and Maggie LaMont

and Maggie LaMont

When we learned in March that Oregon was to receive $88 million from the U.S. Treasury for foreclosure prevention because of our high unemployment rate and that we would have approximately six weeks to create a funding proposal and submit it to Treasury, we took a deep breath. We then exhaled and quickly dove into the task of figuring out the most efficient and equitable means to put that $88 million to work preventing foreclosure.

Oregon Housing and Community Services and Department of Consumer and Business Services staff traveled throughout the state speaking to a diverse group of stakeholders: homeowners, servicers, real estate agents, landlords and community service workers. We asked them for input on how best to allocate the funds.

In every corner of the state, people are facing the possibility of foreclosure. In all, more than 40,000 Oregon home loans are in delinquency or foreclosure today. As you can imagine, OHCS has received many calls and letters from individuals and organizations that would like to have access to the new dollars.

Under the U.S. Department of Treasury's requirements, Oregon must allocate a substantial majority of the funds to those areas of the state that are economically distressed. During our meetings around the state to gather feedback, a diverse group of Oregonians, including people from Jackson and Josephine counties, urged us to consider factors beyond the 2009 unemployment rate. They encouraged us to look at the magnitude of the increase in unemployment and changing housing values. Based on those recommendations — and in open consultation with U.S. Treasury — we worked to quantify the impact of the current recession on every Oregon county.

OHCS identified four factors that drive economic distress in the state: the 2009 unemployment rate, the change in unemployment between 2007 and 2009, the rate of foreclosure and delinquencies, and the decline in home values from their peak. We specifically chose to base our decisions on these key data points, rather than any subjective or political factors. Using the most current and reliable information available on these four measures, OHCS calculated a "housing distress index" for each Oregon county.

In total, 20 counties met the criteria of "hardest hit" or "housing distressed." OHCS proposes to allocate the substantial majority of the hardest-hit funds to these 20 counties. They include the original 16 counties (Columbia, Coos, Crook, Curry, Deschutes, Douglas, Grant, Harney, Jackson, Jefferson, Josephine, Klamath, Lake, Lane, Linn, and Wallowa), and four additional counties: Clackamas, Marion, Multnomah and Yamhill. OHCS proposed that 80 percent of the hardest-hit funds will go to these 20 counties and the balance to the remaining 16 counties in Oregon. Throughout the updating and revising of this process, we have continued to stay in communication with the U.S. Treasury.

In addition, we have included a pilot program to address deeply underwater mortgages in Deschutes and Jackson County. We propose to loan $10 million to a mission-driven organization that will buy homes at their current values and finance at the current value for the homeowner.

As we have developed our proposal, we have listened and responded to the concerns of Oregonians. We have also collaborated with the U.S. Treasury Department to ensure that Oregon receives the funds in timely fashion. Treasury will review our proposal and give us feedback in the next few weeks and we hope to begin dispersing funds by the fall.

We have been committed to remaining transparent as we create our foreclosure prevention programs, including making counties and interested parties aware of the proposal, and giving several presentations to legislative committees. Our constant goal has been to seek to help as many people as possible find a successful path out of their current mortgage dilemmas.

State and local government, nonprofits and financial institutions must work together to respond to the statewide foreclosure crisis.

Local elected officials can play an important role in encouraging lending institutions to participate actively in the Oregon Homeownership Stabilization Initiative and all other foreclosure prevention efforts. We ask for you support as we seek to help Oregonians during a time of great need.

Victor Merced is director of Oregon Housing and Community Services. Maggie LaMont is chairwoman of the Oregon State Housing Council.