After Ohio Was Initially Excluded from Hardest Hit Fund in 2010, Brown Helped Secure $570 Million to Help Homeowners, Communities Affected by Foreclosures
Tuesday, – June 19, 2013 – (RealEstateRama) — WASHINGTON, D.C. – Ohio has nearly $375 million remaining in its allotment through the Hardest Hit Fund, federal funds which U.S. Sen. Sherrod Brown (D-OH) helped secure in 2010. Today, Brown urged Governor Kasich to balance the important needs of housing counseling and foreclosure prevention resources with the need to demolish vacant and abandoned homes that have blighted communities.
“I ask that you carefully balance the interests of communities, individual homeowners, and housing counseling agencies,” Brown wrote in his letter to Kasich.
As a member of the Senate Committee on Banking, Housing, and Urban Affairs, Brown is a longtime champion of foreclosure mitigation efforts. When the Senate passed a housing bill in 2008, Brown successfully passed an amendment that provided an additional $80 million in mortgage counseling funds. When Ohio was not among the initial five states included in the Help for the Hardest-Hit Housing Markets (4HM) program when it was launched in February 2010, Brown made direct appeals to President Obama and then Treasury Secretary Geithner to dedicate additional funds for this program. At the behest of Brown, the 4HM program, which uses leftover funds from the TARP program passed in 2008, was expanded in March 2010 to cover Ohio.
The Hardest Hit Fund (HHF) has provided the Ohio Housing Finance Agency (OHFA) with more than $570 million in funds that can be used in a flexible manner to address our state’s local housing issues. Almost $200 million has been spent on a variety of programs that help Ohioans stay in their homes, including direct assistance to borrowers and help for local housing counselors to assist homeowners. Of the more than 10,000 Ohioans who have received assistance to date, the overwhelming majority have been able to remain in their homes. In fact, less than one-half of one percent of participants has lost their homes through a sheriff’s sale.
Despite the success of HHF in Ohio, many communities have expressed the need for flexibility in how the funds are spent, including an allowance for demolition of vacant and abandoned homes. In 2009 and 2010, Brown helped secure more than $484 million in demolition funding through the three rounds of the Neighborhood Stabilization Program (NSP).
In 2012, Brown wrote to the Treasury Department and the Department of Housing and Urban Development urging them to allow Ohio flexibility for demolition. Now that Michigan has received approval to spend a portion of its HHF funds for demolition, it is expected that Gov. Kasich will formally request similar flexibility for Ohio. Brown’s letter to Kasich urges support for flexibility, while asking that a portion of the HHF funds continue to be used for foreclosure prevention efforts. A full copy of the letter follows:
June 18, 2013
Governor John Kasich
Riffe Center, 30th Floor
77 South High Street
Columbus, OH 43215-6117
Dear Governor Kasich:
As you know, Ohio’s housing market has faced substantial challenges for more than a decade. Our state experienced a sustained exodus of manufacturing jobs from some of our major metropolitan areas at the same time that unsavory lenders were peddling predatory mortgage products to unwitting homeowners. Ohio had more than 70,000 foreclosures last year alone – more than triple the number of foreclosures in 1995 – and 30 percent of Ohio homeowners are “underwater” in their mortgages, owing more than the value of their home.
In response to the economic crisis, Congress enacted the Emergency Economic Stabilization Act, which enabled the United States Treasury Department to provide the Ohio Housing Finance Agency (OHFA) with more than $570 million through the Hardest Hit Fund (HHF). These funds were to be used in a flexible manner to address our state’s local housing issues. Almost $200 million has been spent on a variety of programs that help Ohioans stay in their homes, including direct assistance to borrowers and help for local housing counselors to assist homeowners. Of the more than 10,000 Ohioans who have received assistance to date, the overwhelming majority have been able to remain in their homes. In fact, less than one-half of one percent of participants has lost their homes through a sheriff’s sale.
However, one important activity was previously ineligible for HHF funding – demolition of vacant and abandoned properties. Members of the Treasury Department, Department of Housing and Urban Development, Congressional offices, and local think tanks and non-profits discussed the importance of demolition at the September 2012 Interagency Meeting on Residential Property Vacancy. Until recently, the Treasury Department interpreted the law as requiring programs to “maximize assistance for homeowners,” “minimize foreclosures,” and “facilitate loan modifications to prevent avoidable foreclosures.” Despite this legal constraint, the Treasury Department recently approved the State of Michigan’s plan to use HHF funds to demolish vacant and abandoned structures.
Ohio communities clearly need more resources to support demolition. In 2009 and 2010, Ohio received more than $484 million in demolition funding through the three rounds of the Neighborhood Stabilization Program (NSP). I understand that OHFA is planning to follow Michigan’s example, and has spent several months exploring using a portion of its HHF funds for demolition – including submitting a concept paper and meeting with stakeholders. I applaud these developments and support OHFA’s efforts to construct a plan within the next two months to establish a demolition program using HHF funds.
I ask that you carefully balance the interests of communities, individual homeowners, and housing counseling agencies. Housing counselors in particular have faced challenging times of late. With so many in Washington calling for more and more austerity, federal housing counseling programs have been cut to levels so low that homes and jobs are being sacrificed. It would be tragic to cut their budgets any further. To ensure that such worthy organizations continue to receive vital funding through HHF, and that homeowners continue to receive direct assistance, it seems appropriate to allocate roughly 25 percent of the remaining $374 million in HHF funds to demolition.
United States Senator
Cc: Mr. Douglas Garver, Executive Director, Ohio Housing Finance Agency
Mr. Don Graves, Deputy Assistant Secretary for Small Business, Community Development and Housing Policy, U.S. Department of the Treasury