The Florida Housing Finance Corp. starts taking applications Monday morning from struggling homeowners for mortgage assistance from the federal government’s Hardest Hit funds. The state-owned corporation had planned on providing as much as $35,000 over 18 months to each qualified homeowner. But at the direction of Florida Gov. Rick Scott, it scaled back the program to offer only $12,000 over six months.
Scott, who earlier this year refused to take federal transit dollars for a Tampa-to-Orlando high-speed rail project, agreed to accept the federal mortgage assistance with the caveat that it be spread among more recipients. Scott’s six-month proposal is expected to assist 40,000 homeowners, while the previous, 18-month version would have assisted about half that many.
But the risk associated with cutting back each homeowner’s slice of assistance is that the person will not find work by the time the aid runs out in six months — and so would once again face foreclosure. In that case, the government money would have only delayed the inevitable.
"Some of us have a concern that six months isn’t long enough to help the people who really deserve help," said Len Tylka, chairman of the Florida Housing Finance Corp. The government-owned operation is taking homeowners’ applications for assistance at the website http://www.flhardesthithelp.org/.
Tylka said he knows from the experience of at least one family member that finding a job can take months and months, even when a job seeker is diligent, educated and experienced. The Florida Housing Finance Corp.’s "biggest concern," he added, is that the money could wind up being wasted if recipients don’t find work within six months and end up losing their homes after all.
He said he would rather target 20,000 homeowners and get them through their tough times than reach out to 40,000 homeowners for a shorter period that increases the risk they will still default on their mortgages. The money, he noted, is intended only for deserving homeowners and not those who purchased homes they couldn’t afford in the first place.
"We’re going to watch this like a hawk and take the battle to the next level if we have to," Tylka said. "If we find this is not working, I will be wanting to make modifications."
The shortened duration of Florida’s mortgage assistance is not the only issue being raised. U.S. Sen. Bill Nelson, D-Fla., has criticized the state for being slow in distributing the money, which originally sprang from the federal government’s economic-stimulus program. The Florida Housing Finance Corp. had planned to go statewide in February, but the rollout was delayed when the governor reviewed the program and asked for changes.
Among the five original states slated to get Hardest Hit funds, Florida is the last to roll out its program, according to the U.S. Treasury Department.
California has provided assistance to more than 146,000 households since launching its program in January, said Linn Warren, director of Keep Your Home California. Like Florida, California has limited its mortgage-assistance window to six months, but the group has tailored its Hardest Hit spending plan to reach more than just the unemployed.
The California Housing Finance Authority dedicates part of the federal money to a Transition Assistance Program, which provides money to mortgage-defaulting homeowners to help them relocate to more-affordable housing.
And, unlike Floridians, Californians may be eligible to receive as much as $50,000 in Hardest Hit funds to reduce the mortgage principal they owe on the home — if the lender matches the assistance dollar-for-dollar and modifies the loan to make it affordable. So far, lenders haven’t been eager to participate in that, Warren said. But Bank of America is part of a related pilot program, and GMAC and a few smaller lenders have begun to work with the agency on principal write-downs.
"We think (lenders) are becoming more interested in this as an option," he said. "We think it’s a good idea. It’s good for the borrower. It makes mortgage modifications sustainable."
In Florida, homeowners getting help from the Hardest Hit funds will have to contribute a minimum amount to each monthly payment; qualified applicants who are past due on their mortgage payments may also tap as much as $6,000 to make their loan current.
The funds have to be repaid if the homeowner sells the property within five years. If the home is foreclosed on within five years, the federal money is written off.
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source http://www.bostonherald.com
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