The Florida housing market may be recovering, but there are still millions of dollars of untapped Federal stimulus money waiting to be deployed. Last week, officials in Florida announced plans to use some of that money to help homeowners get to a break-even position on their home mortgage loans. The Orlando Sentinel has this report: ("State offers to cut loan balances for 'underwater' homeowners," by Mary Shanklin).
"After spending only a small fraction of its billion-dollar share of federal foreclosure-prevention funds during the past two years, the Florida Housing Finance Corp. said it would loosen its hold on the money by letting qualified homeowners use it to reduce their outstanding debt and monthly payments," reports the Sentinel. "Unlike some of the state's other programs, designed to help those in trouble, the principal-reduction program is aimed at homeowners who are current on their mortgages. Recipients can also earn more than the area's median income and can be fully employed. And the unpaid loan amount can be as high as $350,000."
The proposal has created some controversy, the Sentinel reports: "Some Floridians complain that the program will reward people who made little or no down payment when they purchased their home and are now underwater as a result. Seminole County resident Tina Harden said the principal-forgiveness program does nothing for people like herself. She made such a substantial down payment on her home along Markham Woods Road in 2008 that her mortgage is not underwater. But the house is listed for sale, and she will lose money on it if it sells. 'I don't think the program should have anything to do with what you owe on the house,' she said. 'If you put down a big chunk of money and your neighbor didn't, why should he get the break?''
The Sarasota Herald-Tribune has this report: ("Florida program to offer mortgage reductions," by Josh Salman). The story notes another criticism of the program: it serves to benefit homeowners who aren't in dire need. "Many foreclosure defense attorneys argue the [allocation] should be directed instead to the 377,707 Florida homeowners now in some stage of foreclosure, or the hundreds of thousands more who are past due on their payments," the paper reports. "Homeowners participating in the new Hardest-Hit initiative cannot be more than 60 days delinquent."
"These people are in no imminent danger, they're not the hardest-hit," foreclosure attorney Matt Weidner, told the Herald-Tribune. "The hardest-hit borrowers are the ones sitting in a Florida foreclosure courtroom right now. This money is just going right to the banks—not the people who need it."