WASHINGTON — The Obama administration released $600 million Wednesday to help unemployed homeowners in Oregon and four other states avoid foreclosure.
Oregon, where one in every 76 homes is facing foreclosure, qualifies for $88 million.The money will be used to help distressed homeowners.
The money will be available to state housing authorities in Oregon, Ohio, South Carolina, Rhode Island and North Carolina “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 due to unemployment,” the Treasury Department said.
According to Treasury, the money will augment “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.”
State officials in Oregon estimate that up to 7,400 homeowners will be helped.
Among other things, Oregon will:
— provide funds to assist with loan modifications, including through principal reduction and arrearage payments.
— provide up to six months of mortgage payment assistance for an unemployed borrower or a borrower experiencing other financial distress. Lenders or servicers would be required to match for up to an additional six months.
— offer funds to ensure a successful modification or pay arrearages or other fees incurred during unemployment or financial distress once a homeowner has regained employment or recovered from that financial distress.
— provide assistance to borrowers who participated in the state’s Hardest Hit Fund unemployed borrower program but did not subsequently regain employment in order to facilitate a short sale or deed-in-lieu of foreclosure. This assistance would be matched by lenders or servicers.
In all, states estimate that approximately 50,000 struggling homeowners will receive aid.
Wednesday’s announcement is only the latest in the Obama administration’s efforts to dent the foreclosure crisis.
The money is part of the $2.1 billion is directing from its existing $75 billion mortgage assistance program to a total of 10 states. Each state designed its own plan. Treasury approved money in June for Arizona, California, Florida, Michigan and Nevada.
In the latest package of aid, Ohio will receive $172 million — the largest amount of money. That could aid around 15,000 homeowners by helping borrowers pay their mortgage for up to a year while they search for jobs. It could also provide incentives for mortgage companies to reduce borrowers’ mortgage balances.
North Carolina is receiving $159 million, and South Carolina is in line for $138 million while Rhode Island is receiving $43 million.