WASHINGTON — Despite the ongoing flood of home foreclosures that has rocked Indiana for almost two years, the state failed to qualify for a $600 million federal program aimed at assisting floundering homeowners.
The Treasury Department announced Tuesday that five hard-hit states — including Ohio — will receive aid under the second round of the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets program, with the money targeted for individuals who are unemployed and can't afford their mortgages.
In a conference call with reporters, Assistant Treasury Secretary Herbert Allison said the states were selected because they had the highest percentage of residents living in counties with unemployment rates in excess of 12 percent.
"What we're trying to do is look at areas hardest hit by the problem," Allison said.
Five states split federal aid package
Five other states, including Michigan, split $1.5 billion in an earlier housing assistance round. Andy Fisher, press secretary for Sen. Richard Lugar, R-Ind., said Indiana wasn't included in either round because it didn't meet Treasury Department criteria.
"It is determined by formula, and Indiana does not qualify," he said.
That doesn't mean Indiana is in good shape on the foreclosure front. A report issued in March by RealtyTrac, which describes itself as the leading online marketplace for foreclosure properties, said Indiana has the nation's 17th highest foreclosure rate in 2009 and that some parts of the state, including Evansville, have been hit particularly hard.
According to RealtyTrac's most recent count, Vanderburgh County alone has 460 properties in some type of foreclosure. There were a reported 69 foreclosures in February — one for every 1,202 housing units. Homeowners in the 47713 ZIP code area were hit hard in February with nine foreclosures — one in every 773 housing units.
State foreclosures run above average
Statewide, there were 33,091 foreclosures in February, one in every 640 state housing units, well above the national average of one in every 418 housing units.
While Indiana failed to qualify for the program, federal assistance still may be on the way for distressed Hoosier homeowners.
The administration of President Barack Obama recently announced plans to modify a previously announced $75 billion Home Affordable Modification Program to prevent foreclosures with an eye toward assisting the jobless and those who owe more on their mortgages than their homes are worth.
The administration hopes the new program will help between 3 million and 4 million families nationwide avoid foreclosure.
Under the plan, unemployed homeowners will receive a three-to-six month break on making their house payments, spending no more than 31 percent of their monthly income on mortgages.
Lenders offer refinanced loans backed by the Federal Housing Administration.
Experts blame the increase on the number of people who were unemployed for long periods and a housing surplus.