Millions for Home Foreclosure Prevention Program Unspent in R.I.

June 20, 2012

Only about one-third of the more than $79 million available from a federal foreclosure prevention program in Rhode Island has been spent to help struggling homeowners, officials said this week.

R.I. has the highest foreclosure rate in New England and one of the highest in the country.
Rhode Island Housing, the quasi-public agency that administers the Hardest Hit Fund in the state, said that about $25 million had gone to nearly 1,700 homeowners by the end of May. Officials say another $6 million in assistance to 300 more homeowners has been approved but not finalized.

Richard Godfrey, executive director of Rhode Island Housing, said the program got off the ground slowly and fewer people have applied than expected, in part because some are not used to accepting government help.

Officials at the Treasury Department, which oversees the program at the national level, have also cited lender reluctance to participate as one of the early challenges, saying some national providers had concerns about working out operational details with the 19 jurisdictions where the program exists.

Godfrey said the spending pace has accelerated in Rhode Island and that all of the funds are expected to be allocated in the next 18 months.

Rhode Island has the highest foreclosure rate in New England and one of the highest in the country.

Said Godfrey: “Perhaps no state, other than Nevada, is more hard hit by the double whammy of declining home values and unemployment.”

Some states have spent a far lower percentage of their Hardest Hit Fund allocations than Rhode Island. Andrea Risotto, a Treasury Department spokeswoman, said that as of the end of May, states had drawn almost $1 billion from the $7.6 billion available to help homeowners make their mortgage payments. As of the end of last month, about $650 million of the total — or about 9 percent — had actually been spent, she said, though “much more” has been committed.

At a news conference at Rhode Island Housing headquarters Monday, Mary Miller, undersecretary for domestic finance at Treasury, held up Rhode Island as a leader but said that many more people can be helped under the program.

“The states had to build them from scratch,” she said in an interview. “It just took a while.”

Treasury officials say that, in the first quarter of this year, there was a 40 percent increase in the number of participants nationally, and a 60 percent increase in aid spent on their behalf. The funds are available through 2017.

President Barack Obama started the Hardest Hit Fund in 2010 to provide assistance to the states most affected by the housing and economic recessions. It operates in 18 states and the District of Columbia.

Rhode Island was selected in the second round of recipients because of its high unemployment rate, which stands at 11 percent. Rhode Island Housing began accepting applications statewide in December 2010, the agency said.

Jay Harding, 36, and his wife started having trouble making the payments on their three-bedroom home in South Kingstown in 2010. He had a change in employment that meant a 25 to 30 percent cut in income, paired with increased expenses from a second child.

They blew through their savings, and got some help from his parents, but soon weren’t going to be able to make their payments. They couldn’t sell _ they were underwater.

The first time Harding applied to the Hardest Hit Fund, he was rejected, he said. But he applied again after the program eased its requirements.

Harding, who now has a civilian environmental-services job with the Rhode Island National Guard, hopes more people take advantage of the program.

“There’s more money left than what they’re giving out,” he said. “Word doesn’t seem to get out in a big enough way. I don’t think they’re connecting with enough people.”

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