Planning For Federal Foreclosure Assistance Underway

Posted: Monday, April 5, 2010

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State officials have about a month to put together a plan for how they’ll use 172 million federal dollars to put the brakes on foreclosures.  The state was awarded the funding last week in a second round of foreclosure mitigation using funds from TARP, the program that bailed out the banks in late 2008. 

One of the virtues of program is it allows states flexibility in devising a plan for the money that best suits them, says Doug Garver, Executive Director of the Ohio Housing Finance Agency. 

Garvin:  “Given these dollars and the kind of innovative efforts that we’ll be given a lot of latitude on, we’re going to really try to get the most bang for the dollar, help as many families as possible stay in their homes.”

Garver lists several possibilities for doing that.  One is providing bridge loans to help those who are jobless maintain their mortgages until they find employment.  Paul Bellamy, who heads the Foreclosure Prevention Program in Cuyahoga County, believes that will likely be a priority in the state application.  It’s a well-meaning strategy, he says, but he sees practical pitfalls in making substantial loans to the chronically unemployed. 

Bellamy:  “Once you get into the five figures it’s amazing how quickly 172 million dollars will disappear.  If you stay in the four figure range, you could probably spread it around more households, but then the question becomes how many of those are going to be able to turn the corner?”

A second much discussed use of the money is for loan modifications; particularly ones that would reduce the principle for those who owe more than the value of their homes.  That could include directly paying off principle, or beefing up local foreclosure intervention and counseling services that help distressed borrowers find solutions that may already exist, but they don’t know how to plug into them. 

Paul Bellamy favors that last option.  He says those kinds of programs, including the one in Cuyahoga County, have run out of money.  With foreclosure filings continuing to pile up, Bellamy says he’s anxious to see what form Ohio’s plan will take. 

Bellamy:  “And whatever it is, let’s make it fast.”

Bill Rice, 90.3

Tags

Economy, Facing the Mortgage Crisis, Government/Politics, Other, Housing/Real Estate