The U.S. Department of the Treasury held a summit September 18 on the Hardest Hit Fund (HHF) with representatives from all 19 HFAs participating in HHF, Treasury, Fannie Mae, Freddie Mac, and several major loan servicers. The meeting featured remarks from federal officials, an update on the program’s performance to date, examples of notable state programs and activities, and loan servicer comments and suggestions.
After brief introductory remarks by Undersecretary for Domestic Finance Mary J. Miller, Treasury Secretary Timothy Geithner stopped by to address attendees. Geithner said he believes the housing market is still 3-5 years away from completely recovering, and that policymakers still have a lot of work to do to restore the housing sector to full health. The Secretary then urged HFAs to “do as much as you can” to expend HHF funds as quickly as possible to help struggling homeowners and encouraged states to be innovative while also making use of some of the best practices identified at the summit. Following Geithner, Timothy Massad, Assistant Treasury Secretary for Financial Stability, said that this is the final year that HFAs can expect to be able to implement new initiatives under HHF, because they will need to focus the remaining years of the initiative implementing their programs to be sure they distribute all their allocated funding toward assisting borrowers. He echoed Secretary Geithner’s request that HFAs to everything they can to quickly and effectively distribute their HHF funds.
Next, Dang Du, a policy and data analyst with Treasury, provided a brief program update. According to Treasury data, HFAs have currently drawn down about $1.5 billion of the $7.6 billion allocated to HHF. The majority of states increased the amount of new borrowers they funded in the second quarter of 2012, but only half the states saw an increase in applicants. Treasury estimates that HFAs approved and provided funding for 58,519 borrowers and are currently reviewing around 29,000 new applications. HFAs spent a combined $511 million in program funds though the end of the second quarter 2012, and incurred $128 million in administrative expenses. Du attributed the high administrative expenses to the costs of starting up the program and indicated they should decrease as state programs are now in their implementation phase.
Following Du’s presentation, representatives from five HFAs discussed their efforts to increase borrowers’ awareness of the unemployment and reinstatement assistance options available through HHF. All speakers agreed that overall public awareness of the assistance available to struggling homeowners is very low, and that HFAs need to consider creative marketing techniques. Mary Townley of the Michigan State Housing Development Authority told the group that her organization has developed promotional videos with faith-based leaders in the metro Detroit area urging their congregations to seek assistance through HHF if they need it. Michigan has also stepped up its paid media advertisements, and Townley showed the crowd a powerful advertisement about HHF that was run in Michigan during the Olympics. Michael Auman of Oregon Housing and Community Services demonstrated how Oregon has revamped its Hardest Hit website so that it more effectively educates consumers about how to apply for the program through the use of animated videos.
Betty Rozakis of the North Carolina Housing Finance Agency discussed her agencies’ partnership with the North Carolina Employment Security Commission (ESC), which administers unemployment benefits. ESC sends monthly mailings about HHF to new filers for unemployment benefits and those whose benefits will expire in 30 days. ESC has also given NCHFA direct access to its database, which helps NCHFA quickly examine applications. In addition, NCHFA has also hired two community liaisons (one for each half of the state) to travel throughout North Carolina to distribute literature and talk to borrowers about the benefits of HHF programs.
David Westcott of the Florida Housing Finance Corporation shared with the audience the website they developed that provides a one-stop access point for the state’s HHF Advisor Agencies (organizations that determine eligibility and certification for HHF program recipients) to acquire all the information and promotional materials they need to effectively market the HHF program to their communities. Joe McGavin of the Illinois Housing Development Authority shared some of the in-depth information his department gathers to ensure that they are reaching out and assisting a broad-swath of eligible Illinois borrowers, and also his efforts to increase training for Sponsor agencies.
During the next panel, Lon DeWeese of the Nevada Housing Division (NHD) laid out NHD’s principal reduction program, under which the agency uses HHF funds to provide underwater borrowers with up to $50,000 in principal reduction when they refinance through HARP. DeWeese said that NHD developed this program, which represents a partnership between NHD, FHFA, and Treasury, because they needed to find a unique way to assist the significant amount of Nevada homeowners who owe more than their home is currently worth. While the program only started in mid-June, it has received a steady stream of applicants each week. Representatives from Fannie Mae, Freddie Mac, and JPMorgan Chase were there to discuss their involvement with this initiative.
Later, Diane Richardson and Jean Mills of the California Housing Finance Agency spoke about Keep Your Home California’s Principal Reduction plan. This initiative uses HHF funds to help struggling low to moderate-income homeowners reduce the principal balance of their first mortgage through a loan recast or in conjunction with a loan modification that includes a rate reduction. The state has worked together with servicers to reduce the burden this program places on them. As with the Nevada program, lender representatives took the time to speak and answer questions about the role they play in implementing this plan.
On the final HFA panel, Matt Rivers discussed some of the innovative plans the South Carolina State Housing Finance and Development Authority is considering to make their HHF dollars go farther with the limited options they have available to them. Michael Auman outlined and solicited comments on Senator Jeff Merkley’s (D-OR) proposal to establish a trust that would purchase underwater mortgages and refinance them (for more information, see NCSHA’s blog post on the plan).
The final panel included representatives from various mortgage servicers (JPMorgan Chase, GMAC, CitiMortgage, Bank of American, and Wells Fargo) who discussed their suggestions for improving the HHF program. Many of the panelists recommended that HFAs seek to improve and increase their marketing efforts, but stated that they were impressed by the marketing strategies presented during the first panel. The panelists also suggested that the program be adjusted to allow more homeowners to benefit, such as by expanding eligibility requirements and increasing the amount of assistance available to recipients. They also proposed that HFAs adopt uniform practices to better facilitate servicer participation.
In closing the summit, Treasury’s HHF Program Director Mark McArdle commended HFAs for all they have done through the HHF program. He encouraged attendees to continue developing ways to make HHF more effective and to share their ideas and advice with Treasury and others.