Under the program announced by Governor Brian Sandoval, the state will use Federal housing money to provide as much as $50,000 to qualified homeowners who then refinance at lower interest rates under the Federal Home Affordable Refinance Program.
"Principal reduction combined with mortgage refinancing will mean hundreds of dollars returning to the pockets of homeowners. This effort represents our continued focus on combating the worst housing crisis seen in a generation and in the state hit hardest by it."
Previous discussions in Nevada fell flat because they required a dollar for dollar match by lenders. So state officials proposed using some of the $194 million Nevada received two years ago as part of the Federal Hardest Hit Fund -- money to help states hit hardest by the Great Recession -- to write down loan balances.
About $75 million was set aside for principal reduction but the state could seek permission to use more of the funds down the road. The number of people eligible will be far in excess of what we will be able to fund."
The program is being launched in Clark County where it is estimated that there are 67 percent of homeowners who owe more than their homes are worth.
The program is limited to owner-occupied homes with mortgages that originated before May 31, 2009 and are backed by Freddie Mac or Fannie Mae.
A homeowner's mortgage balance must be at least 115 percent of the value of the home and cannot exceed $729,750. Additionally, family income cannot exceed exceed 150% of median income for the area. In Clark County, that income threshold is $99,000 for a family of four.
Homeowners who meet these criteria will receive an information packet and application from the state.