TARP?s ?Hardest Hit? Program

More than $7 billion of federal funds are sitting around in 18 states and the District of Columbia, waiting to be given to homeowners who have fallen behind in their mortgage payments. The funds are available under the relatively new TARP (Troubled Asset Relief Program) Hardest Hit initiative to help keep the unemployed from losing their homes, but some states are having a tough time putting the money to work.?

In Illinois, $300 million sits at the Illinois Housing Development Authority. Troubled homeowners can obtain information on accessing the funds at www.illinoishardesthit.org. In Florida, which also has millions to give to troubled homeowners, the website for information is www.flhardest hithelp.org. Michigan has some of its nearly $500 million in housing money left (www.stepforwardmichigan.org.), as do Nevada, www.nevadahardesthitfund.nv.gov, and Tennessee, www.hardesthittn.org.

Each state crafted its own program to distribute the money. Homeowners who are a few months behind in paying their mortgage can get a grant ? free money ? to bring them up to date, and the program will keep helping them to pay their mortgage so they can stay in their homes.

The housing crisis remains intractable, partly because the unemployment situation. Those who have lost jobs are almost certain to lose their homes to foreclosure. That?s why the Hardest Hit program is authorized to make mortgage payments (with some restrictions) for those who are unemployed, or underemployed. The Bush administration?s telephone hotline, 888-995-HOPE, set up to help stem the tide of foreclosures, helped few people and was mired in red tape as financial institutions struggled to deal with delinquencies. It was followed by the Obama administration?s Making Home Affordable program (www.makinghomeaffordable.gov), but it, too, failed to stem the tide of foreclosures, as its Home Affordable Modification Program (HAMP) was viewed as too complex for mortgage servicers to handle.

That was followed last fall by HARP (Home Affordable Refinance Program), designed for people who were current on their payments, but underwater on the value of their home vs. the amount of the mortgage. Both programs remain in effect, but have had minimal impact on foreclosures.

The federal Hardest Hit program started slowly, and at year-end 2011, only about 30,000 families had been helped. One cause of the delay in pushing money through the system was the reluctance of mortgage servicers (and Fannie Mae and Freddie Mac) to accept payments from the program. In most states, however, that challenge has been overcome. And although each state has a slightly different program and restrictions, in every instance the first step requires meeting with a HUD-certified housing counseling agency. Illinois has succeeded in getting processing finished and payments to lenders within 60 days of application.

Housing advocates are trying to get the word out about Hardest Hit. ?This is the best tool in our toolbox now for keeping people in their homes. It recognizes that the cause of foreclosure has moved to loss of income, as opposed to poorly underwritten loans. That?s the real challenge we?re seeing in the neighborhoods,? says Ed Jacob, executive director of Neighborhood Housing Services of Chicago Inc.

The real issue now is getting people into the program before they are too far behind on their mortgage to qualify for these funds. Check with your state?s Housing Development Authority to find out if there is Hardest Hit money available and to get the rules. Since each program is set up by individual states, there is no single good place to get specific information. However, the National Council of State Housing Agencies, www.ncsha.org/advocacy-issues/hardest-hit-foreclosure-initiative, is a good place to learn more about the overall program and get an idea of what your state is doing to help those who are unable to stay current on their mortgage.??? ?