August 11, 2010
WASHINGTON- Today, the Obama Administration announced a plan to expand its Housing Finance Agency (HFA) Innovation Fund for the Hardest-Hit Housing Markets (the Hardest-Hit Fund) by providing $2 billion to HFAs in 18 jurisdictions that have experienced sustained unemployment rates at or above the national average over the last 12 months, through June 2010. The HFAs receiving the new funding include nine of those already participating in the Hardest-Hit Fund (California, Florida, Michigan, Nevada, North Carolina, Ohio, Oregon, Rhode Island, and South Carolina), as well as the HFAs of Alabama, DC, Georgia, Illinois, Indiana, Kentucky, Mississippi, New Jersey, and Tennessee.
The HFAs will use the funding to implement or expand unemployment bridge loan programs under general requirements established by Treasury, with flexibility to tailor their programs to best meet the needs of the unemployed and underemployed in their jurisdictions.
“We appreciate the Administration’s continued confidence in HFAs and are pleased that it has significantly expanded its Hardest-Hit Fund Initiative to include more states struggling with high unemployment and home foreclosures,” said Barbara Thompson, executive director, National Council of State Housing Agencies. “We hope the Administration will find a way to extend resources to all states, as this is a national problem,” she added.
In February, the Administration rolled out its Hardest-Hit Fund Initiative, making $1.5 billion available to HFAs in the five states where home prices had declined more than 20 percent since reaching their highs (Arizona, California, Florida, Michigan, and Nevada) to enable the HFAs to design foreclosure prevention programs. The Administration expanded the program in March by making $600 million more available to five additional states (North Carolina, Ohio, Oregon, Rhode Island, and South Carolina) that had high concentrations of people living in economically distressed areas, defined as counties in which the unemployment rate exceeded 12 percent in 2009.
Last year, Treasury also turned to HFAs to assist with the housing recovery, purchasing nearly $15 billion in state HFA Housing Bonds under Treasury’s New Issue Bond Purchase program to bolster HFA efforts to stimulate first-time home buying, help distressed homeowners, and provide affordable rental homes. Congress has also called on HFAs as key housing recovery partners, entrusting to their administration billions in Housing Bond and Low Income Housing Tax Credit resources since 2008.
State HFAs have consistently achieved over many decades affordable and sustainable housing outcomes by combining public purpose and accountability with sophisticated finance and sound underwriting skills. HFA loan performance continues to be strong, with delinquency and foreclosure rates well below the conventional market. HFAs did not engage in subprime lending, offering largely fixed-rate, 30-year loan products.
NCSHA is a national nonprofit, nonpartisan association that represents the affordable housing interests of HFAs before the Administration and Congress. Its members are the HFAs of the 50 states, the District of Columbia, New York City, Puerto Rico, and the U.S. Virgin Islands and more than 300 of their affordable housing partners.
See ncsha.org for more information on and HFA reaction to this initiative.
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