CalHFA Plans to Put $700 Million in Funding to Good Use

The ""California Housing Finance Agency"":http://www.calhfa.ca.gov/ (CalHFA) announced Friday that it will develop innovative initiatives to use nearly $700 million in new federal funding to help the state's most troubled homeowners stay in their homes.

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""We are very grateful that the Obama Administration recognizes that California and several other states have been severely impacted by the twin problems of unemployment and home price depreciation,"" said Steven Spears, acting executive director of CalHFA. ""We are honored by President Obama's continued support and the confidence the President has shown in state housing finance agencies (HFAs).""

""As DSNews.com reported"":http://dsnews.comarticles/obama-pledges-15b-for-unemployed-and-underwater-homeowners-2010-02-19, CalHFA is one of five state HFAs slated to receive a total of $1.5 billion from the federal government's Emergency Economic Stabilization Act of 2008. In addition to California, the funds will support efforts in Arizona, Florida, Michigan, and Nevada--all of which have seen average home price declines of 20 percent or more.

Spears said CalHFA will work quickly to develop programs to help California's low- and moderate-income homeowners and will submit plans of these efforts to the federal government by April 16. He expects the new initiatives to be ready for implementation by mid-year or sooner.
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Under the Obama administration's plan, the funding can be used for innovative programs to assist unemployed homeowners, borrowers who owe significantly more than their homes are now worth, and those facing challenges with second mortgages. The programs will be available to all eligible homeowners, regardless of whether their mortgage was initially financed by CalHFA.

House Speaker Nancy Pelosi said the allocation of this funding is a step in the right direction for many California families at risk of losing their homes. With a 49 percent drop in housing prices since their peak and 12.4 percent unemployment, she said California faces unique challenges that require effective local responses.

""With this allocation, California's housing finance agency will now have $700 million for innovative solutions to the foreclosure crisis,"" Pelosi said. ""These solutions include mortgage principal forbearance, principal reduction for borrowers with significant negative equity, and assistance to unemployed persons. More California residents will receive the help they need to stay in their homes and communities will emerge stronger as a result.""

The $700 million in funding is in addition to a separate plan announced late last year by the federal government to provide $5.4 billion in financial backing to CalHFA. The agency said this assistance will enable it to continue its 35-year effort to provide safe, fixed-rate mortgage loans to first-time homebuyers and help finance affordable rental housing.

""This funding alone will not solve the significant problems in the housing market that California families face, but combined with other initiatives by state, local, and federal governments as well as the private sector, this will contribute to stabilizing California's housing market,"" Spears said.