Bowing to political pressure and rising foreclosures, the Obama administration is allocating $600-million more in mortgage rescue relief efforts to five additional states. The program provides funding for Ohio, North Carolina, South Carolina, Rhode Island and Oregon.
The administration’s move comes just five weeks after allocating aid to the five worst affected states in the foreclosure crisis. Nevada, California, Florida, Michigan and Arizona have been ear-marked to receive $1.5-billion in federal aid to help homeowners most severely impacted by the housing crisis. The efforts are part of the White House plan to slow the volume of foreclosures forecast to top 3.4 million residential properties by Housing Predictor in 2010 alone.
Deflating home values in the hardest hit areas have made it impossible for many homeowners to sell or refinance their properties. Staggering unemployment levels in the five additional states and tough economic conditions triggered the relief measures as more families have difficulty paying mortgages leading to an increase in defaults.
The $600-million in new aid from the Trusted Assets and Relief Program will be administered by state Housing Finance Agencies, which will provide the proceeds to homeowners to stay in their homes and avoid foreclosure in distress as a result of banking practices that nearly destroyed the mortgage lending market.
Housing Predictor forecasted the foreclosure crisis nearly three years ago as the first real estate research firm to do so, but the administration’s efforts may bring a change to the forecast. Analysts are reviewing the program to determine if there should be a revision in the current forecast that a total of 20 million foreclosures will occur through 2015 from the crisis.
Ohio housing agencies are being allotted $172-million under the program. North Carolina will get $159-million, followed by hard hit South Carolina, which will receive $138-million. The historically troubled economy in Oregon will receive $88-million to help homeowners, and Rhode Island will get $43-million.
The initial fives states to receive funding were targeted since home prices have deflated more than 20%. But the second relief program targeted in the new program are aimed at areas that are living under dire economic distress defined as counties where unemployment exceeds 12%.
However, the government figures do not show the full scope of unemployment since many people are under-employed or have given up looking for work all together, and in many cases tops 20%. Government officials say less than 15% of the U.S. population lives in such high unemployment areas. The efforts are part of the White House plan to stabilize the housing market and preserve homeownership as increasing numbers of homeowners walk away from their mortgages as a result of being under water, and see no other alternative.