Hardest Hit Fund Approval

August 10th, 2010

The $600 million additional funding through the Housing Finance Agency Innovation Fund was recently approved.

Feds Approve State Plans for $600M in 'Hardest Hit Fund' Foreclosure Prevention Assistance

Ohio was among the five states that will receive a portion of $600 million in additional funds in foreclosure-prevention assistance from the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets ("Hardest Hit Fund"). The funds will be used to support local initiatives to assist struggling homeowners in these five states that have high percentages of their population living in areas of economic distress because of unemployment - defined as exceeding 12 percent in 2009.

Ohio is due to receive $172 million. Other states receiving funding notification Wednesday include North Carolina ($159 million), Oregon ($88 million), Rhode Island ($43 million) and South Carolina ($138 million).

"These states have designed targeted programs with the potential to make a real difference in the lives of homeowners struggling to make their mortgage payments because of unemployment," said Treasury Assistant Secretary for Financial Stability Herb Allison in a conference call with media on Wednesday.
 
"While the Obama administration has already taken critical action to strengthen the housing market and create jobs, we are committed to doing everything we can to immediately help those who are hurting the most during these tough times."

The proposals approved Wednesday include targeted programs to expand options for homeowners struggling to make their mortgage payments because of unemployment, as well as programs to address first and second liens, facilitate short sales and/or deeds-in-lieu of foreclosure, and assist in the payment of arrearages. States estimate that approximately 50,000 struggling homeowners will receive aid.

Allison explained that this is the second round of special assistance targeted to states especially hard-hit by the foreclosure crisis. Five other states with home price declines of more than 20 percent - Arizona, California, Florida, Michigan and Nevada - have already received $1.5 billion in supplemental assistance.

In addition, Allison noted, a third round totaling $3 billion in assistance will be released in the near future. He said that funding was part of the regulatory reform bill, with $2 billion of the total coming from the federal Troubled Asset Relief Program (TARP). He said the treasury and the U.S. Department of Housing and Urban Development (HUD) are currently working out details for that program.

Allison said that the release of the funds comes now that the plans submitted by state housing finance agencies have been approved by the Treasury.

"Ohio families have felt the effects of the national housing crisis harder than most. Through this partnership with the Obama administration, the Ohio Hardest-Hit Fund will keep more Ohio families out of foreclosure while adding stability to the housing market," Gov. Ted Strickland said in a statement. "The Ohio Hardest-Hit Fund will be another tool for homeowners to stay in their homes, along with ongoing state initiatives like Save the Dream and the Foreclosure Compact that bring homeowners and lenders together to avoid home foreclosure."

He went on to note that Ohio has received the third largest allocation of Hardest-Hit funds to date as part of this second round of funding.

The following summarizes Ohio's plan, which estimates that 18,500 homeowners will be assisted through these targeted programs:

Rescue Payment Assistance will provide a payment to a participating homeowner's servicer to help bring the homeowner current on his or her delinquent mortgage. The payment could cover principal, interest, fees, delinquent taxes or escrow shortage and homeowners insurance.

Partial Mortgage Payment Assistance will support unemployed homeowners by providing partial mortgage payments while they search for a job or participate in job training.

Modification Assistance with Principal Reduction will provide a payment incentive to servicers to reduce a participating homeowner's mortgage principal to the level necessary to achieve a loan modification with a target of a 115 percent loan-to-value ratio or less. This program should increase the number of loan modifications that are approved and available to both HAMP eligible and non-HAMP eligible borrowers.

Transitional Assistance will offer an incentive to servicers to complete short sales and deed-in-lieu agreements to help homeowners exit their homes gracefully. This will allow homeowners who cannot sustain homeownership to pursue alternatives to foreclosure, reducing the negative impact on their credit rating and losses to the servicer.

According to the Ohio Housing Finance Agency (OHFA), the Ohio Hardest Hit Fund (HHF) plan will begin Sept. 27, but borrowers who are in need of immediate assistance can visit the Dream Ohio website at www.savethedream.ohio.gov or call the hotline at 888-404-4674 to get free assistance and speak directly with a housing counselor.

If a homeowner uses Ohio HHF to stay in their home and then sells or refinances their home within five years, the assistance would be repayable from the net proceeds.

Ohio's complete plan can be found online at http://www.ohiohome.org/homebuyer/HHFProposal.

In addition, OHFA is seeking proposals from qualified HUD Approved Housing Counseling Agencies located in Ohio to provide services for the Ohio Hardest Hit Fund (HHF) program as specified in a Request for Qualifications (RFQ). The HHF
program is an extension of the Troubled Asset Relief Program (TARP) under the Emergency Economic Stabilization Act of 2008 (EESA) administered by the U.S. Department of Treasury.

OHFA intends to select HUD Approved Housing Counseling Agencies for the period of Oct. 1, 2010, through Sept. 30, 2011. Additional information on this funding is available online at http://www.ohiohome.org/homebuyer/HHFcounselorRFQ.pdf.

A state-by-state summary of the Hardest Hit Fund proposals approved Wednesday is available online at http://www.financialstability.gov/roadtostability/hardesthitfund.html .

To view the online article, please click here

About Safeguard
Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, Ohio and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees and a handful of contractors performing services in the Midwest, to a national company with approximately 800 employees. Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.