The U.S. Treasury Department reports that as of the end of May states taking part in Hardest Hit Fund, a federal foreclosure prevention program, had drawn only $650 million from the $7.6 billion available to help homeowners make their mortgage payments. The Treasury Department oversees the program at the national level.
Andrea Risotto, a Treasury Department spokesperson, cited lender reluctance to participate as one of the early challenges, saying some national providers had concerns about working out operational details with the 19 jurisdictions where the program is in place.
But Treasury officials report that, in the first quarter of this year, there was a 40% jump in the number of participants nationally, and a 60% increase in aid spent on their behalf. The funds are available through 2017. President Barack Obama started the Hardest Hit Fund in 2010 to help states most affected by the housing and economic recessions.
In Rhode Island, struggling homeowners have received only an estimated one-third of more than $79 million available from the foreclosure prevention program, officials reported Monday.
Rhode Island Housing, the agency that administers the state's Hardest Hit Fund, said that an estimated $25 million had gone to nearly 1,700 homeowners by the end of May. Officials say another $6 million in assistance to 300 more homeowners has been approved but not finalized. Some states have spent an even lower percentage of their Hardest Hit Fund allocations.
Richard Godfrey, executive director of Rhode Island Housing, said the program started slowly and fewer people applied than what was expected, partly because some are not used to accepting government help. Godfrey said the spending pace has accelerated in Rhode Island and that all of the funds are expected to be allocated in the next 18 months.
Rhode Island has the highest foreclosure rate in New England and one of the highest in the country. Added Godfrey: "Perhaps no state, other than Nevada, is more hard hit by the double whammy of declining home values and unemployment."