WASHINGTON, D.C.—Another $3 billion is being directed to homeowners struggling with unemployment, announced federal officials this week.
Seventeen states and the District of Columbia will receive $2 billion through the existing Housing Finance Agency (HFA) Innovation Fund for the Hardest Hit Housing Markets, announced the Treasury Department.
In addition, the Department of Housing and Urban Development. (HUD) announced a new $1 billion Emergency Homeowners Loan Program to provide assistance to homeowners who are facing foreclosure and have experienced a loss of income due to unemployment, underemployment, or a medical condition.
California is eligible to receive the largest share of the funds, more than $476 million.
The other states eligible for funding are Alabama, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, and the District of Columbia.
These states all have an unemployment rate at or above the national average during the past 12 months, said Herb Allison, the Treasury’s assistant secretary for financial stability, in a conference call with reporters.
Each state will use the funds for targeted unemployment programs that provide temporary assistance to homeowners to help them pay their mortgages while they seek work or undertake job training.
This is the third round for the Hardest Hit Fund, which has previously awarded $1.5 billion and $600 million to states. The money comes from the Troubled Asset Relief Program. HFAs that are receiving this funding for the first time must submit program proposals to Treasury by Sept. 1.
“We appreciate the administration’s continued confidence in HFAs and are pleased that it has significantly expanded its Hardest Hit Fund initiative to include more states struggling with high unemployment and home foreclosures,” said Barbara Thompson, executive director of the National Council of State Housing Agencies, in a statement. “We hope the administration will find a way to extend resources to all states as this is a national problem.”
Federal officials declined to estimate how many families will be assisted with the latest funds, saying that states are still working on their programs.
The new HUD program will complement the Hardest Hit Fund, according to Bill Apgar, HUD senior adviser for mortgage finance. It will assist homeowners in hard-hit local areas that may not be included in the hardest-hit target states. These areas are still being determined.
The program will work through a variety of state and nonprofit entities and will offer a declining balance, deferred payment “bridge loan” (zero percent interest, non-recourse, subordinate loan) for up to $50,000 to assist eligible borrowers with payments on their mortgage principal, interest, mortgage insurance, taxes, and hazard insurance for up to 24 months.
Under the program, eligible borrowers must:
- 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;
- Have a mortgage property that is the principal residence of the borrower, and eligible borrowers may not own a second home;
- Demonstrate a good payment record prior to the event that produced the reduction of income.