The Obama administration has expanded its Housing Finance Agency Hardest-Hit Fund to target five additional states with high shares of their populations living in local areas of concentrated economic distress. This second round includes up to $600 million in funding for state housing finance agencies (HFAs) in North Carolina, Ohio, Oregon, Rhode Island and South Carolina to develop foreclosure-prevention programs.
While the first HFA Hardest-Hit Fund, announced by President Obama in February, targeted five states with home price declines greater than 20%, the second HFA Hardest-Hit Fund will target five states with high concentrations of people living in counties in which the unemployment rate exceeded 12% in 2009.Â Less than 15% of the U.S. population lives in these high-unemployment-rate counties, according to the Treasury Department.
HFAs in states qualifying for the second Hardest Hit Fund will be required to submit plans to the Treasury for review before becoming eligible for funding. Once HFAs have submitted plans to the Treasury for review, and the Treasury determines that the plans satisfy the requirements under the Emergency Economic Stabilization Act of 2008 (EESA), the plans will become eligible for funding, up to a predetermined allocation cap.
Allocation caps have been determined in proportion to the number of people in these five states living in counties with high unemployment, resulting in the following allocation caps:
- North Carolina – $159 million;
- Ohio – $172 million;
- Oregon – $88 million;
- Rhode Island – $43 million; and
- South Carolina – $138 million.
The objective of the fund is to allow HFAs to develop creative approaches that consider local conditions. To provide guidance to HFAs in designing programs, the Treasury has outlined some of the possible types of transactions that would meet the requirements of EESA, including programs that provide assistance to unemployed borrowers, short-sale and deed-in-lieu programs, and principal-reduction programs for borrowers with severe negative equity.
SOURCE: Treasury Department