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The administration announced Monday that it is expanding its initiative to provide ""funding for state housing finance agencies"":http://financialstability.gov/docs/Hardest%20Hit%20public%20QA%200%2029%2010.pdf to develop their own localized[IMAGE]mortgage assistance programs. A second round of funding, totaling $600 million, will go to five additional states: North Carolina, Ohio, Oregon, Rhode Island, and South Carolina.
Last month, ""$1.5 billion in aid was allocated"":http://dsnews.comarticles/obama-pledges-15b-for-unemployed-and-underwater-homeowners-2010-02-19 to be divided between California, Nevada, Arizona, Florida, and Michigan â€" states with what the administration called the ""hardest hit housing markets,"" where unemployment is high and home prices have fallen more than 20 percent in the aftermath of the housing bubble.
Building on this first Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (the ""HFA Hardest Hit Fund""), the second round of grants announced Monday targets states ""with high shares of their populations living in local areas of concentrated economic distress,"" the Treasury explained in a statement to the media, i.e., areas where unemployment in 2009 exceeded 12 percent.
North Carolina will be awarded up to $159 million; Ohio $172 million; Oregon $88 million; Rhode Island $43 million; and South Carolina $138 million. The money will go to housing finance agencies (HFAs) in each state to develop innovative measures to help families avoid foreclosure and provide additional assistance to unemployed homeowners.
[COLUMN_BREAK]The Treasury Department outlined the following as types of programs that will qualify for funding:
• Unemployment Programs â€" Programs may provide for assistance to unemployed borrowers to help them avoid preventable foreclosures.
• Mortgage Modifications â€" Programs may provide for modification of mortgage loans held by HFAs or other financial institutions or provide incentives for servicers/investors to modify loans.
• Mortgage Modifications with Principal Forbearance â€" Programs may provide for paying down all or a portion of an overleveraged loan and taking back a note from the borrower for that amount in order to facilitate additional modifications.
• Short Sales/Deeds-In-Lieu of Foreclosure â€" Programs may provide for assistance with short sales and deeds-in-lieu of foreclosure in order to prevent avoidable foreclosures.
• Principal Reduction Programs for Borrowers with Severe Negative Equity â€" Programs may provide incentives for financial institutions to write-down a portion of unpaid principal balance for homeowners with severe negative equity.
• Second Lien Reductions â€" Programs may provide incentives to reduce or modify second liens.
Other innovative ideas and transaction types, including innovations related to the Making Home Affordable program, will also be considered and evaluated on a case-by-case basis for compliance. HFAs in the states qualifying for the second Hardest Hit Fund will be required to submit plans to Treasury for review after program guidelines are released within the next two weeks.
State HFAs included in the first round of funding have been working quickly to develop their housing programs for review. Their plans must be submitted to the Treasury by April 16.
