ABC News' Yunji de Nies and Jon Garcia Report:
Later today, the President will announce administration plans to allocate $1.5 billion of TARP money toward funding state Housing Finance Authorities (HFAs) in the five states hardest hit by the housing crisis. President Obama will focus on the issue of housing at two events in Las Vegas, where he will be joined by Senator Harry Reid (D-NV).
HFAs in California, Florida, Nevada, Arizona, Michigan will have access to new money. Each of those states has seen home values decline by 20% or more, according a senior administration official, who spoke about the President’s announcement on background. The funds will not be allocated equally, but given out based on which states have the biggest need and whose HFAs can demonstrate they can use the money most effectively.
“Primary criteria will be price declines and unemployment,” the senior administration official said.
The White House believes HFAs are the best way to distribute the money, because unlike the federal government, the local agencies understand the specific needs of each community.
“They’re doing lots of different things, they’re deeply knowledge of the local markets,” the official explained, “And they’re up and running.”
Because the money is funded out of TARP, the White House says there will be great attention to accountability and transparency. All programs that benefit will be posted online, and the administration is encouraging HFAs to “go out and innovate.”
The White House believes the new funds will amplify what many of these agencies are already doing: giving out loan guarantees, grants, helping struggling home owners avoid foreclosure.
The official said the President recognizes that this single allocation of money will not solve the massive foreclosure crisis, but pointed that conditions have improved dramatically from one year ago. The official pointed to housing futures, which the official said show markedly different view of the future of housing. Still there are major issues in many real estate markets, which this official said was also tied deeply to unemployment. That is why the money directed toward the HFAs will be granted on the basis of both.
“It’s not going to solve this catastrophically large problem,” the official said, “It’s going to help.”