Oregon will receive nearly $90 million in federal funds to help homeowners remain in their homes and avoid foreclosure."We had no idea. We did not submit a proposal," said Lisa Joyce, a spokeswoman for the state Department of Housing and Community Services. The agency's job is to figure out the details and send a plan to Washington for approval. It could be late summer or fall before money starts flowing, Joyce said.
The state was one of five receiving about $600 million from the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets. Other states getting the funds were North Carolina, Ohio, Rhode Island and South Carolina.
The first Housing Finance Agency funds targeted five states with home price declines more than 20 percent. The second Hardest Hit Fund targeted five states – including Oregon – with high concentrations of people living in economically distressed areas, defined as counties in which the unemployment rate exceeded 12 percent in 2009.
Oregon’s Housing and Community Services will now be able to submit proposals for innovative housing initiatives designed for parts of the state that have experienced severe damage to the housing market. The funds could be used to help homeowners by modifying mortgages, clear the way for sales of some homes to avoid foreclosure and loan principal reduction program for borrowers with serious equity problems.
Feds say said the states have latitude to choose among ways to fashion their mortgage assistance. Some examples are:
Aid to help unemployed people make their mortgage payments for a few months until they find work.
Changing the terms of a loan or giving lenders incentives to write down part of the principal.
Helping homeowners and lenders make "short sales," for amounts less than the purchase price, to get people out of houses they can no longer afford.
The administration has been struggling to do more to deal with a tidal wave of foreclosures.
U.S. Sen. Jeff Merkley praised the program Monday and said it would “provide housing assistance that is tailored to hard-hit areas of the state and best helps families stay in their homes.”
“The economic benefit for Oregon communities reaches beyond help for families under water on their mortgage,” Merkley said. “Because foreclosures can damage home values across an entire neighborhood or city, this kind of assistance benefits all homeowners in the area, even those who aren’t at risk of losing their home.”
According to U.S. Rep. David Wu, representing Oregon’s 1st Congressional District, the funds would help many homeowners “avoid mortgage delinquency and keep their homes.”