California received the largest portion of the Treasury's Hardest Hit Fund as the state continued to recover from the large amount of unemployed and distressed homeowners impacted during the financial crisis.
The HHF provided nearly $2 billion to California programs that assist struggling homeowners in local communities, the Treasury noted in its first performance summary.
The solutions offered to borrowers through HHF include unemployment mortgage assistance, principle reductions and mortgage reinstatement assistance.
"In June, California increased the maximum duration and amount of employment mortgage assistance available, adjusted the target income criterion for borrowers and expanded the Community 2nd Mortgage Principal reduction Program to include HELOCs," the Treasury pointed out.
California was one of the 18 states that experienced the steepest home price declines and/or worst unemployment during the housing meltdown.
Since the HHF program rolled out in 2010, each state has been allocated funds based on how much local homeowners were impacted.
The various rounds of funding were distributed to the various states based on negative equity, unemployment and population data.
California continues to receive the most funds with its population making up roughly 12% of the nation. One-third of the state's homes were underwater after the crisis and the state ranked high in unemployment, noted Mark McArdle, the Treasury's acting chief of homeownership preservation.
Overall, this program provided $7.6 billion to 18 states to assist homeowners severely impacted by the housing crisis.
The HHR program was specifically designed to address the state-by-state differences in the housing crisis by allowing each state to decide how best to use the funds.
The recession led to extended periods of unemployment, leading many states to launch additional programs to provide longer-term solutions — such as principal reduction combined with a permanent loan modification.
Consequently, states issued HHF have created more than 60 programs that are assisting homeowners to take control of their personal finances.
"This collaboration and flexibility have helped states respond to changes in housing markets, local economies, and industry dynamics, and as a result, improve the quality of assistance provided to homeowners," explained Hardest Hit Fund program director Erin Quinn.
Treasury has also worked with participating states to identify barriers to program success while making appropriate changes so homeowners can continue to improve their household finances.
In the twelve months ending June 30, the number of assisted homeowners more than doubled from 58,519 to 126,858, with the amount of funds distributed growing by more than 200%.
Additionally, the amount of funds the states have committed to specific homeowners — or for specific uses — exceeded $2.4 billion, or 36% of the HHF program.
While the HHF programs continue to show much improvement, the participating states have significant work that remains, Quinn stated.
“Housing markets and local economies are recovering, but many are fragile and homeowners still need help,” she concluded.
