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States Examine Hardest Hit Funds

Hardest hit programs in Michigan and Indiana are in a pinch, with one state nearly out of funds and the other under fire for misuse of those dollars. Both programs are designed to prevent foreclosure and help state homeowners in need.

According to Michigan Radio, the state's "Step Forward" program has received $761 million in federal funds since 2010—but those funds are quickly dwindling. In fact, only $40 million remains in the program's coffers.

Mary Townley, VP of Step Forward, says more than 50 percent of the state's funds have gone toward demolishing housing in blighted communities, with the remainder going to underwater homeowners. Though the program technically has until 2020 to spend all its funds, according to Townley, the money will run dry long before then—and she doesn't expect any additional funds from the federal government.

Indiana is also having problems with its Hardest Hit Fund, as a newly released report from the Inspector General for the Troubled Asset Relief Program reveals money was inefficiently and ineffectively used. According to the report, the state's funds—which amount to more than $32 million—have only helped 9,127 homeowners over the last six years.

The program spent $23 million on demolitions and still has 33 percent of its funds available. Brad Meadows, spokesperson for the Indiana Housing and Community Development Authority which administers the Hardest Hit Fund, said the state hasn't misused its dollars, blaming the stilted appropriation of funds on a "bounce back in the housing market and a drop in the foreclosure rate in Indiana."

"We saw a 37.2 percent decrease in mortgage foreclosure filings from 2011 to 2015," he told Call 6 news. "It is down more than 50 percent since 2006."

Like Michigan, Indiana will need to use all its federally issued funds by the end of 2020. But the program has already stopped accepting applications for assistance.

"While we had to stop accepting applications 18 months early—which many other HHF states have had to do as well—it was not because of an alleged misuse in funds," he said. "It was that we were able to quickly and efficiently identify and help families most in need of assistance to remain in their homes."

About Author: Aly J. Yale

Aly J. Yale is a longtime writer and editor from Texas. Her resume boasts positions with The Dallas Morning News, NBC, PBS, and various other regional and national publications. She has also worked with both the Five Star Institute and REO Red Book, as well as various other mortgage industry clients on content strategy, blogging, marketing, and more.

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