RI ramps up spending on foreclosure prevention

PROVIDENCE, R.I. (AP) -- Rhode Island has spent over 60 percent of $79 million available in a federal foreclosure prevention program, and housing officials say the state is on track to draw down the rest in the coming months.

Nearly $48 million in Hardest Hit Fund money had gone to about 2,560 homeowners by the end of December, Rhode Island Housing officials said Thursday. Over $5 million more has been approved but not finalized. The funds generally go toward mortgage payments made on behalf of qualified homeowners.

The spending was slow at first partly because fewer people applied than expected; federal officials also said some lenders initially resisted participating. But Rhode Island Housing, the quasi-public agency that administers the Hardest Hit Fund program in the state, says it will stop accepting applications at the end of January because it expects to have the rest of the money committed.

Rhode Island Housing Executive Director Richard Godfrey described the program as highly successful ? so successful, in fact, that the agency has asked the state's congressional delegation for $35 million more. The additional funding would allow the agency to extend the program for a year and help about another 1,200 homeowners make their mortgage payments, he said.

"We're very sad that we've run out of money because Rhode Islanders are still struggling," Godfrey said.

Andrea Risotto, a spokeswoman for the U.S. Treasury Department, which oversees the program, said the overall funding level is capped under federal law at $7.6 billion, and the amount each state is getting is also set. Chip Unruh, a spokesman for U.S. Sen. Jack Reed, said the delegation has asked Treasury if unspent funds from other Hardest Hit states might be used in Rhode Island.

The Obama administration launched the Hardest Hit Fund in 2010 to provide assistance to the states most affected by the housing and economic downturns. It operates in 18 states and the District of Columbia. Rhode Island was selected because of its high unemployment rate, which is now 10.4 percent.

Rhode Island has spent its Hardest Hit money faster than many other states. According to Treasury, states had committed $1.7 billion of the total ? or about 22 percent ? through November on behalf of homeowners in the program. In Rhode Island, Godfrey said the average total assistance is about $18,500.

Rhode Island Housing also does foreclosure mediation and conciliation for five municipalities ? Providence, East Providence, Cranston, Warwick and Warren ? but Godfrey said mediation efforts often come too late. The process doesn't start until the lender has already notified the homeowner it intends to foreclose, and by the time cases are referred to a coordinator, many homeowners have already left.

"It comes very late in the process and many of the folks have already given up and been displaced," he said. "We really need to compel mediation earlier in the process."

Coordinators received 1,828 letters of intent to foreclose last year in the five jurisdictions, according to Rhode Island Housing. But they were able to make contact with only 461 homeowners. Of those, 65 percent had their foreclosures canceled without even going to a conference. Of the ones that did go to conference, just under half had some form of loss mitigation.

Source: http://news.yahoo.com/ri-ramps-spending-foreclosure-prevention-193014486.html

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