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Administration Adds Funds to State Housing Foreclosure Prevention Programs

by devteam August 12th, 2010 | Share

A few days after awarding arnsecond round of funding to five states, the Obama Administration announced a $2rnbillion expansion of its Innovation Fund for the Hardest Hit Housing Marketsrn(the Hardest Hit Fund).  At the same timernit said that the U.S. Department of Housing and Urban Development (HUD) willrninitiate a $1 billion complementary program titled the Emergency HomeownersrnLoan Program to provide assistance to homeowners who are at risk of foreclosurernbecause of a reduction in income due to un-or-under employment or a medicalrncondition. </p

The Hardest Hit Fund awards moneyrnto state housing finance agencies(HFAs) agencies in states that have suffered the double whammy of highrnunemployment and a drop of more than 20 percent in housing values.  Funds can be used for specific programsrnproposed by the agencies to facilitate short sales or loan modifications forrnproperties that are under water, and for subsidies for persons with temporaryrnfinancial difficulties while they are looking for a job or undergoing training.rn Ten states have received awards sincernthe program was announced last February. READ MORE</p

States that have already receivedrnHardest Hit funds may use the additional money to support unemployment programsrnpreviously approved by the Treasury Department or can implement a newrnunemployment program.  States that arernnew to the program must submit proposals to Treasury by September 1 underrnguidelines for allowable initiatives. </p

The new HUD program will providernsimilar assistance to homeowners in local areas that have been hard hit by loanrndelinquencies and high unemployment but are not located in the Hardest Hitrntarget states.  HUD will work withrnnon-profit and government entities to provide up to $50,000 in zero interest,rnnon-recourse subordinate loans to assist eligible homeowners with mortgage,rnproperty tax, and hazard insurance payments for up to 24 months.  </p

In order to qualify for the program thernhomeowner must:</p<ol

  • Be at least three months delinquent in their payments and have a reasonable likelihood of being able to resume repayment of their mortgage payments and related housing expenses within two years;</li
  • Have a mortgage property that is the principal residence of the borrower, and eligible borrowers may not own a second home;</li
  • Demonstrate a good payment record prior to the event that produced the reduction of income.</li</ol

    HUD will announce furtherrnregulations and the names of targeted communities in the next few days.</p

    The additional Hardest Hit Funds will be available to the followingrnstates; the proposed allocation is based on the state's size as measured byrnpopulation. </p

    </p

    “We remain committed to helping struggling homeowners, and this programrnwill provide additional assistance to states hit hardest by unemployment,” saidrnAssistant Secretary for Financial Stability Herb Allison. “This is part of thernAdministration's comprehensive housing policy that has helped to stabilize arnfragile housing market and allows responsible homeowners the chance to reducerntheir monthly mortgage payments to affordable levels.”</p

    “HUD's new EmergencyrnHomeowner Loan Program will build on Treasury's Hardest Hit initiative byrntargeting assistance to struggling unemployed homeowners in other hard hitrnareas to help them avoid preventable foreclosures,” said Bill Apgar, HUD SeniorrnAdvisor for Mortgage Finance. “Together, these initiatives represent a combinedrn$3 billion investment that will ultimately impact a broad group of strugglingrnborrowers across the country and in doing so further contribute to thernAdministration's efforts to stabilize housing markets and communities</p

    MORE FROM THE NATIONAL COUNCIL OF STATE HOUSING FINANCE AGENCIES

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    • About the Author

    devteam

    Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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