The Obama administration said Wednesday that it will provide additional support to help unemployed homeowners through two targeted foreclosure-prevention programs.
Through the existing Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets, the U.S. Treasury will make $2 billion of additional assistance available to housing finance agencies (HFAs) in 17 states and the District of Columbia to implement local programs for homeowners struggling to make their mortgage payments due to unemployment.
In addition, HUD is planning to launch a complementary $1 billion Emergency Homeowners Loan Program to provide assistance – for up to 24 months – to homeowners who are at risk of foreclosure and have experienced a substantial reduction in income due to involuntary unemployment, underemployment, or a medical condition.
President Obama first announced the Hardest Hit Fund in February 2010 to allow states hit hard by the economic downturn to design and implement their own programs to meet the local challenges homeowners in their state are facing.
The additional $2 billion in assistance announced Wednesday has been earmarked for states that have experienced an unemployment rate at or above the national average for the past 12 months. Each state will use the funds for unemployment programs that provide temporary assistance to help homeowners pay their mortgage while they seek re-employment, additional employment, or undertake job training.
States that have already received money under the Hardest Hit Fund may use the additional resources to support their existing unemployment programs or they may opt to implement a new program. States that are new to the grant list must submit proposals to Treasury by September 1. Assistant Treasury Secretary Herb Allison said final approval for new programs will be made by October 3, in order to ensure program roll-outs during the fall season.
The states eligible to receive funds through this additional assistance include:
Alabama – $60,672,471
California – $476,257,070
Florida – $238,864,755
Georgia – $126,650,987
Illinois – $166,352,726
Indiana – $82,762,859
Kentucky – $55,588,050
Michigan – $128,461,559
Mississippi – $38,036,950
Nevada – $34,056,581
New Jersey – $112,200,638
North Carolina – $120,874,221
Ohio – $148,728,864
Oregon – $49,294,215
Rhode Island – $13,570,770
South Carolina – $58,772,347
Tennessee – $81,128,260
Washington, D.C. – $7,726,678
This new program will provide assistance to homeowners in areas that may not be included in the Treasury’s Hardest Hit Fund program. HUD says it will announce additional details, including the targeted areas, when the program is officially launched within the next month.
Bill Apgar, HUD’s senior advisor for mortgage finance, explained that the program will work through a variety of state and non-profit entities to offer a declining balance, deferred payment “bridge loan” of up to $50,000 per eligible borrower, which can be used to make payments on their mortgage, property taxes, and insurance for up to 24 months.
Eligible borrowers must be at least three months delinquent and have a reasonable likelihood of resuming repayment of their mortgage and related housing expenses within two years. The property must be their primary residence and the borrower cannot own a second home. They must also demonstrate a good payment record prior to the event that resulted in their reduction of income.
Since its launch, DS News magazine has positioned itself at the forefront of an
evolving industry. Always current with the most up-to-date
default servicing news, DSNews.com keeps you informed through daily Web casts,
community forums, and a wide range of industry resources.