State housing finance agencies (HFAs) in North Carolina, Ohio, Oregon, Rhode Island, and South Carolina have been given the green light to use $600 million in federal funding for local foreclosure prevention programs.

These five states were designated as some of the nation’s “hardest-hit” housing markets because of high unemployment – local rates above 12 percent – and concentrated areas of severe economic distress.

The federal grants to assist struggling homeowners in these states are provided through the Obama administration’s Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets.

This is the second round of financing awarded through the Hardest Hit Fund. Five other states where property values soared during the boom and nose-dived when the correction set in have already received and begun using $1.5 billion – Arizona, California, Florida, Michigan, and Nevada.

Herb Allison, Treasury assistant secretary for financial stability, told reporters on a conference call Wednesday that a third round of state grants is in the works. The Dodd-Frank reform legislation just signed into law allocates another $2 billion from the Troubled Asset Relief Program (TARP) to the Hardest Hit Fund.

Allison says the Treasury is currently working with HUD to determine which additional states will be targeted, but he added that all future grants will be geared toward unemployment-related housing assistance programs. In all, Hardest Hit Fund appropriations will total $4.1 billion.

North Carolina, Ohio, Oregon, Rhode Island, and South Carolina each submitted proposals to the administration on June 1, outlining programs to address the specific challenges facing distressed homeowners in their states. The administration announced Wednesday that all proposals have been approved, and each state’s housing finance agency can begin implementing their mortgage assistance plans immediately.

The plans include targeted programs to expand options for homeowners struggling to make their mortgage payments because of unemployment, as well as programs to address first and second liens, facilitate short sales and deeds-in-lieu, and assist in the payment of arrearages. Between the five states, it is estimated that approximately 50,000 distressed homeowners will receive aid.

North Carolina has been awarded $159 million in hardest-hit funding. Ohio gets $172 million. Oregon has been approved for $88 million. Rhode Island will receive $43 million, and South Carolina has been approved for $138 million.