President Obama announced a plan Friday to use $1.5 billion of TARP money to help families in states hit hardest by the housing crisis avert foreclosures.
The program is designed to assist unemployed homeowners, people who owe more than their homes are worth, and certain other borrowers negotiate with lenders to write down their mortgages.
The program, dubbed the Help for the Hardest-Hit Housing Markets, applies to states where average home prices have fallen more than 20 percent from their peak. Those states -- California, Florida, Nevada, Arizona and Michigan -- also lead the nation in foreclosure rates.
Obama announced the program during a town-hall style event in Nevada, which has had the country's highest foreclosure rate for 37 consecutive months, according to RealtyTrac.
"This innovative program will allow us to work directly with states and localities to tailor housing assistance to local needs," Treasury Secretary Timothy Geithner said in a statement. "It's an opportunity to provide additional relief to the hardest hit states while continuing to strengthen our housing market stabilization efforts."
The funding will be allocated to state and local housing finance agencies, which will then be tasked with developing programs that meet the federal government's requirements.
The White House has said Treasury will announce further details, including which funding will go to which states, within two weeks.
The White House offered examples of how local housing financial agencies may use the funding, such as launching programs to help unemployed homeowners until they secure jobs, assisting "underwater" borrowers in negotiations with lenders to write down mortgages, and paying incentives to second mortgage holders to help reduce principal so that borrowers can stay in their homes.
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