State awaits guidelines on foreclosure aid plan

President Barack Obama was greeted with a standing ovation during his visit to Las Vegas on Friday when he announced Nevada will receive a share of $1.5 billion in funds meant to help people in danger of losing their homes to foreclosure.

But Nevada's estimated $100 million share likely won't "be flowing much before June," said Lon DeWeese, chief financial officer for the Nevada Housing Division, which found out Friday morning it would be overseeing distribution of the money that comes to the state.

"The state is going to jump in fully to get these funds flowing as quickly as possible, but we're not controlling the process," DeWeese said.

The division must first submit a plan for the money to the U.S. Treasury, which must then approve the plan, DeWeese said. And the Treasury hasn't yet released guidelines for what that plan should look like. The Treasury plans to provide those guidelines in the next two weeks, the White House said.

The housing division will eventually work with a network of qualified lenders, banks and housing counseling agencies that will use the funds to help people who have lost their jobs and now might lose their houses, borrowers who owe more money than their homes are now worth, and those struggling with second mortgages.

"This will be an important step toward helping to keep people in their homes and assisting those who are underwater," Senate Majority Leader Harry Reid said.

The money is part of a $1.5 billion fund for five states -- Nevada, California, Arizona, Florida and Michigan -- that have been hit hardest by falling housing prices with values decreasing by at least 20 percent. The funds come from those set aside for housing under the Emergency Economic Stabilization Act of 2008.

The money will be allocated to eligible states using a formula based on home price declines and unemployment. But the funds won't flow directly through state coffers, DeWeese said. The Housing Division will instead authorize payment to its "network of lenders" through the Treasury.

The money could be used to provide "bridge loans" that help unemployed homeowners pay their mortgages until they get a new job, Reid said. States also may choose to experiment with programs that would help borrowers negotiate with lenders to write down mortgages.

In January alone there were 11,854 foreclosed properties in Nevada, or one in every 92 units of housing. That compares to one in every 126 in Arizona, one in 185 in Florida and California, and one in 257 in Michigan, according to the real estate data firm RealtyTrac.

Contact reporter Lynnette Curtis at lcurtis@reviewjournal.com or 702-383-0285.