Treasury Awards Second Round of "Hardest Hit" Housing Funds

ThernDepartment of the Treasury has announced the second round of awards under its 4HMrnor Help for the Hardest-Hit Housing Market Fund established by President Obamarnin February. </p

The five states, all sufferingrnhigh levels of unemployment coupled with significant declines in home valuesrnare:  North Carolina, Ohio, Oregon, Rhode Island, and South Carolina.  The states will share in $600 million inrngrants to State Housing Finance Agencies (HFAs) with programs designed tornprevent foreclosure.  The states estimaternthey can assist approximately 50,000 struggling homeowners with the grants.    </p

Firstrnround awards totaling $1.5 billion were made to five states, Arizona, California,rnFlorida, Michigan and Nevada, inrnJune.  The program is targeted to statesrnwith high unemployment and where a high percent of the population is living inrnareas of economic distress due to unemployment and housing prices have declinedrnat least 20 percent from their peak.  </p

The mostrnrecent proposals include programs targeted at expanding options for homeownersrnstruggling to meet mortgage payments and programs addressing first and secondrnliens, short sales, and deeds-in-lieu of foreclosure.</p

“These states have designed targeted programs with the potentialrnto make a real difference in the lives of homeowners struggling to make theirrnmortgage payments because of unemployment,” said Treasury AssistantrnSecretary for Financial Stability Herb Allison. “While the ObamarnAdministration has already taken critical action to strengthen the housingrnmarket and create jobs, we are committed to doing everything we can to immediatelyrnhelp those who are hurting the most during these tough times.” </p

In order to receive the awards, HFAs gathered public input and designedrnthe programs they felt would meet the specific challenges in their individualrnstates.  Plans were evaluated by the TreasuryrnDepartment for compliance with the Emergency Economic Stabilization Act of 2008rn(EESA) which provided the funds. rnTreasury also offered technical assistance to develop performance andrnreporting metrics. </p

North Carolina which received $159 million willrnprovide funds so unemployed and cash-strapped homeowners can pay mortgage andrnmortgage-related expenses during job training or while looking for employment.  The state will work with lenders to refinancernexisting second mortgages in cases where those junior liens are impeding loanrnmodifications and will also assist lenders in reducing principal on somernmortgages in order to make monthly payments more affordable.  The state estimates that they will assist up to 7,190 homeowners.</p

Ohio estimates that 15,356 homeowners will be aided by programs to helprnunemployed borrowers pay their mortgages for up to 12 months while searchingrnfor a new job or undergoing job training or to bring delinquent mortgagesrncurrent where borrowers have experienced hardships due to a reduction or lossrnof income. The state will also set up a modification program to incentivizernlenders and servicers to reduce a homeowner's mortgage principal balance to arntarget 115 percent or less of the loan-to-value, at which point the loan may berneligible for HAMP or another modification. Finally, to facilitate a short salernor deed-in-lieu of foreclosure, the state will provide an incentive payment tornthe servicer as well as relocation aid to the borrower and payments in exchangernfor the release of second liens.  Ohiornwill receive $172 million. </p

Oregon's initiatives include funds to assistrnwith loan modifications through principal reduction and/or arrearage payment.  It will also provide assistance to borrowersrnthat participated in the state's Hardest Hit Fund unemployed borrower program butrndid not subsequently become employed in order to facilitate a short sale orrndeed-in-lieu.  The latter program will bernmatched by lenders or servicers.  Thernstate projects assisting up to 7,400 homeowners with the $88 million grant. </p

Rhode Island will provide assistance tornhomeowners who cannot, without that assistance, participate in the federal HomernAffordable Modification Program (HAMP) and assist borrowers who are notrneligible for HAMP to achieve other types of loan modification.  The state will also provide paymentrnassistance to homeowners who are at risk of foreclosure because of an immediaternor temporary financial crisis, and funds to facilitate a short sale orrndeed-in-lieu and assist with relocation where homeowners in crisis can nornlonger stay in their homes.  Rhode Islandrnwill receive $43 million and estimates it will serve up to 5,000 of itsrnresidents.</p

Finally, South Carolina will use $138 millionrnto assist homeowners who are unemployed or experiencing a short-term loss ofrnincome by making part or all of their mortgage payments for a period of time. Borrowersrnwho have regained the ability to pay their mortgages after a financial crisisrnbut have residual arrearages, late changes or a reduction in principal canrnreceive assistance with those amounts. rnThe state will also provide funds to servicers so borrowers can become HAMPrneligible or to modify second liens. rnFunds will also be available to incentivize lenders to acceptrndeeds-in-lieu and to assist with relocation expenses. The state anticipatesrnassisting up to 12,000 homeowners.</p

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