Unemployed Homeowners to Get $3 Billion in Aid

From the Wall Street Journal | Aug 11, 2010 |

By NICK TIMIRAOS And MEENA THIRUVENGADAM

The Hardest Hit Fund, announced in February as a way to help states design their own foreclosure-prevention programs, is currently funding initiatives in 10 states. The allocation is part of the $50 billion that the administration earmarked for housing aid under the Troubled Asset Relief Program. The Obama administration is making $3 billion in aid available to help unemployed homeowners avoid foreclosure.

The administration announced plans Wednesday to allocate $2 billion to its "Hardest Hit Fund," which provides federal grants to state housing agencies, doubling the size of that program. The funding will be divvied up between housing agencies in 17 states, plus the District of Columbia, that have the highest unemployment rates. State housing officials will decide how to target that funding toward keeping borrowers from losing their homes when they face short-term unemployment.

The administration will also spend $1 billion on a previously announced program under which the Department of Housing and Urban Development will provide bridge loans to help unemployed borrowers who are delinquent on their mortgages. The program was created under the financial-regulatory bill that President Barack Obama signed last month.
The initiative, modeled after existing state programs, will offer interest-free loans of up to $50,000 for eligible borrowers to be used to make mortgage payments for up to two years.

The effort will focus on homeowners who are at least three months past due on their payments and "have a reasonable likelihood of being able to resume employment," said Bill Apgar, a senior housing official.
The funding comes as the Obama administration is under pressure to boost the results of its flagging effort to modify loans through the Home Affordable Modification Program, or HAMP.

In June, more homeowners fell out of modifications than entered new modifications, and the program has fallen short of its goal of preventing three million foreclosures.
The administration didn't say how many borrowers it hoped to reach through the additional aid.

Write to Meena Thiruvengadam at meena.thiruvengadam@dowjones.com