A new federal fund will help struggling homeowners in five different states, according to Reuters.
The states that will get help are among those with some of the highest unemployment rates in the county. Ohio, North Carolina, South Carolina, Oregon and Rhode Island will all
receive money from what the Treasury Department calls the "Hardest Hit Fund."
The fund, which totals around $600 million, will go towards limiting foreclosures for upwards of 50,000 homeowners facing the threat of foreclosure in those states.The Treasury Department fund will be distributed to state housing agencies. Each of the five states that were chosen submitted proposals to the department, and recently became eligible to receive the aid.
“The funds will start flowing in the next several months, state by state,” said Herb Allison, Treasury Assistant Secretary for Financial Stability.
In the five states that qualified for aid, there are counties in which the unemployment rate was higher than 12 percent in 2009. This is above the national unemployment rate, which is expected to rise to 9.6 percent, according to the article.
The program is not designed to prevent every foreclosure or stop bankruptcy, said Allison. Rather, it is meant to target those who are most in need of help.
“For the people who are going to be helped by this, it will make a very meaningful difference,” Allison told Reuters. He went on to say that over the life of the Hardest Hit Fund program, those homeowners who are helped will receive around $10,000 worth of benefits. The program will go from now until late in 2012.
President Barack Obama announced the Hardest Hit Fund last February for five other states: Nevada, California, Arizona, Florida and Michigan. These are the states that experienced the steepest drops in housing prices with the onset of the economic crisis and the collapse of the housing market.
The program was expanded in March to include the five most recently announced states and an additional $600 million in funding. The funds for the Hardest Hit Fund came from an existing program, the $50 billion Home Affordable Modification Program, which is in turn a part of the $700 billion bank bailout package that Congress rolled out in 2008.
The Hardest Hit Fund will be distributed in a number of ways. Some programs will help unemployed or under-employed homeowners to keep up with their mortgage payments. Other programs will reduce the principal of loans or finance short sales of houses to alleviate the pressure on homeowners who face negative equity.
In Ohio, as one example noted by the Reuters article, unemployed workers will get help paying their mortgage for a period of time that is longer than the three months of help that comes from the nationwide HAMP assistance program. Funding for this program in Ohio will total $172 million.
North Carolina will receive up to $159 million, South Carolina will get up to $138 million, Oregon will get up to $88 million, and Rhode Island will get up to $43 million.
“We think what we are doing is making home ownership more affordable for people who are struggling,” said Allison.