Obama Administration Shifting Focus of Foreclosure Prevention to Local Level

North & South Carolina, Oregon, Ohio, and Rohde Island are some of the hardest hit states regarding the housing market. The reason for it is mostly the high unemployment rates in these regions.

To combat the foreclosure rates at these states, the administration decided to change the universal approach, taken previously on a national level with HAFA and HAMP programs, and focus it much more specifically on the hardest suffering regions. As part of this paradigm shift, the local state housing finance agencies (HFAs) in the above states will receive a total of $600 million in federal funding to fund their own developed foreclosure reduction programs.

This grant is in fact the second round of such local funding, following Arizona, California, Florida, Nevada, and Michigan, which received $1.5 billion in total.

A third round of funding is in the works according to Herb Allison, Treasury assistant secretary for financial stability. The Dodd-Frank reform legislation signed into law allocates another $2 billion from the Troubled Asset Relief Program (TARP) to the Hardest Hit Fund.

The local state plans, towards which the funds are allocated, include targeted programs expanding options for homeowners who are struggling with mortgage payments due to unemployment, as well as programs addressing first and second liens, facilitating short sales and deeds-in-lieu, and assisting in the payment of arrearages. It is estimated that approximately 50,000 distressed homeowners will receive aid through the 5 states.