- Associated Press - Friday, February 20, 2015

LOS ANGELES (AP) - California still has about $1 billion in federal aid to hand out to victims of the housing market crash, according to a newspaper report.

The state has delivered less than half of $2 billion in the fund aimed at helping homeowners in communities where home prices collapsed and unemployment spiked, the Los Angeles Times said Thursday (https://lat.ms/1vltQSm ).

Starting in 2010, the Treasury Department’s Hardest Hit Fund provided a total of $7.6 billion to 18 states and the District of Columbia, allowing them to customize relief for hard-hit areas.

The state’s version, called Keep Your Home California, included a focus on helping banks finance debt forgiveness by reducing mortgage principal.

It also made payments for the unemployed, helped delinquent owners catch up on payments and provided assistance in finding affordable housing for borrowers who lost homes in short sales.

California had delivered or committed just over 44 percent of its available funds as of Sept. 30, the newspaper said, citing Treasury Department data. That put it in a tie with Mississippi for 12th place, out of the program’s 19 participants, in the percentage of funds delivered. Oregon and Rhode Island, by contrast, had already delivered or committed more than 90 percent of the federal funds they were given.

A Keep Your Home spokesman, Steve Gallagher, said he expects all the federal funds will be distributed by the end of 2017, when the program expires.

“The economy is getting better,” Gallagher told the Times. “But there are still a lot of people in real trouble, and in some areas of the state there are still quite a few underwater homeowners.”

Officials have attributed California’s slow pace of distributions to a number of problems, including the early emphasis on mortgage principal reduction. Most banks, along with Fannie Mae and Freddie Mac, declined to accept the program until the state agreed to shoulder its entire cost.

California had initially pushed the banks to pay for half of the cost of debt forgiveness. The goal of the program was to reduce homeowners’ debt to match the reduced value of their homes.

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Information from: Los Angeles Times, https://www.latimes.com/


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