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More Mortgage Aid for Unemployed Homeowners

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By Tanya Roth, Esq. on August 12, 2010 12:41 PM

Homeowners who are unemployed and facing foreclosure have one small reason to be a bit less worried. On August 11, the Obama Administration announced a $3 billion package to aid struggling homeowners. This aid is meant to supplement the "Hardest Hit Fund" originally set into motion last February by the President.

The money in the Hardest Hit Fund is supposed to be used by government officials to create programs to provide direct mortgage aid to unemployed homeowners, according to the New York Times. The first $1.5 billion of funding was sent to those states hit hardest by the collapse of the housing market: Arizona, California, Florida, Michigan and Nevada.

The second round totaled $600 million and went to North Carolina, Ohio, Oregon, Rhode Island and South Carolina. The next group of states eligible for mortgage aid funding includes Alabama, Illinois, Kentucky, Mississippi and New Jersey.

According to the Times, it will be the Department of Housing and Urban Development that will be responsible for overseeing the program. The Department of Treasury will provide $2 billion and HUD will provide the additional $1 billion which was authorized by the new financial reform law. Representatives from HUD will work with local programs to provide bridge loans of up to $50,000 to eligible borrowers. This money can then be used by unemloyed homeowners to pay their mortgage principal, interest, mortgage insurance, taxes and even hazard insurance for up to two years. HUD has said it was still determining which communities would receive the money.

"We remain committed to helping struggling homeowners and this program will provide additional assistance to states hardest hit by unemployment," Herb Allison, Treasury assistant secretary for financial stability, told Reuters.

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