Through two government agencies, the Obama Administration is pumping an additional $3 billion into federal programs to help homeowners avoid foreclosure.
Using the existing Housing Finance Agency (HFA) Innovation Fund for the Hardest Hit Housing Markets (the Hardest Hit Fund), the Treasury Department will make $2 billion of additional assistance available for HFA programs for homeowners struggling to make their mortgage payments due to unemployment.
At the same time, the Department of Housing and Urban Development (HUD) will soon launch a complementary $1 billion Emergency Homeowners Loan Program to provide assistance -- for up to 24 months -- 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.
"We remain committed to helping struggling homeowners, and this program will provide additional assistance to states hit hardest by unemployment," said Assistant Secretary for Financial Stability Herb Allison. "This is part of the Administration's comprehensive housing policy that has helped to stabilize a fragile housing market and allows responsible homeowners the chance to reduce their monthly mortgage payments to affordable levels."
Bill Apgar, HUD Senior Advisor for Mortgage Finance, said HUD's new Emergency Homeowner Loan Program will build on Treasury's Hardest Hit initiative by targeting assistance to struggling unemployed homeowners in other hard hit areas to help them avoid preventable foreclosures.
"Together, these initiatives represent a combined $3 billion investment that will ultimately impact a broad group of struggling borrowers across the country and in doing so further contribute to the Administration's efforts to stabilize housing markets and communities across the country," he said.
Hardest Hit Fund
President Obama first announced the Hardest Hit Fund in February to allow states hit hard by the recession more flexibility in determining how to design and implement programs to meet the local challenges homeowners in their state are facing.
Under the additional assistance, states eligible to receive support have all experienced an unemployment rate at or above the national average over the past 12 months. Each state will use the funds for targeted unemployment programs that provide temporary assistance to eligible homeowners to help them pay their mortgage while they seek re-employment, additional employment or undertake job training.
The states eligible to receive funds through this additional assistance are: Alabama; California; Florida; Illinois; Indiana; Kentucky; Michigan; Mississippi; Nevada; New Jersey; North Carolina; Ohio; Oregon; Rhode Island; South Carolina; Tennessee; and Washington, DC.