WASHINGTON – Feb. 10, 2011 – A $7.6 billion federal effort to help unemployed homeowners avoid foreclosure will soon be running in all 18 states sharing the funds.
The Hardest Hit Fund, announced by President Obama a year ago and expanded to more states since then, largely targets lower-income jobless or underemployed homeowners.
Those eligible receive forgivable loans for mortgage payments, or they may tap other programs, such as one to help them get current on mortgage payments. Generally, the loans are forgiven after five years if borrowers stay in the homes and keep current on payments.
Next month, all of the states plus the District of Columbia are expected to have launched partial, full or pilot programs, says Treasury Department spokeswoman Andrea Risotto.
California, the No. 1 recipient with almost $2 billion, is expected to announce today that its full program is running after a partial start in January. Florida, No. 2 with $1.1 billion, hopes to launch in March.
Michigan, the first to start in July, had approved 700 borrowers for help as of Dec. 31. That will grow to 19,200 this year and pass 49,000 by July 2013, the state’s plan says.
Oregon took 15,000 homeowner applications over six weeks in December and January for one part of its program. The full program launches this spring, says spokeswoman Lisa Joyce.
The government targeted areas hit hard by unemployment or fallen home prices. States’ programs have different rules and benefits.
Nevada, which expects to launch its program this month, will offer up to $500 a month for up to six months to the unemployed to make mortgage payments. Indiana, planning a pilot next month, will give up to $1,000 a month for up to 18 months, based on where borrowers live. In Florida, the most a homeowner will get is $35,000. In Ohio, it’s $15,000.
In some states, such as California and Nevada, homeowners may get their loan principal reduced if companies that own or manage loans agree to match state dollars. California has $790 million earmarked for principal reduction, but only one national loan servicer has agreed to participate in that program. More are expected soon, says program director Di Richardson.
Some programs, including California’s, were delayed to get loan servicing companies on board and to create systems for states and companies to share data, Richardson says. California aims to help 100,000 homeowners.
The programs will only dent the housing crisis. In Nevada, more than 400,000 households owe more on their mortgages than they’re worth, according to the Lied Institute for Real Estate Studies. Nevada’s program aims to help 22,000 homeowners. Institute director Nasser Daneshvary fears that many may get money, not find jobs and still lose homes. “I don’t think it’ll be very helpful,” he says.
More information can be found by going to www.treasury.gov and typing “Hardest Hit Fund” in the search box.
© Copyright 2011 USA TODAY, a division of Gannett Co. Inc., Julie Schmit.
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