Sergio Munoz has a problem with something called the Hardest Hit Fund.
I qualified the moniker "Hardest Hit Fund" with the phrase something called because, whatever it is, no one really knows about it. That’s precisely the problem Munoz perceives: No one knows about the Hardest Hit Fund (which I’m going to henceforth abbreviate to HHF), and for those who really need it, the HHF should not be ignored.
To that end, Munoz in 2012 launched a nonprofit organization, Help Share The Word, to create awareness, especially among the needy, for the HHF.
OK, so what is it?
In 2010, the Obama administration unveiled the Hardest Hit Fund to help homeowners avoid foreclosure in the regions of the country hardest hit by dramatic home price declines and unemployment. The $7.6 billion in funding for HHF came from TARP and was allocated by the U.S. Treasury Department to the 18 economically hardest-hit states and the District Columbia.
If you’re wondering if your state is on the list, here are the members of the busted fraternity: Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, South Carolina and Tennessee.
Each state works the HHF differently. For example, the North Carolina Prevention Fund pays an unemployed worker’s mortgage for up to 24 months (up to $24,000) while they are enrolled in an educational or training program or searching for a new job. The funds are provided as zero interest loans, which does not have to be paid if the homeowner lives in the home for 10 years.
In the Great Lakes region, the Michigan Homeowner Assistance Nonprofit Housing Corp., through an entity named Through A Step Forward, designed forgivable loan programs to help homeowners who have had financial hardship.
Those programs include: mortgage payment assistance for homeowners receiving unemployment compensation; rescue funds for homeowners who have fallen behind in their mortgage due to no fault of their own; and matching funds for principal reductions.
Earlier this year, I read a story from the Las Vegas Review-Journal that reported Nevada’s Hardest Hit Fund paid out nearly $17 million through third-quarter 2012. The news article also mentioned there were 52 principal reduction approvals in the second quarter of 2012, doubling the number since the U.S. Treasury allocated $194 million in Hardest Hit funds for Nevada back in 2010.
To me it sounds like the HHF money has been reaching its targets.
Munoz says no — distressed homeowners are still suffering.
"Nine out of 10 people are not even aware the HHF even exists," Munoz said. "They are vaguely familiar with what TARP is."
For those of you who have forgotten, TARP stands for Troubled Asset Relief Program, which in its original iteration was a government program to purchase assets and equity from financial institutions to strengthen the financial sector. Guess what, it was signed into law, not by President Barack Obama, but by President George W. Bush. Yes, this program dates back to 2008.
Munoz sent me an op-ed piece he wrote, which stated, "While these funds are provided through the Housing Finance Agency of eligible states and the District of Columbia, many people are unsure of how to access the funds and are unaware that they are available today to help … options for relief have been available, but navigating the maze of information has become increasingly difficult."
I gave Munoz a call.
"The message about the HHF is not getting out," Munoz said.
According to the latest report from the Treasury Department, HHF had provided $742.2 million in assistance to about 125,000 borrowers through Sept. 30. Another $199.6 million had been spent on administrative support, outreach and counseling.
Nearly nine out of 10 borrowers receiving assistance had income of less than $50,000. More than 215,000 borrowers have applied for HHF assistance, and about 62,000 were denied. While 77,000 borrowers were receiving assistance at the end of September, another 48,000 who were once receiving assistance had withdrawn from the program.
While only fraction of the funds earmarked for the HHF have been spent, state Housing Finance Agencies have until the end of 2017 to use the money allocated to them.
Actually, I wasn’t surprised to hear that HHF has been underutilized, since TARP has always had a problem getting its message out. So, I asked Munoz what does Help Share The Word aim to do?
"We saw there was a need for information," he said. "We thought we could bridge the gap between knowledge and need. We are setting out to create an awareness campaign for the Hardest Hit Fund in the 18 states where the fund is accessible."
Sounded to me like a commendable idea, but what was the game plan?
"One of the ways we want to get the message out is through the media," Munoz said. "But, we also have a business-to-business plan. If you are a large employer in a given city, we want to co-market with you because you might have employees or vendors that have homeownership problems. Whoever is in the periphery, how can we help share the word about foreclosure prevention?"
Help Share The Word has a website, www.helpsharetheword.org, that provides links to official websites set up by state Housing Finance Authorities to help borrowers tap into the HHF, and warns borrowers away from companies that want to charge for assistance.
Help Share The Word is also producing videos that Munoz hopes will go viral.
A video produced by Help Share The Word has more than 22,000 views since being uploaded to YouTube.com in July.
"One of the issues we are encountering," Munoz said, "is that the media is kind of running from this, because in the past TARP has had some problems. Nevertheless, we feel this issue is different and can help people if we can get the message out."
Foreclosure is a problem across all economic classes, Munoz said.
"People who have been paying their mortgages on time suddenly encounter an unforeseen hardship such as divorce, medical bills, unemployment, etc. All of a sudden they are hurting and need help. Just like in 2008 when the banks and the insurance companies got help when they were hurting, people can get help, but it’s not as easy as just calling up Goldman Sachs and saying, ‘We need some money.’ The homeowner doesn’t really have the resources as to how to find out that this help really exists."
Munoz really believes the HHF can be effective for one very important, tangential reason other than financial support.
"When people facing foreclosure apply for HHF programs, in most states they get a dedicated HUD-certified counselor who will assist them to see how they can get help with whatever problems they are having with their mortgage," he said. "Even if they don’t qualify for the HHF, that certified counselor would be able to recommend other programs that they might qualify for."
To which, he added, "It is almost like having a public defender for your mortgage."