Sarasota Real Estate Market News

Florida’s ‘hardest-hit’ homeowners are eligible for more aid

TALLAHASSEE, Fla. – April 30, 2012 – Florida’s struggling borrowers will get more money and more time to get back on their feet with new rules announced Friday for a $1 billion program aimed at keeping people in their homes and out of foreclosure.

The changes to the Hardest Hit Fund, which also eliminate eligibility roadblocks, validate complaints that the original plan was too optimistic in its timeline for unemployed and underemployed homeowners to turn their lives around.

Instead of six months of mortgage assistance, homeowners can now get up to a year, while the allowance to bring a loan current was increased from a cap of $6,000 to $18,000.

To minimize credit damage and reduce late fees, the money to bring a loan current will be awarded when the homeowner is approved for the program. Under the current process, the money is given at the end.

The Florida Housing Finance Corp., which oversees the program, approved the changes during a Friday meeting, but they still need federal authorization. That is expected in May.

“These changes are really good news and beneficial to a lot of Hardest Hit applicants,” said David Westcott, the corporation’s director of homeownership programs.

They also come just two weeks after a federal report criticized the program nationwide for ramping up too slowly and helping too few homeowners.

Announced in February 2010, the program has allocated $7.6 billion to 17 states and the District of Columbia to help homeowners while they look for a better job, or any job at all.

But as of the end of December, just 30,640 homeowners nationwide have benefited and just 3 percent of available money has been spent, according to the inspector general of the Troubled Asset Relief Program.

In Florida, nearly $90 million has been set aside as of April 1 to assist 4,955 homeowners statewide. About 350 Palm Beach County homeowners have received Hardest Hit money.

Cecka Green, communications director for the Florida Housing Finance Corp., said Friday’s changes were not in response to the federal report and had been in discussion for a while.

The agenda item corporation board members approved does note that just 12 percent of homeowners receiving the monthly mortgage stipends had found jobs with incomes high enough to make their loan payments affordable at the end of the six months and qualify to have their arrearages paid.

Previously, homeowners’ monthly expenses had to be below 31 percent of their gross income to get the money to bring the loan current.

That requirement was eliminated with Friday’s vote because the money will come on the front end now, Green said.

It means Deborah Stockhammer of Jupiter River Estates may qualify to have her $9,800 unpaid balance funded. Although working, Stockhammer, 59, was denied the money previously because her salary was too low.

Also, because the plan changes are retroactive, Stockhammer, whose six months expired in March, may get another six months in monthly mortgage help.

“If they give it to the people who really need it and deserve it, it will be helpful,” she said. “We’re all not just sitting home doing nothing wanting a handout.”

Another eligibility roadblock removed was a requirement that homeowners be fewer than 180 days behind on their mortgage. With the changes, a homeowner can’t be in foreclosure, but there is a limit on how long a loan can be delinquent.

Foreclosure defense attorney Mike Wasylik said the new plan is a “bigger Band-Aid, but still a Band-Aid.” He believes using the money to write down loan balances would be a better use.

“Why not make it permanent help by taking the $1 billion and putting it toward principal reduction?” he said. “This is an economic policy that’s not solving the real problem.”

Copyright © 2012 The Palm Beach Post (West Palm Beach, Fla.), Kimberly Miller. Distributed by MCT Information Services.

May 19, 2012 - Posted by | News related to Short Sales and Foreclosures

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