The Obama administration announced today that it will nearly double the size of a "Hardest Hit" foreclosure prevention fund to $4.1 billion, with an additional round of $2 billion in funding to state housing finance agencies that expands the program from 10 to 18 states and Washington, D.C.

The administration also said the U.S. Department of Housing and Urban Development will launch a complementary $1 billion Emergency Homeowners Loan Program to provide up to 24 months of assistance to unemployed homeowners at risk of foreclosure.

In two previous rounds of "Hardest Hit" funding, the Treasury Department funneled $1.5 billion to five states with high foreclosure rates (Arizona, California, Florida, Michigan and Nevada), and $600 million to five states with high unemployment (North Carolina, Ohio, Oregon, Rhode Island and South Carolina).

Now, the Hardest Hit Fund is being expanded to eight additional states: Alabama, which will receive $60.7 million; Georgia ($126.6 million); Illinois ($166.3 million); Indiana ($82.8 million); Kentucky ($55.6 million); Mississippi ($38 million); New Jersey ($112.2 million); and Tennessee ($81.1 million). Washington, D.C., will also get $7.7 million.

In addition, nine of the 10 states receiving funds in the first two rounds of "Hardest Hit" distributions will get additional allocations, based on population: California ($476.3 million), Florida ($238.9 million), Michigan ($128.5 million), Nevada ($34.1 million), North Carolina ($120.9 million), Ohio ($148.7 million), Oregon ($49.3 million), Rhode Island ($13.6 million) and South Carolina ($58.8 million).

Housing finance agencies in the 10 states that received the initial $2.1 billion in "Hardest Hit" funding are using the money to subsidize mortgage payments for the unemployed and provide loan modifications, earned principal reductions, and assistance for reducing or eliminating second loans.

States that have already received Hardest Hit funding will be allowed to use the additional allocations to support unemployment programs previously approved by Treasury, or they may opt to implement a new unemployment program.

Arizona, which was awarded $125.1 million in the first round of Hardest Hit funding to five states with high foreclosure rates, was the only one of those states to not receive additional funding.

A Treasury Department spokesman said the latest round of funding is targeted at states with unemployment rates at or above the national average, and that Arizona is below the national average.

The Phoenix-Mesa-Scottsdale, Ariz., metro area was the only one of 20 markets recently identified by RealtyTrac as having the highest foreclosure rates in the first half of this year that did not also have double-digit unemployment in June exceeding the national average of 9.6 percent.

HUD’s new Emergency Homeowner Loan Program will build on the Hardest Hit program by targeting assistance to unemployed homeowners in other areas to help them avoid foreclosure, said Bill Apgar, HUD senior advisor for mortgage finance, in a statement.

The program will work through state and nonprofit entities, offering zero percent bridge loans with deferred payments of up to $50,000 to help eligible borrowers pay their mortgage insurance, taxes and hazard insurance for up to 24 months.

Details of the programs are expected in coming weeks. To qualify for the program, HUD said borrowers must be at least three months behind on their payments, and have "a reasonable likelihood" of being able to resume payment within two years.

Homeowners who have experienced a substantial reduction in income due to underemployment or a medical condition may also qualify, if they can demonstrate a good payment record before their income was reduced.

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