Bank of America initiates home loan modification offers

Homeowners with Bank of America mortgages should keep a watchful eye on their mailboxes for a letter from the bank. The lender said yesterday that it has begun mailing out letters to customers who may qualify to have their home loans reduced as part of a multi-state settlement among five major banks, 49 state attorneys general, and the federal government over alleged foreclosure abuses.

The Charlotte, North Carolina-based company estimates that more than 200,000 of its customers could qualify for a reduction in the principal balance on their mortgages.

Some customers could receive letters from the bank as early as this week, inviting them to provide financial information as part of a review process for the program. The bank plans to have mailed out most of the letters before September 30.

Bank of America estimates that customers who end up receiving the loan modifications will save, on average, 30 percent a month on their mortgage payments. Under a 30 percent reduction, a monthly payment of $1,200 for principal and interest would be reduced to $840.

Among the criteria to qualify, a borrower must owe more on the mortgage than the property is worth and be at least 60 days behind on payments as of January 31 of this year. A qualified homeowner must also have a contractual monthly payment for principal, interest, property taxes, hazard insurance, and any applicable homeowner association fees totaling more than 25 percent of gross household income.

Bank of America will reduce the amount owed by the homeowners by as much as $100,000 in some cases. Only mortgages that are currently owned by Bank of America will qualify. Those that are owned by government entities Fannie Mae and Freddie Mac, or backed by the Federal Housing Administration, will not be eligible.

The lender said it began reducing the principal balance on mortgages in March, focusing initially on homeowners who already had a loan modification bid under review. Under this initiative, the bank said it has mailed 5,000 trial modification offers, representing potentially more than $700 million in forgiven principal balances.

Under the terms of the settlement, Bank of America will seek to provide for an affordable payment to qualified under-water homeowners by first reducing the principal balance to as low as 100 percent of the current property value, then lowering the interest rate and forbearing additional principal, as necessary, to reach an affordable payment.

Florida Supreme Court to decide whether judges can punish 'robo-signing'

Lending practices in Florida "could come to a grinding halt," according to the state's bankers, depending on the outcome of a court case that could let homeowners turn the tables on lenders seeking to foreclose on their homes.

On the other hand, the plaintiff's lawyer in the case says this is the court's opportunity to put lenders on notice that sloppy and/or fraudulent foreclosure procedures by banks will not be tolerated in Florida.

The Florida Supreme Court will hear oral arguments on Thursday in the case of Roman Pino v. Bank of New York. The case should decide whether banks can be punished when they file fraudulent documents in foreclosure cases, a matter that has plagued Florida's courts as the foreclosure crisis spiraled out of control in the wake of the 2008 collapse of the financial markets.

At center stage will be "robo-signing," where banks and law firms recreated loan documents — and hired someone to sign them — because the originals could not be found.

Pino's fight for his $203,000 Greenacres home will be the test case that could reshape state law and affect thousands of foreclosure cases moving forward. The issue is whether Florida banks should be able to escape punishment if they drop a foreclosure case because they realize they have fraudulent documents. They are currently allowed to do so and then refile the case with proper documentation.

That's what Royal Palm Beach attorney Thomas Ice said happened to Pino, who took out a $162,400 mortgage on his Greenacres home in 2006. By 2008, he'd fallen behind on his payments. But when the lender filed foreclosure papers, Ice and Pino discovered that documents being used by the now-defunct Broward County law firm of David Stern — the face of the robo-signing scandal — did not appear legitimate.

The bank dropped the suit when Ice started asking questions but later refiled with proper paperwork.

That's how the system should work, the Florida Bankers Association and the Mortgage Bankers Association said in briefs filed before the Supreme Court. If not, they wrote, the "economic impact could be devastating to the State of Florida."

Ice is asking Florida Supreme Court justices to allow trial judges to reject such motions to dismiss when fraudulent documents are involved. Instead, he said, judges should order sanctions against the banks and lawyers, possibly including a ban on the bank re-filing against a homeowner who proved fraudulent documents are involved.

But the banks say that could be a major problem, arguing that sanctions would discourage banks from pursuing legitimate foreclosure cases or issuing new home loans. The banker groups argued that with the large volume of foreclosure cases in Florida, banks or their lawyers "no doubt occasionally will make clerical errors, lose promissory notes, or discover other deficiencies in their foreclosure complaints that mandate correction in the interests of fairness.

"The Court should not strip lenders and other litigants of the right to dismiss the case voluntarily, especially where it is sometimes necessary to cure alleged defects in documentation in order to avoid improprieties in the judicial process," the groups' lawyers wrote.

Oddly, Pino's case is actually moot. He agreed to a confidential settlement with The Bank of New York Mellon so that he could keep his home. Florida's 4th District Court of Appeal denied attempts by Ice to re-open the case so that he could press for sanctions.

However, after their original decision, the appellate judges asked the Supreme Court to hear the case because it was a matter of "great public importance."

As both the bankers and Ice note, a ruling in Ice's favor would allow attorneys to re-open cases in perhaps thousands of case where fraudulent documents have been used.

The case's outcome could have broad, far-reaching impacts. Even though oral arguments are being heard this week, there is no deadline by which the Supreme Court must render a decision, which could take months.

Florida wants to loosen requirements for Hardest Hit Fund program

Florida has decided to seek federal approval to ease restrictions on qualifying and to boost payments for the Florida Hardest Hit Fund (HHF), a federal mortgage assistance program designed to help unemployed or underemployed workers struggling to make monthly mortgage payments.

The move came three weeks after a federal audit was released detailing problems in the Hardest Hit Fund with getting assistance to distressed homeowners. However, a spokeswoman said the state's decision was made in response to changes made to existing federal mortgage programs, not the audit.

Under the current parameters of the HHF, qualifying homeowners can receive a maximum $12,000 over six months to keep up with mortgage payments, and up to $6,000 to pay for past-due amounts to bring a loan current. The changes sought by Florida, which require the approval of the U.S. Treasury Department, would allow those who qualify for the program to receive $24,000 over 12 months for mortgage payments or up $25,000 to bring delinquent loans up to date.

The Treasury will also consider the state's intent to ease the program’s requirements. The state wants to eliminate the requirements that a loan must have been issued before 2009 and the value of a loan not be more than twice the value of the home. Also, under the state's proposal, homeowners more than 180 days past due would be reviewed by mortgage servicers to determine their qualification, instead of being disqualified automatically, and condo associations would undergo a shorter and less expensive review for their units to qualify for HHF funds.

If the Treasury approves the changes as expected by late May, the state would implement them in June. Applications that do not qualify under the current rules are being flagged so as not to deny homeowners who would be eligible under the new parameters.

The increase in the maximum amount recipients can receive is in direct opposition to the approach Florida Gov. Rick Scott took when he took office in January 2011.

Under a pilot program in Lee County that began in October 2010, homeowners could receive up to $35,000 for up to 18 months. The statewide roll-out of HHF was originally scheduled for February 2011, but after Scott reviewed the pilot, he wanted to reduce the maximum benefits and the length of time for struggling homeowners to get sufficient employment to resume monthly mortgage payments.

At the time, it was thought that the reductions in benefits would double the amount of program recipients from 20,000 to 40,000.

But, the program struggled to help as many homeowners as originally intended. Florida was allotted $1 billion in HHF money. As of April 1 of this year, nearly one year after the program began statewide, just $101.8 million had been reserved for 5,540 homeowners, and only $20.8 million of that has actually gone to help homeowners. As detailed by the federal audit released three weeks ago, the 16 other states (and Washington, D.C.) involved in the program are experiencing similar problems.

After reviewing the results of the first year of the statewide program, Scott agreed to the changes currently being sought by the state.

Federal audit finds fault with execution of Hardest Hit Fund

Program to aid homeowners would benefit from better design and management

The Hardest Hit Fund – a $7.6-billion federal program to help homeowners avoid foreclosure – set too few goals for the 18 participating states and didn't do enough to make sure the nation's biggest banks were on board, according to a government audit.

The audit criticized the U.S. Treasury Department for rolling out the Hardest Hit Fund program with no advance notice in February 2010, then leaving the states to implement it on their own. The report, written by a special inspector general, points out that it took seven months before the federal government met with the states, banks, and mortgage giants Freddie Mac and Fannie Mae to help gain participation in the program.

The 76-page audit will be released today by the special inspector general for the federal Troubled Asset Relief Program, or TARP, best known for bailing out the nation's banks after the financial crisis.

"The TARP money went out to banks within days, but here you only have 30,000 homeowners helped after more than two years," Christy Romero, the special inspector general for TARP, said in an interview, referring to the Hardest Hit Fund program.

Romero said the lack of any measurable goals for the program creates the appearance that the Treasury Department is trying to avoid accountability to "Congress and taxpayers who funded TARP." Even though the states deliver the Hardest Hit Fund money, Romero added, "it's not a state program — it's a federal program with Treasury as its overseer."

The U.S. Treasury Department acknowledged in a written response that Hardest Hit Fund program started slowly, but it said each state had to build systems to run and monitor its programs "from scratch." It said the programs were gaining traction and would continue to help homeowners well into the future.

The Hardest Hit Fund was designed to provide cash so states with high unemployment and depressed housing markets could devise their own programs in five relief categories, including making mortgage payments for unemployed homeowners and writing down principal on troubled loans.

As of Jan. 1, 2012, only 3% of the $7.6 billion available nationally had been distributed. Keep Your Home California, the Golden State's version of the program, had distributed less than 2% of California's nearly $2-billion slice of the funds.

In Florida, progress has been slow as well. As of April 1, the state has approved 4,955 of the 27,541 completed applications it has received and has paid out $20.9 million. About $90 million has been reserved, but under the Florida program, applicants are allotted a no-interest loan of $18,000, the maximum amount they could draw down, and are given monthly installments to aid mortgage payments. At Florida’s current pace, by the time the program ends in 2017, about 30,000 homeowners will have received $540 million – 10,000 fewer homeowners than intended and $460 million short of Florida’s total allocation.

The federal audit said the program's single goal was "to help prevent foreclosures and preserve homeownership." The U.S. Treasury Department was blamed for not setting specific goals for the states to achieve.

In its response, the Treasury Department said that setting numerical goals for distribution of funds and homeowners to be helped — "a one-size-fits-all approach" — would violate the aim of the program. It said states need more flexibility to devise and adapt their own approaches to healing troubled housing markets.

The funds are kept at the Treasury until the states identify uses for them, and then they flow through special nonprofit agencies, not state coffers.

The audit said 95% of the Hardest Hit Fund help provided to homeowners so far has been unemployment assistance or payment of past-due amounts — the only assistance that Fannie and Freddie directed the banks and other mortgage servicers to participate in.

Because the states have little bargaining power with national financial firms, the Treasury "should have been, and still should be, the driving force" in getting Fannie, Freddie and the banks onboard, the audit report said.

It quoted an unidentified housing official as saying the $1 billion provided to Florida "has been a nice carrot to use with servicers in Florida, but there is no stick with the carrot to force servicers to participate."

The U.S. Treasury Department said it can't compel participation in Hardest Hit programs but had "actively and consistently engaged" with the banks, Fannie and Freddie "from the earliest stages of the program, encouraging support and addressing impediments to participation."

The audit contains a number of recommendations for the U.S. Treasury, including that the Treasury should:

• Publish on its web site on a quarterly basis the total number of homeowners assisted by the Hardest Hit Fund, amounts drawn down by states, and dollars expended for assistance provided to homeowners; and
• Develop an action plan for the Hardest Hit Fund that includes steps to increase the numbers of homeowners assisted and to gain support from the banking industry.

The U.S. Treasury indicated it will address the audit's recommendations at a later date. The Hardest Hit Fund program is scheduled to conclude operations in 2017.

Foreclosure complaints against lawyers swamp Florida Bar

The Florida Bar has fielded nearly 1,400 complaints against attorneys relating to the housing crisis, an unprecedented amount that has buried investigators and forced the group to rethink how it will handle widespread grievances in the future.

Beginning in the fall of 2010, as foreclosures receded because of robo-signing revelations, a wave of consumer complaints alleging attorney misconduct began to hit the Bar.

The complaint categories – mortgage fraud, foreclosure fraud, loan modification misconduct – didn't even exist three years ago, said Ken Marvin, director of lawyer regulation for the Florida Bar. His first recorded loan modification complaint was in November 2010. Today, 793 cases have been opened.

"They just started coming in and the numbers were incredible," Marvin said. "We never even had a loan modification category or mortgage fraud or foreclosure fraud, and we had to create all of this because we wanted to track these reliably."

The Bar hired an additional attorney to specifically process foreclosure and mortgage complaints, which make up about 17 percent of all open Bar cases.

As of late March, 208 of the 1,394 housing-related cases have resulted in some kind of disciplinary action against an attorney, which can range from a public reprimand to disbarment.

But while foreclosure fraud may be the most high-profile type of case following the collapse of the Law Offices of David J. Stern last year, no punitive actions have been taken so far against an attorney in that category. Of 377 foreclosure fraud cases opened, 234 are still pending.

Specifics of the Bar investigations are not public, but foreclosure complaints generally include forged signatures on court documents, bad notarizations, and backdated paperwork.

David Stern, who remains a member in good standing with the Bar, is less of an investigative priority because he "is no longer in a position to potentially harm the public," Marvin said. Of a more pressing concern are attorneys still doing business, including those performing loan modifications – the largest housing-related complaint category investigated by the Bar.

Of the 793 loan modification cases opened since late 2010, disciplinary actions have been taken in 137 cases, including three disbarments.

Florida's attorneys became more involved in the loan modification business following a 2010 law requiring loan modification businesses to be state-licensed and a 2008 law that banned companies from collecting upfront fees. However, the law excludes attorneys from the prohibition, and many attorneys found themselves solicited heavily to front loan modification firms so the firms could continue doing business.

In August, Boca Raton attorney William O'Toole was put on emergency suspension when the Florida Supreme Court said his home loan modification and foreclosure defense business was causing "great public harm." O'Toole's Summit Legal Group worked with as many as 3,000 clients nationwide who paid between $1,500 and $3,000 in upfront fees, according to a deposition O'Toole gave in the Bar's case against him. O'Toole said he allows almost exclusive control of his office to non-lawyers who handle all contact with clients.

The Bar indicates it is working on a plan to better handle future mass complaints. Last year, Bar President Scott Hawkins created a commission to look at attorney regulation, focusing standards for imposing sanctions, how complaints are processed and handling widespread discipline cases. The commission's report will be presented to the Bar's board of governors in May.

Florida foreclosures and repossessions increase from last year

South Florida counties see higher increases than rest of the state

Banks filed new foreclosures on 4,119 South Florida homes last month, an 85 percent increase from March 2011 and an indication that lenders continue to make up for time lost during the robo-signing scandal.

According to a report released today by RealtyTrac, banks also repossessed 2,709 homes in Palm Beach, Broward, and Miami-Dade counties in March, a 39 percent jump over last year, but down 25 percent from February.

Statewide, newly filed foreclosures were up 58 percent in March from the same time last year and 13 percent from February. Florida's year-to-year increase in new filings went against a national trend that saw the same category drop 12 percent, although there was a 10 percent increase in March from the previous month.

"I think we'll continue to see increases in Florida for some time, and all of this shows that the housing crisis is far from over," said Ken Thomas, an independent Miami-based banking analyst. "We're not going to hit bottom until we see all this excess inventory get out there."

The "robo-signing" debacle that surfaced in late 2010 delayed foreclosures for much of 2011. Because robo-signing was more of a problem in judicial foreclosure states, such as Florida, banks may be more aggressive in those states to reduce backlogs that built up faster than in non-judicial states.

Florida ranked second nationally for total foreclosure filings during the first quarter of 2012 with 73,344. California was first with 133,245. RealtyTrac measures three types of filings – initial default, notice of sale, and final bank repossession. RealtyTrac analysts indicate they expect to see continued year-over-year increases in Florida's foreclosures, but the monthly totals will probably bounce around.

Florida court favors homeowners in key foreclosure ruling

Homeowners in foreclosure may have a better chance of getting a true trial, instead of a quickie judgment, following a Floria district court of appeals decision that requires banks to prove ownership of the note at the time they file for repossession.

The ruling this week in Palm Beach County was heralded by foreclosure defense attorneys who said it may even force banks to dismiss some cases and start over with new paperwork.

The ruling follows a rare Florida Supreme Court decision last week to take up an already settled Greenacres foreclosure case that involved an allegedly backdated assignment of mortgage that the bank used to show ownership. The court said it wanted to rule on the case because its opinion could have an impact on the "mortgage foreclosure crisis throughout the state."

This week's ruling was on the case of Robert McLean v. JP Morgan Chase and involved a 2009 Broward County foreclosure.

According to the decision, which reversed a lower court's verdict in favor of the bank, Chase originally filed the foreclosure claiming the note – basically the IOU from the borrower – was "lost, stolen or destroyed."

That sort of claim has been made thousands of times as lenders rushed without the proper documentation to take back homes tangled up in the real estate boom's securitization frenzy.

Although most notes are found before a final foreclosure judgment is entered, Florida's 4th District Court of Appeals said the note also must be correctly dated and endorsed to show ownership before the foreclosure is initially filed – something that Chase didn't have, according to the ruling. The court also questioned a mortgage assignment made to Chase that was dated three days after the foreclosure was initially filed.

If there is substantial doubt about the note, the bank should dismiss and refile the case or the homeowner should be entitled to an evidentiary hearing instead of a more hasty "summary judgment," the ruling said.

Chase did not respond to a request for comment.

One leading West Palm Beach attorney downplayed the significance of the 4th DCA decision, calling it a technicality that doesn't impact the legitimacy of the foreclosure. Gerald Richman, who represents the Boca Raton-based foreclosure firm Shapiro & Fishman, also said the ruling could force an unnecessary expense on lenders if they have to refile a complaint.

Richman said he couldn't measure the impact the ruling will have on Florida's already overwhelmed courts because he doesn't know how many similar cases are out there. But Tampa-area foreclosure defense attorney Mark Stopa said the ruling will apply to the majority of his cases.

"In my view, this is the biggest foreclosure case in Florida, ever," he said of this week's ruling.

Some Florida lawmakers want to repossess foreclosed homes more quickly

Some Florida lawmakers want to amend a rarely used fast-track foreclosure law to shrink the state's court backlog and as an end-run around Wall Street reforms that may bar nonjudicial foreclosures.

Florida's Senate Judiciary Committee, which has discussed ways to reduce the average two-year timeline to repossess a home in Florida, is scheduled to meet this week in Tallahassee.

Committee member Sen. David Simmons, R-Maitland, said this week that he has drafted a bill that would change section 702.10, Florida Statutes, created in 1993, that requires a property owner to "show cause" why a final foreclosure judgment should not be entered on an expedited basis.

According to a foreclosure report by Senate staff that was presented to the committee last month, bank lawyers haven't used the law because they believe it is limited to non-residential property and doesn't allow for a deficiency judgment to be entered against the owner.

The report also says that the federal Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law in July 2010, puts limits on nonjudicial foreclosures and that adopting a nonjudicial process would require substantial changes to property laws.

Simmons said the Florida Bankers Association asked him to work on a proposal that will help clear an estimated court backlog of 371,000 foreclosure cases. His bill, which would affect current foreclosures, is still being drafted and not yet available online, he said.

"We've got to create an expedited method of dealing with this that will take down the backlog where the homeowner has no defenses and is simply waiting it out, or where the homes are abandoned," Simmons said. "At the same time, if there is a legitimate defense that a homeowner wants to raise, then they need to be able to raise it."

Florida is one of 21 states that have strict judicial foreclosure proceedings, meaning banks must get a judge's approval before repossessing a home.

Rep. Kathleen Passidomo, R-Naples, was the first this year to file a bill aimed at expediting foreclosures. The proposal, House Bill 213, has since been substantially rewritten to include changes to the same statute Simmons hopes to amend, she said Tuesday.

She said her changes would require the courts to decide whether a homeowner has a legitimate defense to fight the foreclosure. If not, the judge could issue a final judgment.

"Some defenses should be heard, but if the borrower just responds by saying 'I don't want to move out,' that doesn't do anyone any good," Passidomo said. "At some point, we've got to get these houses back on the market and this issue resolved."

Passidomo said her bill also would allow third parties, such as homeowners associations, to move foreclosures forward when banks are delaying action.

Foreclosure defense attorneys and homeowner advocates have opposed changes to Florida law that would take cases out of the court system. They argue that chain of ownership confusion created by the mass securitization of mortgages, as well as paperwork problems caused by banks taking foreclosure shortcuts, would sail through without correction if judges were taken out of the process.

Expedited foreclosure legislation has failed the past few years in Florida, but bank representatives and lawmakers believe they have a better chance of getting something passed during the 2012 session.

UPDATE: Neither of these bills became law during the 2012 Legislative Session.

Nearly 9,500 Homeowners Statewide Apply To Receive Assistance in Program's First Week

TALLAHASSEE—Today Florida announced that 9,439 homeowners have submitted applications to receive financial assistance from the Florida Hardest-Hit Fund (HHF) program as of Friday, April 22. The application process was made available to troubled homeowners in all 67 counties a week ago on April 18. Currently, these applications are in various stages of completion; all homeowners who fully complete and submit an application will undergo eligibility determination by HHF Advisor Agencies statewide.

The counties with the largest number of applications are Broward (1,638), Miami-Dade (1,027), Orange (957) and Palm Beach (939). Homeowners in every Florida county may apply for financial assistance from the fund.

Programs available through the HHF are as follows:

The Unemployment Mortgage Assistance Program, or UMAP, will provide up to $12,000 to pay monthly mortgage and escrowed mortgage-related expenses for up to six (6) months, or until the homeowner can resume making mortgage payments, whichever comes first. In addition, homeowners in the UMAP will be required to pay 25 percent of their monthly income toward their monthly mortgage payment, with a minimum payment of $70 per month.

The Mortgage Loan Reinstatement Payment Program, or MLRP, will provide up to $6,000 to bring the homeowner’s past-due first mortgage current if the homeowner can show the ability to resume making mortgage payments on his own; for a homeowner who received funding from the UMAP program, any unused funds up to $12,000 may be used in addition to MLRP funds to help bring the first mortgage current.

UMAP and MLRP program funds will be in the form of a 0% percent, deferred-payment loan; the loan can be forgiven over a five-year period, at a rate of 20% each year.

Florida homeowners should continue to be aware that several "imposter" websites have been identified and applicants are strongly encouraged to verify that the website they are using is, in fact, the official Florida HHF website before providing their personal information.

First announced on February 19, 2010, by the US Department of the Treasury (Treasury), the "Housing Finance Agency (HFA) Innovation Fund for the Hardest-Hit Housing Markets" (HFA Hardest-Hit Fund) provides federal funding to states hardest hit by the aftermath of the burst of the housing bubble. To date, $7.6 billion has been infused into the HFA Hardest-Hit Fund for 18 states and the District of Columbia; Florida’s total allocation currently stands at more than $1 billion. The goal is to help troubled homeowners sustain and keep their homes, ultimately, to avoid foreclosure.

Florida Hardest-Hit Program Goes Statewide Today

One billion dollars for helping homeowners avoid foreclosure became available Monday through the statewide roll-out of the Florida Hardest-Hit Fund program.

Florida began taking applications Monday morning for the federally funded program that will provide nearly 40,000 unemployed and underemployed homeowners with up to six months of cash assistance to make payments on mortgages that would otherwise go unpaid.

Created by the U.S. Treasury in February 2010, the Housing Finance Agency Innovation Fund for the hardest-hit housing markets sets aside funds from the 2008 federal stimulus package to five states: Arizona, California, Florida, Michigan and Nevada, states with the highest levels of foreclosures. The program was later expanded to 18 states. Florida's cut to date is $1 billion of nearly $9 billion in federal funds.

Florida is the last state of five original recipients to get its program under way. The program was rolled out last year in Lee County as a pilot. The region was the epicenter of a housing bust resulting in thousands of foreclosures.

Florida's original program would have provided as much as $35,000 in assistance over an 18 month period for homeowners who were looking for work and behind on their mortgages. After taking office, however, Gov. Rick Scott ordered a review of the program and changed its parameters.

The new program reduced the maximum award up to $12,000 and shortens the duration of benefits, which advocates said could reduce the program's effectiveness for recipients whose job search takes longer to complete, as Florida's economy recovers more slowly than other states.

The program also offers up to $6,000 for residents who have gone back to work to pay delinquent mortgage payments.

About 70 agencies are assisting in outreach efforts including not-for-profit groups and for-profit companies.

Florida Launches Statewide Hardest-Hit Fund Program

TALLAHASSEE—On Tuesday, April 5, Florida announced that unemployed or underemployed homeowners in Florida, who are having difficulty paying their mortgages, will be able to apply for financial assistance from the Florida Hardest-Hit Fund (HHF) beginning at 9 a.m. on Monday, April 18. On this day, the program will become available to troubled homeowners in all 67 counties in the state.

After reviewing information gleaned from the pilot in Lee County and in consultation with the Governor’s Office, there are a few changes to the HHF program benefits, as follows:

The Unemployment Mortgage Assistance Program, or UMAP, will provide up to $12,000 to pay monthly mortgage and escrowed mortgage-related expenses for up to six (6) months, or until the homeowner can resume making mortgage payments, whichever comes first. In addition, homeowners in the UMAP will be required to pay 25 percent of their monthly income toward their monthly mortgage payment, with a minimum payment of $70 per month.

The Mortgage Loan Reinstatement Payment Program, or MLRP, will provide up to $6,000 to bring the homeowner’s past-due first mortgage current if the homeowner can show the ability to resume making mortgage payments on his/her own; for a homeowner who received funding from the UMAP program, any unused funds up to $12,000 may be used in addition to MLRP funds to help bring the first mortgage current.

The minimum qualifications a homeowner must meet to be considered for assistance from either or both HHF programs will remain the same.

UMAP and MLRP program funds will be in the form of a 0% percent, deferred-payment loan; the loan can be forgiven over a five-year period, at a rate of 20% each year.

There are several reasons for these changes to the program. Most importantly, the need for this program continues to grow and Florida wants to assist as many homeowners as possible. These changes could allow Florida to provide financial assistance to nearly 40,000 homeowners statewide, or twice as many as previously estimated could be helped.

Florida homeowners should also be aware that several websites posing as HHF application sites have been identified. Once the application process opens, applicants are strongly encouraged to verify that the website they are using is, in fact, the official Florida HHF website before providing any personal information.

Applying for the Florida Hardest-Hit Fund program is FREE-OF-CHARGE, and applicants will not be asked to pay for any eligibility determination services in conjunction with applying for the program.

First announced on February 19, 2010, by the U.S. Department of the Treasury (Treasury), the “Housing Finance Agency (HFA) Innovation Fund for the Hardest-Hit Housing Markets” (HFA Hardest-Hit Fund) provides federal funding to states hardest hit by the aftermath of the burst of the housing bubble. To date, $7.6 billion has been infused into the HFA Hardest-Hit Fund for 18 states and the District of Columbia; Florida’s total allocation currently stands at more than $1 billion.

Treasury has approved both of Florida's housing programs to provide temporary assistance to eligible unemployed or underemployed homeowners. The goal is to help them sustain and keep their homes, ultimately, to avoid foreclosure.

Foreclosure Prevention Program to Accept Statewide Applications in April

A much-anticipated state program to help homeowners avoid foreclosure has been revised and now is expected to debut statewide in mid-April, the state announced Friday.

Changes to the Hardest Hit Fund will mean less money for those who qualify, but Florida will be able to help about 40,000 homeowners, twice as many as initially expected.

Hardest-Hit will cover mortgage payments for single-family homeowners who are unemployed or in jobs with salaries below what they need for basic living expenses. Money also will be used to bring delinquent mortgages current for homeowners who have returned to work or found higher-paying jobs.

The revisions call for homeowners to share in the cost of the program. They will contribute at least $70 per month or 25 percent of their monthly incomes, as determined by eligibility advisers.

Florida Hardest-Hit Fund Statewide Launch Delayed

The launch date of a new federal mortgage assistance program designed to aid families in states hit hard by the economic and housing market downturn has been delayed until late March.

The Florida Hardest Hit Fund, which has a little more than $1 billion available for Floridians struggling to pay their mortgage, will be rolled-out beyond its pilot phase later than its anticipated target of the last week of February.

Homeowners who qualify for financial assistance may receive up to 18 months of monthly mortgage payments or money to pay past due mortgage payments to bring the mortgage current. The money, up to $35,000 per household, will be paid by the state program directly to the lender.

Eligibility requirements are stringent and only about 20,000 Floridians could receive assistance through the program. Online applications will be accepted on a first-come, first-served basis when the program becomes available locally.

There are two programs within the Florida Hardest Fund program:

The Unemployment Mortgage Assistance Program provides money that can be used to pay monthly mortgage and escrow-related expenses until the homeowner can resume payments or for up to 18 months, whichever occurs first.

The Mortgage Loan Reinstatement Payment Program is money that can be used to bring the pastdue first mortgage current. Up to four months will be paid.

Florida is one of 18 states and the District of Columbia that will share in the $7.5 billion allocated for the program.

The Hardest Hit Fund was announced by President Obama and the U.S. Department of Treasury in February 2010 for states that were struggling with unemployment rates above the national average or had steep home price declines — greater than 20 percent after the housing bust.

The state just wrapped up its pilot program in Lee County, where 963 total applications were received.

Florida Revises Application Requirements for The Hardest Hit Fund

Application Requirements Are Revised for Lee County Homeowners Seeking Assistance from Hardest-Hit Fund

Today Florida announced that troubled homeowners in Lee County who want to apply for financial assistance from the Florida Hardest-Hit Fund (HHF) may now be up to 180 days delinquent on their first mortgage. To date, more than 780 applications have been submitted. Applications may be submitted only by homeowners living in Lee County, the pilot site for the program. The application process opened on Monday, October 25, and will remain open until 1,000 applications are received.

On October 29, Fannie Mae and Freddie Mac both issued notices that require servicers to work closely with housing finance agencies (HFAs) that administer mortgage assistance programs (such as HHF) to homeowners who are unemployed/underemployed through no fault of their own. Specifically, servicers have been instructed to accept payments from HFAs, subject to certain limitations, on behalf of homeowners enrolled in programs that provide unemployment mortgage assistance or mortgage reinstatement plans.

Florida has two HHF programs: (1) Unemployment Mortgage Assistance Program (UMAP), which will provide up to 18 months of first mortgage payments directly to the lender on behalf unemployed or underemployed homeowners until they can resume making payments on their own; and (2) Mortgage Loan Reinstatement Payment (MLRP) Program, which will be used to bring a delinquent mortgage current for homeowners who have returned to work or recovered from underemployment.

UMAP and MLRP program funds will be in the form of a 0% percent, deferred-payment loan. The loan can be forgiven over a five-year period, at a rate of 20% each year.

Homeowners in Lee County who thought about applying, but did not because their mortgages are more than 90 days past due should apply for assistance. This is the only change made to the eligibility requirements for the HHF program.

U.S. Treasury Approves Florida's Mortgage Intervention Strategy for Hardest Hit Fund

The federal government has allocated funding to help pay the mortgages of qualified homeowners who are unemployed or underemployed through no fault of their own. Currently, this funding is only available to homeowners in Lee County, Florida, as a pilot program. We expect the program to become available statewide early in 2011. Please check this website frequently for updates.

Homeowners who qualify for financial assistance may receive up to 18 months of monthly mortgage payments and/or funds to pay past due mortgage payments to bring the mortgage current; these funds are paid directly to the loan servicer/lender.

You must meet all eligibility requirements to be considered for the program. Please review the following criteria prior to applying for Hardest Hit Fund assistance.

An eligible homeowner:

• Must be a Florida resident;
• Must occupy property as primary residence (the property cannot be vacant, abandoned or rented);
• Must have suffered an approved hardship that makes the first mortgage unaffordable;
• Must have documented total income at or below 140% of the area median income (AMI), adjusted for household size (in Lee County, the total income for a household of four cannot be more than $86,240);
• May not have unencumbered assets of $5,000, or three times the current monthly mortgage payment (whichever is greater);
• Cannot have a bankruptcy that has not been discharged or dismissed; and
• Cannot have been convicted of a mortgage-related felony in the last 10 years.

The current mortgage:

• Must be serviced by a participating lender, who agrees to accept payments on behalf of the homeowner;
• Must not be more than 90 days past due at the time of application;
• Must have been originated on or before January 1, 2009; and
• Must have an existing principal balance of less than $400,000.

This list is not all inclusive; other information and documents will be required prior to determining eligibility.

Florida Almost Ready to Implement Hardest-Hit Fund

Pilot program set for Lee County in Fall of 2010

Florida's mortgage intervention and foreclosure avoidance assistance using federal Hardest-Hit funding will be available to troubled homeowners in Lee County—the pilot site—as detailed in the information below. As reported earlier, the U.S. Treasury requires that a pilot site be established prior to Florida making this assistance available statewide. The pilot is expected to be in place for a minimum of 90 days, with Mortgage Intervention assistance becoming available statewide sometime thereafter.

On August 11, 2010, U.S. Treasury expanded the existing Housing Finance Agency (HFA) Innovation Fund for the Hardest-Hit Housing Markets (known as the Hardest-Hit Fund) to include a total of 18 states and the District of Columbia, and an additional $2 billion; Florida’s allocation from this new announcement is $238.8 million, which added to Florida's initial allocation of $418 million, brings the state’s total funding to $656.8 million.

This means MORE MONEY to help MORE PEOPLE for a LONGER PERIOD OF TIME.

MORE MONEY: This additional funding means Florida now has more than half-a-billion federal dollars to help troubled homeowners facing foreclosure.

HELP MORE PEOPLE: This additional funding allows the number of homeowners assisted to be increased to approximately 20,000.

LONGER PERIOD OF TIME: This additional funding allows us to now make payments on the homeowner’s behalf for up to 18 months.

These funds may also be used to pay arrearages on behalf of a qualified homeowner to bring the mortgage current.

The U.S. Treasury is requiring that Florida use this new funding specifically for a targeted unemployment program that provides temporary assistance to eligible homeowners by paying their mortgage while they seek re-employment, additional employment or undertake job training.

In order to fully comply with the Treasury’s requirement for the use of this new funding Florida will modify its initial plan to assist unemployed homeowners. As required by the Treasury, Florida will submit the modified plan to them by September 1; Florida hopes to have approval to move forward with the modified strategy by the end of that month.

Additionally, to ensure Florida's revised unemployment plan aligns with the Treasury’s guidelines for the new money, Florida must reschedule the implementation of the pilot in Lee County. Right now, the pilot is expected to be implemented in the autumn of 2010.

Florida to Receive More than Half-A-Billion Dollars Under Expanded Federal HFA Hardest-Hit Fund

TALLAHASSEE—The State of Florida will receive more than half-a-billion dollars in federal funding from the Housing Finance Agency Innovation Fund for the Hardest-Hit Housing Markets (Hardest-Hit Fund). Florida will submit a revised implementation plan to U.S. Treasury to ensure this funding will be available to troubled homeowners in the pilot area by early fall.

The additional funding the State of Florida will receive from the federal Hardest-Hit Fund will give the state more money to help more people for a longer period of time. To do that, it will be necessary for Florida to revise its current Mortgage Intervention plan and reschedule the implementation of the pilot in Lee County until early fall.

First announced on February 19 by the U.S. Department of the Treasury (Treasury), the Hardest-Hit Fund was established to provide federal funding to states hardest hit by the aftermath of the burst of the housing bubble. This funding is to be used to provide meaningful financial support to troubled homeowners to help them avoid foreclosure on their homes. To date, 18 states and the District of Columbia have been allocated $4.1 billion in funding from the fund. Florida’s Hardest-Hit funding includes $418 million from the first announcement and, most recently, $238.8 million, which totals $656.8—more than half-a-billion dollars.

The treasury requires that the new allocation be used specifically for a targeted unemployment program that provides temporary assistance to eligible homeowners by paying their mortgage while they seek re-employment, additional employment or undertake job training. To fully comply with this requirement, Florida Housing will submit a revised Hardest-Hit plan to the Treasury by September 1. Florida hopes to have approval on the revised plan by the end of September, and to move forward with the pilot in Lee County pilot by mid-October. Statewide implementation is tentatively scheduled for February 2011.

Florida’s total allocation from the Hardest-Hit Fund means more money to help more people for a longer period of time:

More Money: This additional funding means Florida now has more than half-a-billion federal dollars to help troubled homeowners facing foreclosure.

Help More People: This additional funding allows us to increase the number of homeowners helped to approximately 20,000.

Longer Period of Time: This additional funding allows us to now make payments on the homeowner’s behalf for up to 18 months, including the payment of arrearages on behalf of a homeowner to bring the mortgage current.

Florida's Hardest-Hit Fund Proposal Submitted to U.S. Treasury

Frequently Asked Questions

Q: What is the HFA Hardest-Hit Fund (or Florida Hardest-Hit Fund)?

The “Housing Finance Agency Innovation Fund for the Hardest-Hit Housing Markets” (HFA Hardest-Hit Fund) was announced by the US Department of Treasury (Treasury) on February 19, 2010, as a means to provide meaningful financial support for families in the nation’s hardest-hit housing markets.

Florida is slated to receive $418 million as one of five states that will share in $1.5 billion in funding through this program. States’ proposals were due to Treasury by April 16, 2010. Treasury will review the proposals to ensure that each meets established program guidelines. For our state, the program is being called the Florida Hardest-Hit Fund. The other states that will share in the $1.5 billion allocation are: California ($699.60 million); Michigan ($154.5 million); Arizona ($125.1 million); and Nevada ($102.8 million).

Q: Are the strategies in Florida Housing’s proposal for the Hardest-Hit funding final?

The strategies outlined in Florida Housing’s proposal are not final. They will be reviewed by Treasury within the next four to six weeks. We expect to communicate with Treasury regarding the proposal to ensure it meets Hardest-Hit program guidelines prior to finalizing the strategies for implementation around early fall 2010.

Q: What strategies does the Florida proposal contain?

Florida Housing’s proposal contains the following three strategies:

(1) Mortgage Intervention Strategy;

(2) Legal Representation Strategy (as a complement to the Mortgage Intervention Strategy); and

(3) Downpayment Assistance (DPA) and Mortgage Rate Reduction Strategy.

How will each of these strategies help troubled homeowners?

The Mortgage Intervention Strategy and the Legal Representation Strategy are designed to assist in keeping homeowners in their homes, or to at least achieve an outcome that is better than losing their homes due to foreclosure.

The Mortgage Intervention Strategy proposes to help the unemployed or underemployed homeowner sustain and keep their home by working with banks and credit unions, and mortgage investors such as Fannie Mae and Freddie Mac, to extend the period of time the homeowners need to become re-employed at a salary that is sufficient to either resume making full mortgage payments, or qualify for a mortgage modification to make the mortgage payments affordable for the homeowner.

The Legal Representation Strategy can complement the Mortgage Intervention Strategy and help a homeowner who already has a mortgage foreclosure action filed against them in court. This program will provide these homeowners with legal representation to ensure they have the chance to achieve an outcome other than foreclosure, if appropriate. For homesteaded foreclosure cases, the Florida Supreme Court has mandated managed mediation, at which lenders are required to have a representative present who has the authority to negotiate on the lender’s behalf. This strategy will allow homeowners to also have representation to make their case for a loan modification, or other outcome, that is better than foreclosure and may allow the homeowner to keep their home.

The third program is the Downpayment Assistance (DPA) and Mortgage Rate Reduction strategy, which is designed to help protect home values by providing incentives to prospective homebuyers to purchase homes as their primary residences. In many areas of Florida, homes are coming on the market more quickly than there are buyers to purchase them. A significant number of these homes are distress sales that are listed below fair market value and contribute to the continuing sales price declines in the state. By providing DPA in conjunction with Florida Housing’s First Time Homebuyer (FTHB) Program, prospective buyers now have incentives to purchase homes, which helps to stabilize both neighborhoods and the sales price declines around the state.

What portion of the $418 million will be earmarked for each of the three strategies?

Florida Housing is proposing that of the $418 million Florida is slated to receive:

(1) $353 million will be provided to the Mortgage Intervention Strategy;

(2) $25 million will be provided to the Legal Representation Strategy; and

(3) $40 million will be provided to the Downpayment Assistance and Mortgage Rate Reduction Strategy.

These amounts are inclusive of administration costs.

How did Florida Housing determine which areas of the state are the hardest hit in order to distribute funding throughout the state?

To determine geographical targeting for distributing Hardest-Hit funding, Florida Housing analyzed data similar to that used by Treasury. Three measures were evaluated for all 67 counties:

A. Housing Price Decline from peak prices—a measure of the change in housing prices over a specified period of time;

B. Unemployment Rate—a measure of the proportion of workers who are without employment over a period of time; and

C. Seriously Delinquent Mortgage Loans—a measure of active first mortgage loans in each county that are 90+ days past due or are in foreclosure. For this measure, there may be concern that some counties would receive higher allocations mainly due to high counts of delinquent investment properties; however, Florida Housing’s analysis showed that there is minimal impact to the allocation from non-primary home properties.

Update on Federal Hardest-Hit Fund

WASHINGTON, DC -- Today, the Obama Administration released the next steps in the recently-announced Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets ("HFA Hardest-Hit Fund").

On February 19, 2010, President Obama announced additional funding for innovative measures to help families in the states that have been hit the hardest by the aftermath of the burst of the housing bubble. States where house prices have fallen more than 20% from their peak are eligible for this funding. Those states are Nevada, California, Florida, Arizona and Michigan. The HFA Hardest-Hit Fund will help housing finance agencies ("HFAs") in these states further respond to the most pressing problems in their communities. HFAs have an understanding of the most urgent local challenges and an ability to address them expeditiously. For that reason, the Obama Administration has committed $1.5 billion in funding under the Emergency Economic Stabilization Act of 2008 (EESA) to help HFAs expand their assistance to struggling homeowners and innovate new ways to address housing challenges.

Today the Administration released detailed guidance for eligible HFAs to submit program proposals for funding. The HFA Hardest-Hit Fund is designed to allow the maximum possible flexibility to eligible HFAs in designing programs that are tailored to the needs of their state. Today's guidance provides instruction to HFAs to ensure that program proposals meet basic guidelines and comply with the purposes of EESA. All programs must protect home values, preserve homeownership, promote jobs and economic growth, and provide accountability to the public.

Funding allocations were also released today based on a formula to provide relief in direct proportion to the scale of each state's housing challenges. Funds have been allocated based on home price declines, unemployment rates, and mortgage delinquencies.

Eligible HFAs may submit program proposals to the Department of the Treasury up to the April 16th deadline, after which the review period will begin. The U.S. Treasury will provide additional updates to the public as the program progresses.

President Obama Announces Help for Hardest Hit Housing Markets

Today President Obama announced funding for innovative measures to help families in the states that have been hit the hardest by the aftermath of the housing bubble. In each of these states, the average price for all homes in the state has fallen more than 20% from the peak.

Home prices across the country are beginning to stabilize since the Administration’s economic policies began to take effect in mid-2009. But the legacy of price declines, together with the effects of high unemployment, means that many working and middle class families in these especially hard-hit areas are facing serious challenges, in many cases beyond what their families’ resources can handle. This new innovation fund will help housing finance agencies in the hardest-hit areas and localities further respond to the most pressing problems in their communities.

President Obama said, "During these difficult economic times, we will work to help responsible homeowners stay in their homes and stabilize the housing market so home values can rise. This program will allow housing finance agencies in the places hardest-hit by the housing crisis find innovative ways to help homeowners stay afloat, and empower local agencies that know these communities best. With the help of Harry, Tim and Shaun, we’ll continue to work together to stabilize the mortgage markets and hasten our recovery."

Secretary of the Treasury Timothy Geithner said, "This innovative program will allow us to work directly with states and localities to tailor housing assistance to local needs. It's an opportunity to provide additional relief to the hardest hit states while continuing to strengthen our housing market stabilization efforts."

Secretary of Housing and Urban Development Shaun Donovan said, "Although the housing market has come a long way in just one year, there are many communities like Las Vegas that are still struggling. The funding announced today will help target resources to those hardest hit markets, promoting innovation that tailors programs to meet local needs and complementing our national foreclosure relief efforts."

Help for the Hardest-Hit Housing Markets

This new program will apply to states that have suffered an average home price drop of over 20% from the peak. State and local Housing Finance Agencies (HFAs) in each state are already familiar with the urgent challenges facing their communities and have demonstrated the ability to address these challenges. For that reason, we will work with these HFAs to expand the capacity to help address these challenges, with $1.5 billion from the funds set aside for housing under the Emergency Economic Stabilization Act of 2008 (EESA).

The HFAs will determine the priorities facing their local markets. The program will be under strict transparency and accountability rules. The increase in HFA activities in these areas will support families in these markets, combining with the numerous other steps the Administration has taken to address housing markets.

Funds can be used for innovation to take steps to address difficult, locally-important challenges for the hardest-hit housing markets, including unemployed borrowers, underwater borrowers, and second liens.

Programs must meet funding requirements under EESA. These include that the recipient of funds must be an eligible financial institution and that the funds must be used to pay for mortgage modifications or for other permitted uses under EESA. Treasury will announce maximum state level allocations in the next two weeks, along with rules governing the submission of program designs by HFAs, and provide a period thereafter for HFAs to submit their program designs in order to receive funding.

Housing markets vary considerably from state to state, and often within a single state. Housing Finance Agencies are intimately engaged already in their local housing markets, and will play the lead role in determining what sorts of programs are most appropriate to local conditions. Three sorts of problems that may be addressed with funding are unemployed borrowers, underwater borrowers, and second liens:

1. Unemployed borrowers. Since the recession began in 2008, unemployment has hit many families who own homes. In previous times, when house prices were rising, families with unemployment could often sell their homes for more than they had paid, using the proceeds to tide them over. Today, by contrast, families in states where prices have dropped more than 20% often find themselves owing more than the house is worth in the current market. Such homes are often difficult to sell, and families with unemployment often can’t pay the current mortgage and may not have enough income to qualify for a modification. In such circumstances, one use of funds would be for HFAs to begin programs to help unemployed homeowners until they have secured a new job. HFAs can consider a variety of programs to help unemployed borrowers.

2. Underwater borrowers. For states with more than 20% home price declines, a large portion of homeowners are "underwater" -- they owe more than the house is worth in the current market. Such borrowers often find it difficult to sell their homes -- lenders may not agree to a sale that fails to pay back a mortgage in full. HFAs may experiment with programs that would assist borrowers to negotiate with lenders to write down mortgages.

3. Second liens. An important challenge can arise for some borrowers who have a home equity line of credit or other second mortgage on their home. Often, a first mortgage lender who may be willing to modify the loan by reducing principal can run into difficulties in coordinating between the first and second mortgage lender. To smooth this coordination problem, and help assure that homeowners get an overall modification that works best, funds can be used to pay incentives to the second mortgage holders, addressing this potential obstacle to reducing principal and keeping borrowers in their homes.