Today, President Obama is announcing $1.5 billion in funding for innovative measures to help families in the states that have been hit the hardest by housing market stress and unemployment. States where house prices have fallen more than 20% from their peak will be eligible for this funding. Such price declines, coupled with the effects of high unemployment, means that many working and middle-class families in these areas are facing serious challenges. The effort we are announcing today will provide support for state housing finance agencies (HFAs) to design programs tailored to the urgent needs of particular communities.
Eligible HFA programs will aim to help homeowners in areas hardest hit by unemployment and home price declines, helping responsible but struggling homeowners stay in their homes.
The $1.5 billion fund will be available for State Housing Finance Agencies and similar organizations to develop innovative programs help address the problems facing their communities. Housing markets vary considerably from state to state, and often within a single state. Housing Finance Agencies are very familiar with their local housing markets, and will take the lead role in determining what sorts of programs are most appropriate to local conditions. The types of programs that may be funded include: measures for unemployed homeowners, programs to assist borrowers owing more than their home is now worth, programs that help address challenges arising from second mortgages,; or other programs encouraging sustainable and affordable homeownership.
There will be a formula for allocating funding among eligible states that will be based on home price declines and unemployment. Eligible HFAs that would like to participate must submit a program design to Treasury. Program designs must meet funding requirements under the Emergency Economic Stabilization Act of 2008 (EESA). The Department of the Treasury will announce maximum state level allocations in the next two weeks, along with rules governing the submission of program designs by HFAs, and provide a period thereafter for HFAs to submit their program designs in order to receive funding.
The state specific nature of the fund will allow HFAs to design programs focused on the priorities in their local markets. The program will be under strict transparency and accountability rules. All program designs and measures of program effectiveness will be posted online, creating a public web forum for interchange of innovative ideas developed through the program.
This new funding for increased HFA initiatives will support families in the hardest hit markets markets, combining with the numerous other steps the Administration has taken to help support US homeowners and housing markets.
Sarah Apsel is a Policy Advisor at the Treasury Department