States experiencing the worst home-price declines and unemployment are speeding up their spending of $7.6 billion in U.S. aid under a three-year-old program designed to help their residents, the Treasury Department said.
The District of Columbia and 18 states including Florida and Michigan have spent about $1.7 billion of the money in the Hardest Hit Fund, part of the Troubled Asset Relief Program. The states had spent only $511 million a year ago.
It took a while to set up aid programs, which range from loan modifications for troubled borrowers to blight removal in neighborhoods swamped by foreclosures, Treasury Assistant Treasury Secretary Timothy Massad said today.
“It does take some time for people to create the administrative structures and the controls,” Massad said in a telephone interview. “We did start to see the money going out the door fairly quickly, and now we’re seeing it accelerate because states have fine-tuned their programs.”
States including California and Arizona have used the money to provide aid unavailable under other federal programs, including reducing the balance on loans backed by Fannie Mae and Freddie Mac. The regulator of the two government-controlled mortgage-finance companies has barred such principal reductions otherwise.
Hardest Hit Funds aided 126,858 homeowners through June 30, Treasury said in the first of a series of quarterly reports on the program.