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 Ã¢â‚¬" for up to 24 months Ã¢â‚¬" 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.
*+Hardest Hit Fund+*
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.
Under the program, $1.5 billion was sent in late June to five states where housing market conditions have deteriorated due to steep plunges in home prices. Another $600 million was awarded in early August to five other states where local unemployment rates are above 12 percent.
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
*+HUD Emergency Homeowners Loan Program+*
This new program will provide assistance to homeowners in areas that may not be included in the TreasuryÃ¢â‚¬â„¢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.
The $1 billion for the HUD program was made available through the Dodd-Frank Reform Act, and is modeled after the HomeownersÃ¢â‚¬â„¢ Emergency Mortgage Assistance Act in Pennsylvania, introduced by Rep. Chaka Fattah (D-Pennsylvania).
Bill Apgar, HUDÃ¢â‚¬â„¢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 Ã¢â‚¬Å“bridge loanÃ¢â‚¬Â 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.