“Hardest hit” states will receive another $2 billion from the federal government.

The Treasury Department said that the additional funds will help unemployed homeowners in 17 states pay their mortgages. Treasury spokeswoman Andrea Risotto said that the government will source the money from the $50 billion allocated for mortgage modifications under the Making Home Affordable program. The allocations per state, meanwhile, were based on unemployment rates.

The official noted that extra fund is in response to growing problems brought by the housing bubble burst. “(The situation) has gone from a crisis of people with subprime mortgages to a crisis where a lot of middle-income people are suffering because of unemployment,” she said.

The $2-billion fund is the latest grant announced by the government for struggling homeowners. In February, President Barack Obama ordered the Hardest Hit Fund with 10 states included in the program. Five of those states – the ones with unemployment rates that had slipped by at least 20% – received $1.5 billion in June while the other five received $600 million this month. The $2-billion will benefit the original 10 states except Arizona. Eight new states and the District of Columbia were added to the list.

Meanwhile, states that are not considered “hardest hit” will be able to tap a $1 billion program under the Department of Housing and Urban Development.

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