.


Floridians received $418 million, and the money will be spent to

  • Offer mortgage payment assistance to the unemployed and under-employed while they find another job.
  • The state will also offer principal reduction and / or second lien extinguishment if necessary to achieve a mortgage modification.


Michigan received $154.5 million for the following programs:

  • Subsidizing unemployed borrowers' mortgage payments while they search for work.
  • Cover loan arrearages for those who have undergone a financial hardship but can sustain home ownership.
  • Eliminate some negative equity through earned principal forgiveness.


Nevada got $102.8 million and will direct it toward

  • Creating a mortgage modification program using a combination of forgiveness and forbearance to reduce principal to less than 115 percent of LTV (loan-to-value) and lower payments to 31 percent of DTI (debt-to-income).
  • There will be assistance to reduce/eliminate second liens with earned forgiveness over a three-year term.
  • It will provide allowances for appraisal and transaction fees, moving fees, a legal allowance for up to three months, and a combination of incentives for borrowers and servicers to execute short sales.

For state-specific information, click these links for Arizona, California, Florida, Michigan, and Nevada.