March 29, 2010

RI to Receive $43 Million in Federal Aid for “Hardest Hit” Housing Fund

WASHINGTON, DC — At the request of U.S. Senators Jack Reed (D-RI) and Sheldon Whitehouse (D-RI), the Obama Administration today announced they are expanding their “Hardest Hit” federal housing aid program to Rhode Island, providing an additional $43 million in foreclosure prevention funding throughout the state.

The Hardest-Hit Fund is a flexible source of federal aid that may be used by housing finance agencies to help protect neighborhood home values, assist “underwater” borrowers who owe more than their homes are now worth, and for other programs to encourage sustainable and affordable homeownership.

“This is great news for Rhode Island. This federal aid will be a big help to families and communities that have been hit hardest by the foreclosure crisis,” said Reed, who led the effort to expand this funding to Rhode Island.

“The recession hit Rhode Island earlier and harder than most states, and our foreclosure crisis continues to be the worst in New England. Given the depth of the downturn in our state, Rhode Island needs special attention from Washington, and the foreclosure mitigation funds announced today are a welcome step. Too many families needlessly face foreclosure due to uncooperative loan servicers and bureaucratic red tape, and I’m pleased that our advocacy on behalf of these familes, has resulted in this $43 million which will help many Rhode Island families avoid the tragedy of losing their home,” said Senator Whitehouse.

When the Obama Administration announced the program last month, the President stated: “The goal is to target communities at the center of the crisis and to empower local agencies that know these communities best.”

But under the Administration’s original formula, the only states eligible for the federal help were those with home price declines over -20%, and only five states (Nevada, -49.9%; California, -38.9%; Florida, -37.4%; Arizona, -36.8%; and Michigan, -24.1%) met that criteria.

In a March 1st letter to President Obama, Senator Reed argued that the Administration didn’t fully take into account how hard states like Rhode Island had been hit by the foreclosure crisis, writing:

“I am deeply disappointed that the recent proposal to assist the nation’s hardest hit housing markets excludes Rhode Island. Given the severe economic conditions in my state, I am concerned that this exclusion runs contrary to our shared goals of providing assistance to homeowners who need it most. As such, I urge you to expand this effort to other impacted states such as Rhode Island.”

Rhode Island has the seventh-highest rate of price decline in the country, at -17.2%, but it also has the third highest unemployment rate, 12.7%, and the highest rate of seriously delinquent mortgages in New England.

“The federal government should help states that have been hit the hardest by the mortgage crisis and Rhode Island is one of those states that needs help. I am pleased there is bipartisan support for this program and that Rhode Island will now receive this much-needed federal assistance,” said Reed, a member of the Banking Committee, which oversees federal housing programs. “The Obama Administration inherited the foreclosure crisis from the Bush Administration, and President Bush’s inattention to this issue made President Obama’s challenge more difficult. But we are seeing signs of progress and President Obama is demanding more from banks, delivering real assistance to the middle-class, and doing everything he can to restore economic growth.”

The other four states receiving federal aid are: North Carolina, Ohio, Oregon, and South Carolina. The five selected states together have 40 percent of the population in the five states that have already benefited from the program, and accordingly these additional funds are equal to 40 percent of the initial allocation of $1.5 billion.


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Meaghan McCabe, (202) 224-2921