Treasury marks $2B in bailout funds for foreclosure aid

The Obama administration on Wednesday announced it is directing another $2 billion in financial bailout money to battered housing markets.


The money is the third payout from the administration’s “Hardest Hit Fund,” which was created earlier this year to fund programs in parts of the country with severe housing market problems.

The program, which now sports a $4.1 billion price tag, has come under fire from Republicans, who say the program puts taxpayer money at risk. The special inspector general over the Wall Street bailout is auditing the program.


Assistant Treasury Secretary Herbert Allison said Wednesday that the $2 billion is the third round of foreclosure aid under the program so far, coming on the heels of an initial funding round of $1.5 billion and a second round of $600 million. The money has so far gone to state housing finance agencies in 10 states.

The first round of funding announced in February was designed to help states that had home-price declines of at least 20 percent from peak market levels. That program divided the $1.5 billion among five states: California ($700 million), Florida ($418 million), Michigan ($155 million), Arizona ($125 million) and Nevada ($103 million).


Lawmakers in other states, including Ohio and Rhode Island, criticized the first program for neglecting their states. The Treasury Department on Wednesday announced the $600 million second round would be divided up among Ohio ($172 million), Rhode Island ($43 million), North Carolina ($159 million), Oregon ($88 million) and South Carolina ($138 million).


The $600 million is being directed to state housing finance agencies in areas of the country with high unemployment.


Rep. Darrell Issa (R-Calif.), the ranking member on the House Committee on Oversight and Government Reform, has repeatedly criticized the program, saying recently, “As with other foreclosure-mitigation programs, taxpayers are in the dark about how their money will be spent and whether the spending has been effective.”


Treasury is working with the Department of Housing and Urban Development to design the third round of funding. Treasury officials said it would be tied to unemployment.


“The standards and states have not yet been determined,” Allison said. “Before too long we ought to be in the position to make an announcement.”