Today U.S. Rep. John Spratt (D-SC) announced that South Carolina will be eligible to receive as much as $138 million in targeted federal assistance for states that are disproportionately affected by the economic downturn and a decline in housing values. These funds come from the expansion of the Housing Finance Agency Innovation Fund for the Hardest-Hit Housing Markets ("HFA Hardest-Hit Fund").
The Hardest Hit Fund provides funding to state housing finance agencies to try out innovative approaches to reduce foreclosures and help responsible families stay in their homes.
This round of Hardest Hit Fund assistance is directed to states with a large percentage of a state's population residing in high unemployment areas (above 12%), and the selection of South Carolina is a recognition of the severe effect that the economic downturn has had on the state's economy.
"I hope that South Carolina's selection today helps bring valuable assistance to eligible homeowners having trouble making their mortgage payments," Spratt said. "This assistance--which is still contingent on the state's submission of an approved plan to the Treasury Department--is designed to help families keep their homes, avoid foreclosure and stabilize the housing market. I look forward to working with Treasury and the South Carolina State Housing Finance & Development Authority to ensure that our citizens receive the assistance they need and deserve."
"Treasury is smart to let South Carolina have a hand in designing the relief we need in our mortgage markets," Spratt said. "It's now up to South Carolina to spell out a plan of action that will help those who need help the most and who stand to benefit the most from assistance. The Treasury and the state need to realize that there is no cookie cutter solution. Each foreclosure has its differences, and to succeed, the process needs to be supported by an adequate number of loan officers and consultants."
The HFA Hardest Hit Fund is intended to allow the maximum possible flexibility to HFAs in designing locally-focused programs that are tailored to the needs of the specific state or a region within a state. All programs must have foreclosure prevention and housing market stability as their primary objectives. Some of the types of acceptable programs are:
Mortgage Modifications - Programs may provide for modification of mortgage loans held by HFAs or other financial institutions or provide incentives for servicers/investors to modify loans.
Mortgage Modifications with Principal Forbearance - Programs may provide for paying down all or a portion of an overleveraged loan and taking back a note from the borrower for that amount in order to facilitate additional modifications.
Short Sales/Deeds-In-Lieu of Foreclosure - Programs may provide for assistance with short sales and deeds-in-lieu of foreclosure in order to prevent avoidable foreclosures.
Principal Reduction Programs for Borrowers with Severe Negative Equity - Programs may provide incentives for financial institutions to write-down a portion of unpaid principal balance for homeowners with severe negative equity.
Unemployment Programs - Programs may provide for assistance to unemployed borrowers to help them avoid preventable foreclosures.
Second Lien Reductions - Programs may provide incentives to reduce or modify second liens.
Spratt said questions about receiving assistance under the program can be directed to the South Carolina State Housing Finance & Development Authority at (803) 896-9001 or his Rock Hill office at (803) 327-1114.