Treasury Announces Additional Investment in Hardest Hit Fund
Industry Update
February 19, 2016
Fifth Round of Funding Will Provide $2 Billion in Additional Assistance to Struggling Homeowners and Communities
WASHINGTON – The U.S. Department of the Treasury today announced it would exercise its authority to obligate up to $2 billion in additional Troubled Asset Relief Program (TARP) funds to the Hardest Hit Fund (HHF) program. The additional investment in HHF will enable participating state Housing Finance Agencies (HFAs) to continue assisting struggling homeowners and stabilizing neighborhoods in many of the nation’s hardest hit communities. The fifth round of HHF funding will be allocated among participating HFAs in two phases of $1 billion each. States receiving additional funds will have until December 31, 2020 to utilize their HHF funds, an extension from the current program end date of December 31, 2017.
“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,” said Treasury Secretary Jacob J. Lew. “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.”
The first phase will allocate $1 billion using a formula based on state population and the HFA’s utilization of their HHF allocation to date. The use of state population as a primary factor is consistent with previous Hardest Hit Fund allocations, and consideration of utilization will prioritize states that have demonstrated the ability to effectively deploy funds. In order to qualify for funding in the first phase, HFAs must have utilized at least 50 percent of their existing HHF allocations.
The second phase will utilize an application process open to all participating HFAs. This phase will allow Treasury to focus additional resources on HFAs that have significant ongoing foreclosure prevention and neighborhood stabilization needs, a proven track record in utilizing funds, and successful program models to address those needs. HFAs will have until March 11, 2016 to submit applications, and will be allowed to request amounts up to 50 percent of their existing HHF allocation or $250 million (whichever is lower). Treasury anticipates announcing the second phase allocations by the end of April.
“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.”
The Hardest Hit Fund was created in 2010 to provide $7.6 billion in targeted aid to 18 states and the District of Columbia deemed hardest hit by the economic and housing market downturn. The program was designed to leverage the expertise of state and local partners by funding locally-tailored foreclosure prevention and neighborhood stabilization solutions. As of the end of the third quarter of 2015, HHF has disbursed approximately $4.5 billion of the $7.6 billion obligated to the program, on behalf of homeowners and stabilization efforts, and assisted nearly a quarter of a million homeowners.
For more information on the latest round of HHF funding, please see the FAQs and for further state-by-state information please refer to the Treasury HHF page.
Source: U.S. Department of the Treasury (full press release)
