The Department of the Treasury announced Friday that it is boosting the Hardest Hit Fund by as much as $2 billion to a number of states, citing the need to continue to support the recovery from the housing crisis in the communities that were impacted the most.
The Hardest Hit Fund was created in 2010 and is designed to help state’s Housing Finance Agencies assist “struggling homeowners” and help stabilize neighborhoods in many of the nation’s hardest hit communities, as part of the Troubled Asset Relief Program.
When it was created, the Hardest Hit Fund was designated to provide $7.6 billion in targeted aid to 18 states and the District of Columbia, and designed to “leverage the expertise” of state and local partners by funding “locally-tailored” foreclosure prevention and neighborhood stabilization solutions.
According to the Treasury, as of the third quarter of 2015, the HHF has distributed approximately $4.5 billion of the program’s original $7.6 billion, on behalf of homeowners and stabilization efforts, and assisted nearly a quarter of a million homeowners.
As part of Friday’s announcement, the Treasury Department will allocate $1 billion to the Housing Finance Agencies of 18 states, including California, Florida, Illinois, Michigan, and Ohio, to continue the work of the Hardest Hit Fund.
Additionally, the Treasury said that the states receiving additional funds will have until Dec. 31, 2020 to utilize their HHF funds, which is an extension from the program’s current end date of Dec 31, 2017.
According to the Treasury, the increased funding for the HHF will come in two phases.
The first phase’s funding of $1 billion is based on a formula combining the affected state’s population and the state’s usage of its previously allocated HHF funds.
In order to qualify for the first round of funding, states must have already utilized more than 50% of their previous HHF allocations.
In some cases, the affected states have already exhausted 100% of the previous HHF allocations, and this new round of funding will allow those states to reopen their HHF operations.
According to an infographic provided by the Treasury, which can be seen below, Illinois (more than $118 million), Oregon (more than $36 million), and Rhode Island (nearly $10 million) have used all of the HHF allocations previously designated for them.
Several other states, including North Carolina, New Jersey, Ohio, Michigan and Tennessee have utilized nearly 90% of their previously allocated funds.
The latest round of funding, which is the fifth round of HHF funding thus far, will provide 18 states with between $5 million and $213 million to continue the fight to recover from the housing crisis.
According to the Treasury, the fifth round of funding will be allocated as follows:
- Arizona - $28,282,519
- California - $213,489,977
- Washington, D.C. - $4,924,602
- Florida - $77,896,538
- Georgia - $30,880,575
- Illinois - $118,174,500
- Indiana - $28,565,323
- Kentucky - $30,148,245
- Michigan - $74,491,816
- Mississippi - $19,340,040
- North Carolina - $78,016,445
- New Jersey - $69,231,301
- Nevada - $8,885,641
- Ohio - $97,590,720
- Oregon - $36,425,456
- Rhode Island - $9,680,817
- South Carolina - $22,030,274
- Tennessee - $51,945,211
According to Treasury Secretary Jacob Lew, the funds were pushed forward by a “bipartisan” group of members of Congress.
“Today’s announcement is the next step in the Administration’s effort to help struggling homeowners recover from the financial crisis, and strengthen the housing recovery,” Lew said.
“Thanks to a bipartisan group of members of Congress who helped secure additional funding for the Hardest Hit Fund, we will be able to provide significant resources to hard hit states and target these critical resources towards programs that we know have helped Americans avoid foreclosure, and stabilized housing markets, including blight elimination programs,” Lew continued.
In addition to the $1 billion allocated to the 18 states referenced above, the Treasury announced Friday that there will be a second round of funding that is open to all participating HFAs, even if 50% of their previous funds have not been used yet.
According to the Treasury, this phase will allow it to focus additional resources on HFAs that have “significant ongoing foreclosure prevention and neighborhood stabilization needs,” as well as a “proven track record” of utilizing funds, and “successful program models” to address those needs.
The Treasury said that HFAs will have until March 11, 2016 to submit applications, and will be allowed to request amounts up to 50% of their existing HHF allocation or $250 million (whichever is lower).
The Treasury said that it anticipates announcing the second phase of allocations by the end of April.
The Treasury also said that the HHF funds allocated under this latest round of funding will be subject to “use or lose” provision, meaning that the states will be required to meet “annual utilization thresholds” beginning at the end of 2016 or their unused funds will be “periodically redirected” to states that are using their funds more effectively.
“While the housing market has strengthened in recent years, there are still many homeowners and neighborhoods experiencing the negative effects of the financial crisis,” said Mark McArdle, Treasury’s Deputy Assistant Secretary of Financial Stability. “The additional HHF funds authorized by Congress will allow states to continue their efforts to stabilize local communities and help struggling families avoid foreclosure.”
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