May 20, 2015

Thousands of Floridians failing to get HARP savings

Florida has the highest number of homeowners nationwide failing to cash in on a federal mortgage program that could save them hundreds of dollars each month.

An estimated 81,420 Florida borrowers are not taking advantage of the lower interest rates available through the Home Affordable Refinance Program, or HARP, according to a year-end report from the Federal Housing Finance Agency.

The program, which was developed for borrowers who can’t do a normal refinance because their loans are underwater, was scheduled to sunset at the end of the year. But, with hopes of reaching more homeowners, FHFA Director Melvin Watt announced earlier this month that the program would be extended through 2016.

“We want to encourage the 600,000-plus borrowers nationwide who would still benefit from the HARP program to take advantage of HARP while they still have the opportunity to do so and while interest rates remain low,” Watt said during a May 8 speech in Los Angeles announcing the extension.

In April, the interest rate on a 30-year fixed-rate mortgage was 3.67 percent, according to federal mortgage backer Freddie Mac. That’s down from 4.34 percent during the same month last year.

Because of Florida’s high number of non-participating borrowers, FHFA focused a public awareness campaign last week in the South Florida and Orlando areas. South Florida has about 17,227 eligible borrowers who aren’t taking advantage of HARP. Orlando has about 9,270.

Despite the outreach, Florida housing counselors complain borrowers remain unaware of the six-year-old program and are often surprised to learn they can use it to lower their interest rates.

HARP is for homeowners who are current on their mortgage payments but who can’t refinance into a lower interest rate because they owe more on their loan than their home’s value. It is only for mortgages backed by Fannie Mae and Freddie Mac that were originated or sold to the Fannie or Freddie before May 31, 2009.

With HARP, the mortgage does not have to be on the primary residence to qualify for a refinance. Second homes and investment properties are also eligible. In total, 305,543 Florida borrowers have refinanced through HARP since it was introduced in 2009.

 

 

December 15, 2014

Florida still worst state for mortgage fraud

Florida has retained its unwanted crown as the mortgage fraud capital of the country for the fifth consecutive year.

Florida experiences more than five times the expected rate of fraud, based on its volume of new mortgage loans in 2013, according to a fraud index released Monday by LexisNexis Risk Solutions.

That's far worse than the second-worst state on the list, Nevada, which has slightly more than two times its expected rate of fraud. Rounding out the five worst are New Jersey, Arizona and Illinois.

But, Florida's fraud numbers are getting a bit better.

In 2009, Florida had more than seven times the expected rate of reported fraud based on the number of new loans. Back then, the state was grappling with the immediate aftermath of inflated home appraisals and poor regulatory oversight that had fueled the housing bust.

Tim Coyle, senior director of financial services for LexisNexis and co-author of the report, said Florida's woes may be due partly to its high number of investment properties, which could be prone to fraud. The prolonged foreclosure process in Florida is also hurting recovery, he said.

Unlike some other studies based on complaints or suspicion, LexisNexis examined proven mortgage fraud and misrepresentation based on 2013 data from mortgage industry professionals.

Nationwide, mortgage fraud has been on the upswing for the past three years. Seventy-four percent of 2013 loans involved some type of fraud or misrepresentation on the loan application, up from 69 percent in 2012 and 61 percent in 2011, LexisNexis said.

One widening concern is misrepresentation on credit documentation, which jumped from being an issue with five percent of loans to 17 percent between 2012 and 2013.

When asked what could help Florida, Coyle cited two nagging concerns to address:

  • Buyers who lie about occupancy, saying they're buying a home as a primary residence to receive a lower interest rate and homestead exemption when they're actually buying it as an investment.
  • Homeowners who collude with friends or family to sell their home to them via a short sale, enabling them to, in essence, keep the property and then refinance it years later.

Not all types of fraud are growing, however. Only 15 percent of loans in 2013 involved appraisal and property valuation fraud, mortgage professionals reported. That's down from 26 percent in 2012, 31 percent in 2011 and 33 percent in 2010.

Coyle attributed the drop-off to the Home Valuation Code of Conduct going into effect in 2009. Under the new rules, lenders could no longer work directly with appraisers.

"This landmark regulation, which disrupted the historical appraisal process, has everything to do with the drop in this year's appraisal fraud," Coyle said. The code of conduct is no longer in force; however, it influenced other appraiser independence rules passed by Congress.

With the refinancing boom ending, the volume of mortgage loans has shrunk from $1.8 trillion to $1.1 trillion. That could put pressure on loan originators to be more creative or more lax as they scramble for a piece of that shrinking pie. Coyle predicted that could lead to an increase in fraud.

 

Dec. 5, 2014

Feds provide even more enhancements to loan modification programs

Florida’s struggling homeowners are getting another financial boost from the federal government with thousands of dollars added to loan modification benefits and a $10,000 relocation stipend if they can’t keep their home.

The U.S. Department of Housing and Urban Development and the Treasury Department announced the changes Thursday to the $29.8 billion "Making Home Affordable" program, which was created in 2009 to stem foreclosures.

In Florida, 274,850 homeowners have started a trial loan modification since the program’s inception. Of those, 170,646, or 62 percent, had their modifications made permanent, according to a September Treasury Department report. The median monthly mortgage savings in Florida under the program has been $474.

Nationally, more than 1.3 million homeowners have received permanent modifications with a median payment reduction of $540 per month.

Homeowners who stay current on their mortgage payments are eligible to earn $5,000 over a five-year period to reduce their loan balance. Under the new guidelines, they can get another $5,000 in the sixth year to “motivate homeowners to continue making their mortgage payments on time.”

For homeowners who agree to a short sale or deed-in-lieu-of foreclosure, the new rules increase the relocation stipend from $3,000 to $10,000. A news release says the $10,000 better reflects increased rents and the cost of moving in many parts of the country.

“While the housing sector has strengthened in recent years, there are still many homeowners struggling to make their mortgage payments,” said Secretary of the Treasury Jacob Lew.

Most loan modifications involve reducing the interest rate to as low as 2 percent, cutting the loan balance, or extending the life of the loan. Banks also get incentives to reduce borrower payments.

The additional $5,000 may also mitigate the impact of increasing interest rates, which start to reset after five years in the loan modification program. Homeowners who were the first to be accepted in 2009 began to experience resets in September.

In Florida, monthly payments could increase by as much as $1,168, as the lowered interest rates grow at a pace of one percent per year until they reach the level they were at when the loan was modified.

But the median increase statewide is expected to be much smaller – about $162 per month – according to a report by the inspector general of the Troubled Asset Relief Program, or TARP.

The new $10,000 in relocation assistance is part of the Home Affordable Foreclosure Alternative program, which is under the umbrella of "Making Home Affordable." Eligibility is restricted to homeowners with mortgages guaranteed by Fannie Mae and Freddie Mac that were obtained before Jan. 1, 2009. The homeowner must also document a financial hardship to receive the assistance.

Making Home Affordable was originally scheduled to sunset in 2013 but has been extended through the end of 2016. And, there is still money to spend. Of the $29.8 billion, nearly $10 billion has been spent with another $5.7 billion allocated for future payments on existing modifications.

 

September 10, 2014

Florida foreclosures Spike in August

Foreclosure starts rose 24 percent statewide in August, according to figures being released today by industry data tracker RealtyTrac, marking the first annual increase since early 2013 and indicating that Florida's housing woes could be far from over. These results are leading to speculation by housing advocates and trial lawyers about whether a predicted flood of home repossessions has arrived.

According to RealtyTrac, which measures foreclosure filings nationwide, 6,468 Florida homes fell into foreclosure in August, which is a 74-percent increase from the previous month. The rise in new cases kept Florida in the top spot in a nationwide foreclosure ranking, a place it’s held for 11 consecutive months.

One in every 400 Florida homes had a foreclosure filing in August. In Nevada, which ranked second nationally, one in every 524 homes had a foreclosure filing. Maryland came in third at one in every 532 homes with a foreclosure filing. Eight of the top 10 metro areas facing foreclosure action were in Florida, including No. 3 Orlando, where one in every 294 housing units had some foreclosure activity.

In the Tampa Bay area, one in every 407 housing units had a foreclosure filing in August, the seventh highest rate among metro areas nationwide. Filings include default notices, scheduled auctions, and bank repossessions. Palm Beach County had just 480 new cases filed last month, a 17 percent decrease from the same time last year, according to the Palm Beach County Clerk’s office.

Nationally, all types of foreclosure filings rose seven percent between July and August but were down nine percent compared with a year ago. A total of 51,192 properties across the country were scheduled for foreclosure auction during the month, up one percent from a year ago. That marks the first annual increase in auctions after 44 consecutive months of decreases.

RealtyTrac analysts and foreclosure defense attorneys had separate ideas on what caused Florida's increase in new filings but agreed it was likely a combination of various factors:

  • Banks catching up on a 2013 state law that requires them to have specific paperwork before filing a foreclosure.
  • A faster court system that gives lenders more confidence to pursue a foreclosure.
  • The sunset of a federal tax break on short sales.

Fast-track Foreclosure Law

Daren Blomquist, vice president of RealtyTrac, said he links Florida’s increase in new filings to the so-called “fast track” foreclosure law that went into effect July 1, 2013. The law gives lien holders a way to more quickly process a foreclosure through the courts in certain situations.

However, the law also requires lenders to have specific documents at the time the foreclosure is filed, including proof of loan ownership, such as the original note, and that they are the correct party to foreclose. If a note is considered lost, affidavits filed under the penalty of perjury are required to attest to the veracity of the foreclosure.

In August 2013, the month after the law went into effect, new foreclosures in Florida dropped 43 percent compared to the previous month and have stayed low since.

“We believe that drop was artificially caused by the law, specifically the requirement that forces servicers to file a lost note affidavit before starting foreclosure if they have lost the note,” Blomquist said. “The August numbers are an early indicator that servicers are finally starting to adjust to that new requirement, and we would expect to see more increases in foreclosure starts in the coming months.”

Here Come the Judge

Judges across the state have been trying to cut the time it takes a bank to foreclose and take back properties. Some homeowners, their attorneys, and consumer activists say judges have been too aggressive and are shortchanging homeowners' rights for the sake of expediency.

Jerry Tepps, a foreclosure defense lawyer in Palm Beach and Broward counties said courts are hiring retired judges and administrators to “make things happen.” Tepps has a few cases that will be resolved this year, only months after they were filed.

“It used to be three or four years before they were over with,” he said. “The court system has become much more aggressive in applying resources than it ever has before.”

Tax Break – Expired

Some insiders believe the bulk of the new cases are homeowners choosing foreclosure over doing a short sale after the Jan. 1 expiration of the Mortgage Forgiveness Debt Relief Act of 2007. The act allowed borrowers to exempt forgiven mortgage debt from counting as income.

Without the tax exemption, a homeowner forgiven $150,000 in debt could end up owing the IRS $42,000 in taxes, depending on the tax bracket. The industry group calling itself "Florida Realtors" is hopeful Congress will pass the tax break after the November elections and make it retroactive to Jan. 1.

 

July 13, 2014

Florida much slower than most states in distributing Hardest Hit funds

Only Arizona slower than Florida

Halfway to the deadline for spending federal Hardest Hit foreclosure-relief funds, Florida has distributed less than a third of its $1 billion share and lags most other states in getting the money to homeowners.

Of 18 foreclosure-troubled states that were given Hardest Hit money in 2010, six have exhausted their funds. Across the country, 40 percent of Hardest Hit dollars had been distributed by the end of the first quarter. Nevada, which often rivals Florida for having the nation's biggest share of underwater homes, had spent 48 percent of its funds. In Florida, however, which led the U.S. for foreclosure activity in May, only 31 percent of the funds had been granted to qualified homeowners by the end of the first quarter, according to reports filed with the U.S. Treasury. Among the worst foreclosure states, only Arizona had spent less (27 percent).

"Initially, even before I was even on the board, our underwriting parameters were conservative compared to those other states, so our money has gone out a little more slowly," said Florida housing official Bernard Smith.

States have until December 2017 to spend their share or lose unspent funds. Florida has several programs for disbursing the aid, including mortgage relief for unemployed and underemployed homeowners and assistance for older homeowners who tapped the equity of their homes with reverse mortgages.

Florida's pace of spending has increased sharply since September, when the state launched a principal-reduction program that grants qualified homeowners as much as $50,000 if they owe more on their home than it's worth and are current on mortgage payments. Since then, the number of Floridians getting some kind of Hardest Hit assistance has exceeded 16,000, doubling in just a year.

One critic of the program said Florida is behind in spending the money because principal reduction was rolled out too late.

Winter Park real-estate broker Alvin Moore said the state erred in waiting until the economy was recovering before launching its most meaningful foreclosure-relief program. Moore, who specializes in selling distress houses to first-time buyers, said it could have made a difference for homeowners during the depths of the economic downturn.

"They kind of missed the boat. The state did a poor job of getting the money out there," he said. "If we're not getting rid of this money and we are in the top two or three states for foreclosures, that really shows you a real inability to manage the program."

Florida has been at or near the top of foreclosure rankings nationally since the state's real-estate bubble burst in 2007. As recently as May, Florida led all other states for foreclosure notices and auctions, according to RealtyTrac. Hardest Hit dollars were distributed to states with the greatest foreclosure problems.

Florida housing officials indicate that some states have gone through their money more quickly than Florida, but they had less to distribute and may not have tried to allocate the money through a variety of programs.

After a sluggish start to its Hardest Hit program, Florida had high hopes for its principal-reduction rollout. But, by the first quarter, it had spent only about $73 million of the $350 million it had targeted, and more than half the applicants were denied, primarily for exceeding income limits.

The U.S. Treasury Department regularly reviews how states are spending the money. The most recent review of Florida's spending found that at least a few homeowners got more money than they should have because of miscalculations. Of six homeowner loans reviewed, three granted too much assistance, the review found. In the small sample, one of the owners received $973 of additional assistance over a seven-month period because of the errors.

Florida responded by providing additional training during a webinar for the housing counselors and advisers who are processing applications.

Compared with other states getting the funds, Florida has had one of the highest rates of applicants withdrawing from the process. About 37 percent of those who sought aid withdrew their applications. Nationally, about 24 percent of applicants withdrew. The reason so many dropped out is unclear but could indicate that their economic situation had improved or that the value of their home grew to the point that they had some equity.

Florida officials indicate that the number of withdrawals may be inflated because some applicants who withdrew from the process early were later reconsidered and approved under new programs that worked for them. In addition, Florida may define withdrawals more broadly than other states.

Officials maintain that the state intends to spend all of its funds before the 2017 deadline.

 

June 26, 2014

Treasury announces enhancements to loan modification programs

The U.S. Treasury will take further steps to ease foreclosures, rising rents, and scarce mortgages, Jacob J. Lew, the Treasury secretary, said on Thursday at a conference observing the fifth anniversary of "Making Home Affordable," a suite of federal programs aimed at helping homeowners after the financial crisis that began in 2007.

Lew’s announcement came on the heels of criticism – resulting in part from the publication of a memoir by his predecessor, Timothy F. Geithner – that Treasury’s efforts to help homeowners were inadequate.

Of the $46 billion in federal bailout money reserved for homeowners after the crisis, about $38 billion has been obligated but only $12.4 billion has been paid out.

The Obama administration has defended its cornerstone program, a loan modification program known as HAMP, which has resulted in more than 1.3 million loan restructurings. The program helped far fewer people than anticipated, but officials say that it pushed lenders to behave better in general.

“As we know, our initiatives have not been a silver bullet,” Lew said. “But HAMP and our other programs cannot be judged only on what they have done directly for homeowners. Treasury’s housing assistance programs have become a model for the broader housing sector.”

Making Home Affordable, which includes HAMP and several smaller programs, will be extended for at least one additional year, through 2016, Lew said. Housing advocates applauded the extension, mainly because there is nothing yet to replace the programs.

Despite a host of new regulations governing mortgage lending, neither regulators nor the industry has come up with a model for loan modifications, advocates said. And, while the banking industry may have used HAMP as a model, borrowers with HAMP modifications do better than those with less generous bank-governed modifications, according to advocates.

For tenants, the help announced Thursday was less direct, coming in the form of subsidized loans to apartment builders for affordable housing. New loans would come from the Federal Financing Bank, which is under Treasury’s direction. The program could more than double the volume of multifamily loans guaranteed by the Federal Housing Administration each year, officials said. The first project to be financed under the new plan will be an affordable rental building in the Rockaways, Queens, that was damaged by Hurricane Sandy.

Lew also urged Congress to extend the Mortgage Forgiveness Debt Relief Act of 2007, so that homeowners who conduct short sales in lieu of foreclosure do not face a hefty tax bill, and to reform the nation’s housing finance system, now dominated by Fannie Mae and Freddie Mac.

He said nothing about principal reduction, which has been banned by Fannie and Freddie on the mortgages they back, and which a growing body of evidence suggests is the most effective way to help homeowners and the broader economy.

The Treasury had promised that Lew would address the expansion of credit to potential home buyers, millions of whom are unable to get a mortgage with today’s tight standards. No new programs were offered, though Lew said the Treasury was working to jump-start the all-but-vanished market for private mortgage-backed securities, which would help lenders grow more confident and make more loans.

Here's a comprehensive list of all Making Home Affordable programs:

  • Home Affordable Modification Program (HAMP)
  • Principal Reduction Alternative SM (PRA)
  • Second Lien Modification Program (2MP)
  • FHA Home Affordable Modification Program (FHA-HAMP)
  • USDA’s Special Loan Servicing
  • Veteran’s Affairs Home Affordable Modification (VA-HAMP)
  • Home Affordable Foreclosure Alternatives Program (HAFA)
  • Second Lien Modification Program for Federal Housing Administration Loans (FHA-2LP)
  • Home Affordable Refinance Program (HARP)
  • FHA Refinance for Borrowers with Negative Equity (FHA Short Refinance)
  • Home Affordable Unemployment Program (UP)
  • Hardest Hit Fund (HHF)

 

Thursday, May 15, 2014

Florida still leads nation in mortgage foreclosures

Rates of foreclosures are slowing down, however

Florida had the nation's highest foreclosure rate in April, even though April's rate was lower than the same time last year.

The research firm RealtyTrac reported last week that Florida's April foreclosure rate was the highest in the nation, despite being down nine percent from April 2012. RealtyTrac says one in 400 Florida homes had a foreclosure filing in April.

Among U.S. metro areas with populations of more than 200,000 people, 11 of the 20 cities with the highest foreclosure rates are in Florida.

Orlando was at the top of the list. It was followed by the Daytona Beach area, South Florida, Jacksonville, metro Tampa, and the Space Coast area. Lakeland and metro Sarasota were ranked ninth and 10th.

Despite Florida having the highest foreclosure rates nationwide, new foreclosure cases are down across the Sunshine State, including in some counties hit hardest by the 2008 housing crash, as the housing market continues to shed distressed mortgages.

From January through April, lenders filed 1,529 new foreclosures in Palm Beach County, down 54 percent from a year earlier, according to RealtyTrac. Over the same period, new cases fell 43 percent in Broward County. Statewide, the year-to-year drop was 34 percent.

Even with fewer filings, Florida had the nation's highest foreclosure rate in April – one in 400 homes. Florida has led the country for seven consecutive months, said Daren Blomquist, vice president for RealtyTrac.

Toxic mortgages during the housing boom of the mid-2000's led to the foreclosure crisis, but recent buyers are benefiting from lower prices and more reasonable loan terms, according to housing analysts.

Irvine, Calif.-based RealtyTrac monitors public records for three types of foreclosures: new cases, scheduled auctions, and bank repossessions.

From January through April, 7,501 Palm Beach County homeowners were in one of those stages of foreclosure, seven percent lower than during the same period of 2013, the firm said.

Still, some foreclosure lawyers say there are plenty more foreclosures to be filed. They insist a new Florida law designed to fast-track foreclosures is instead muddying the process. The law requires lenders to have all of their paperwork in order before they file – a stipulation that has led to a slowdown in new foreclosure filings that is likely to be temporary, attorneys say.

 

May 14, 2014

Compliance monitor releases test results

Five banks pass tests

Joseph A. Smith, Jr., official monitor of the National Mortgage Settlement, today released a summary of six compliance reports he filed with the U.S. District Court for the District of Columbia. The summary details the results of tests to determine Bank of America, Chase, Citi, Ocwen, and Wells Fargo’s compliance with the NMS servicing rules from July 1, 2013, to Dec. 31 2013. The report also contains the test results for Green Tree from Oct. 1, 2013, to Dec. 31, 2013.

According to Smith:

“My colleagues and I conducted a rigorous testing process to review five servicers’ compliance with the National Mortgage Settlement’s original 29 metrics for the third and fourth quarters of 2013,” said Smith. “I’m pleased to report that these servicers passed all tests during this reporting period.

“In addition, this report contains the results from the first quarter Green Tree was tested for the loans it acquired from the ResCap Parties. After extensive testing, I can confirm that Green Tree failed eight metrics. These results show that Green Tree must make significant changes to improve its practices and comply with the Settlement.

“Overall, I’m encouraged by the testing results within this report. I believe that these results, when compared to my previous reports, show that, under the Settlement, servicers are addressing problems quickly and effectively through focused corrective action plans.

“While these results are encouraging, work still remains to ensure that the servicers treat their customers fairly. My colleagues and I continue to test their compliance with the original 29 metrics. In addition, we have started testing the servicers on the four new metrics issued in October which provide more stringent review on the loan modification process, single point of contact and billing accuracy. I look forward to reporting those results in my next compliance report.”

More information about the National Mortgage Settlement is available at www.nationalmortgagesettlement.com. Information about the Office of Mortgage Settlement Oversight is available at www.mortgageoversight.com.

 

May 13, 2014

Florida reopening Hardest Hit Fund to help underwater homeowners

Attention, homeowners who are current on your mortgage payments but who owe more than your house is worth.

At 9 a.m. Thursday, Florida officials will reopen a federally funded program that pays down loan balances by up to $50,000.

To qualify for the Florida Hardest Hit Principal Reduction Program, the home must be a primary residence purchased before January 2010 and have an unpaid first mortgage balance not greater than $350,000. Total household income for a family of four cannot exceed 140 percent of the average median income for an area.

Homeowners must also owe at least 125 percent of the property's current market value.

Reopening the $350 million Hardest Hit Fund Principal Reduction Program gives Floridians a second shot at a program that accepted applications in late September but closed the application process after a few days when the number of applications hit a 25,000 cap.

Unlike last time, there is no automatic cut-off for applications, according to state officials at a news conference Tuesday.

However, they stressed that homeowners who applied in September should not reapply even if they were initially rejected or are still waiting to hear. Instead, they should contact the adviser they were working with.

Since September, the program has spent $102 million to help 2,400 homeowners. More than 6,000 have been rejected.

The state recently expanded another principal reduction program (ReStart) that benefits people who have stopped paying their mortgages. So far, that program has helped only nine homeowners yet has tied up $50 million in Hardest Hit funds.

State officials say they had been "watching trend lines" since March and realized that the Florida Hardest Hit Principal Reduction Program would not use all of the $350 million allotted to it, at which point the decision was made to reopen the application process.

The $7.6 billion federal Hardest Hit fund was created in 2010 to help 18 states with high foreclosure rates. Critics say officials in charge of Florida's $1 billion share have been slow to get the money out to needy homeowners.

Since 2010, Florida has used about $480 million on five different mortgage-assistance programs and has until the end of 2017 to spend the rest.

 

May 12, 2014

Questions raised about programs to help homeowners with mortgage difficulties

Florida housing officials are expanding a program to help homeowners who stopped paying their mortgages and owe more than their homes are worth.

At the same time, however, more than 6,000 Floridians who are current on their payments have been denied assistance under the Florida Hardest Hit Principal Reduction Program – a separate program that uses the same source of federal money.

At an April 25 meeting, state officials voted to expand the $50 million Modification Enabling Pilot Project (also known as ReStart) that was quietly launched last June to help underwater homeowners who have fallen behind on their mortgages. ReStart is for people who originally could afford their mortgages but had an unexpected drop in income.

Florida officials scheduled a news conference for 10 a.m. today to announce "important information'' about the Florida Hardest Hit Principal Reduction Program that helps homeowners who have stayed current on their mortgages. The news release indicated that officials may now expand that program, too.

Both programs, which pay down mortgage balances by up to $50,000, use money from the federal Hardest Hit Fund.

ReStart – for homeowners delinquent on their mortgage payments – was created by a private organization called National Community Capital. Part of a large New Jersey nonprofit that develops affordable housing, National Community Capital says its "social mission'' is to prevent foreclosure and stabilize neighborhoods.

In 2012, it bought 249 Tampa Bay mortgages from the U.S. Department of Housing and Urban Development, which auctions off pools of delinquent, federally insured loans at prices far below face value.

National Community Capital then struck a deal with the state of Florida to use a mix of private and Hardest Hit Fund money to reduce loan balances on its mortgages as well as on mortgages purchased by other investors at HUD auctions in 2012 and 2013.

"When more information becomes available," state officials said in March 2013, "we will make public announcements."

No more announcements were made. The ReStart program got off to a slow start.

The sole homeowners to benefit from ReStart last year were Luis and Felicita Irizarry of Tampa. Far behind on their payments, they owed $241,553 on a small house worth less than $100,000. National Community Capital forgave part of the balance. The state then kicked in $50,000 from the Hardest Hit Fund, reducing the principal to $86,000. After the Irizarrys completed a three-month trial modification period in September, their monthly payments were permanently cut in half, to $720.

Eight more homeowners in Hillsborough, Pinellas, and Polk counties got ReStart help in January and February. An additional 223 are on track to qualify.

However, state officials and National Community Capital realized they didn't have enough mortgages purchased from HUD in 2012 and 2013 to use up all of the federal money earmarked for the ReStart program.

As a result, state officials agreed that homeowners with mortgages bought at HUD auctions in 2014 and 2015 would also be eligible for principal reductions.

Instead of expanding a program that benefits investors and delinquent borrowers, some Floridians wonder why officials didn't transfer some of the $50 million to the Florida Hardest Hit Principal Reduction Program, which helps homeowners who are still paying their mortgages but are underwater and barely getting by.

The Florida Hardest Hit Principal Reduction Program drew 25,000 applicants in September. Since then, 2,230 homeowners have had their mortgages paid down by up to $50,000, but at least 6,123 others have been rejected.

 

January 29, 2014

Hardest Hit Fund hopefuls left in limbo

Thousands of Floridians who applied for a share of the Florida Hardest Hit Principal Reduction Program's $350 million in assistance funds are still waiting.

In the four months since a flood of 25,000 underwater homeowners applied for the state-distributed relief, only 750 have had their loans paid down, state officials said. An additional 17,000 homeowners who applied in late September are left wondering whether they'll qualify. About 150 applicants are close to approval while 7,400 applicants have been denied.

The program's payout limbo has frustrated homeowners who hope the money could help save their homes. About 10 percent of the money, or $40 million, is on its way to loan servicers to shave off approved applicants' mortgage debt.

But it has also marked another slowdown for the broader Hardest Hit Fund program, which is funded by $1 billion in federal relief and has been long criticized for sluggish results. In a report Wednesday to Congress, the Special Inspector General for the Troubled Asset Relief Program (TARP) said, "Florida is not getting a significant amount of these funds out the door to help homeowners."

Officials say that due diligence takes time and that the state and about 80 contracted agencies are working quickly to verify if the applicants qualify. Hardest Hit Fund dollars must be spent by the end of 2017.

The rules for program approval are strict: Homeowners must be current on their mortgage, owe more than 25 percent over a home's market value, and earn household wages less than 40 percent over the area's median income.

But in Florida, where 29 percent of all homeowners with a mortgage are underwater, those limits barely made a dent in demand for help. The state saw a torrent of applicants, reaching its 25,000-application limit in a week.

Since the Hardest Hit Fund program was launched in the aftermath of the housing bust, Florida and 13 other states have shrunk their estimates of how many distressed homeowners they could help. In early 2011, Florida estimated its Hardest Hit Fund relief could reach as many as 106,000 homeowners. By late last year, that estimate had slid to 39,000.

 

January 25, 2014

Foreclosure victims to receive lawsuit cash

More than 1,700 Floridians who lost their homes to foreclosure will receive small payments as part of a national settlement with five major banks.

Florida Attorney General Pam Bondi announced Friday that payments of $1,480 would be paid next week. A total of $2.5 million will be distributed.

The state had previously announced that payments of $1,480 were paid to approximately 73,000 former homeowners who qualified for assistance under the settlement.

Five lenders negotiated a $25 billion settlement in 2012 to end an investigation into foreclosure abuses.

Florida – which has been hit hard by the foreclosure crisis and the collapse of the housing market – negotiated one of the largest shares in the settlement agreement with Ally Financial, Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo.

 

December 5, 2013

Florida foreclosure backlog somewhat diminished

Courts throughout Florida are moving foreclosures through the system at a faster pace, with the current backlog of cases now the smallest since the housing crisis began in 2008.

But more than 250,000 pending defaults continue to clog financially strained judicial systems all over the state. At the current pace, it will take another three-and-a-half years to clear the system completely.

Analysts attribute the recent progress to the new foreclosure fast-track law aimed at further expediting home defaults. With home values on the rise, mortgage lenders are also hustling to move delinquent loans from their books to capitalize on the thriving market.

As of Oct. 31, there were 11,880 pending foreclosures in the 12th Judicial Circuit Court that encompasses Sarasota, Manatee, and DeSoto counties, according to a report from Florida's Office of the State Courts Administrator.

That was down 16 percent from the first half of the year and 29 percent from an estimate on July 1, 2012, court records indicate.

Since the start of the state's fiscal year in July, 1,039 new foreclosure cases have entered local courts. But, during that time, a special task force dedicated to handle these delinquencies was able to resolve 3,268 cases – more than they cleared in the previous year.

The average pace of 932 local dispositions per month in September and October also greatly surpassed the court's resolution speeds earlier in the year, an indication those magistrates have ramped up their workload of late.

The foreclosure reduction efforts are part of a $4 million state initiative to relieve overwhelmed foreclosure courts by employing retired judges, trained case managers, and special magistrates in the areas hardest hit by the housing recession. Those local task forces have proven most effective since another $1.3 million was earmarked for the effort in February.

Banks have also become more willing to take on defaults, with most of these lending institutions standing on better financial ground than they were two years ago. Home prices also have increased substantially – cutting down the potential loss to the lender.

The number of pending foreclosure cases throughout the state has dipped 28 percent since July 2012 and 17 percent since July 2013 to 272,470 as of Oct. 31. That is the lowest total since the foreclosure crisis first clogged up the court system five years ago.

Florida's backlog has now shed 105,237 foreclosures in the past 16 months, records show.

 

September 20, 2013

Florida to accept applications for revamped Hardest Hit Fund program

Florida homeowners with "underwater" mortgages may now qualify to have as much as $50,000 chopped from their loan balance under a revamped Hardest Hit Fund program announced Friday by the state.

After spending only a small fraction of its billion-dollar share of federal foreclosure-prevention funds during the past two years, Florida officials said they would loosen their hold on the money by letting qualified homeowners use it to reduce their outstanding debt and monthly payments.

About $350 million will be distributed through the program, formally known as the Florida Hardest Hit Principal Reduction Program, on a first-come, first-served basis to qualified homeowners whose homes are worth less than their mortgage amounts. The program will be restricted to 25,000 applications.

State officials said they hope to help 10,000 homeowners reduce their remaining mortgage balance by an average of $35,000 each. That is about one-tenth of the homeowners saddled with underwater mortgages in Florida, where home values were slashed in half by the housing slump.

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 state came under fire earlier this year for putting too many restrictions on Floridians' use of the foreclosure-prevention funds. In March, federal officials announced an investigation into Florida's Hardest Hit program after U.S. Sen. Bill Nelson, D-Fla., complained that it was poorly run and reaching too few struggling homeowners.

Only about a quarter of the 53,000 Floridians who have applied for the aid since June 2011 have been approved for some type of assistance.

Under the guidelines announced Friday, all or some of the principal cut from a successful applicant's mortgage has to be repaid if the homeowner sells the house within five years. The amount to be returned dwindles by 20 percent every year the owner keeps the house.

Homeowners can apply for the funds as soon as September 25.

 

September 4, 2013

Mortgage foreclosure filings drop after enactment of new law

Lawyer group fails to follow-through on lawsuit threat

A new Florida law designed to reform and speed-up the mortgage foreclosure process took effect June 7. Meanwhile, the number of new foreclosure filings in Florida is down for the past two months.

Official foreclosure statistics from Florida's Office of the State Courts Administrator for July and August haven’t yet been released, but a report from RealtyTrac shows initial foreclosure filings dropped 28 percent in July when compared to July 2012.

Rep. Kathleen Passidomo, R-Naples, sponsored House Bill 87 this year as a way to address the foreclosure backlog in the court system. As of June 30, 327,938 foreclosure cases were still pending in the courts, where the average foreclosure takes more than two years to complete.

Consumer advocates and foreclosure defense lawyers spoke out against HB 87 during this year's legislative session, claiming that an expedited timeline for homeowners facing foreclosure could allow banks and lenders to trample over homeowners' due process rights.

Banks were also not happy about provisions within the bill, namely those that decreased the time to seek a deficiency judgment from a homeowner after a foreclosure from five years to one year. Faced with the reality of the law, however, banks and lenders have slowed their rate of initial foreclosure proceedings since the law took effect.

Matthew Weidner, a foreclosure defense attorney and president of Florida Consumer Justice Advocates, initially threatened that the group would file a lawsuit "immediately" if HB 87 were to become law, contending the law was unconstitutional. However, the group has now pulled back from that position, deciding to wait and see how the law plays out in practice.

Weidner said the banks are trying to comply with new requirements in the law to obtain proof of ownership of the mortgage before filing foreclosure proceedings.

“We’re seeing a pretty dramatic reduction in filing because the banks are unable to comply with the new requirements,” Weidner said.

That effect was one of the consumer protections built into the law by Passidomo and Sen. Jack Latvala, R-Palm Harbor, who sponsored the Senate's version of the bill during this year's legislative session. During legislative debate, Latvala asserted that the bill has safeguards that tilt more in favor of homeowners than banks.

It’s too early to tell how the new law will affect the foreclosure process and the housing market in the long term. However, the current drop in new foreclosure filings means a corresponding reduction in filing fees collected by Florida courts – a decline that could significantly affect court funding. The courts receive $770 out of each $1,900 foreclosure filing fee. That revenue stream was projected to bring in $32.7 million this state fiscal year, or nearly one-third of the projected revenue from all court fees.

Actual revenues through the first two months of the fiscal year are $1.17 million off projections.

After the “robo-signing” scandal involving law firms pushing faulty paperwork through the courts was exposed in October 2010, banks imposed a voluntary moratorium on new foreclosures, which led to a drastic drop in filing fees. The courts eventually asked for and received an emergency $45 million from state coffers to cover expenses.

The court system is not nearly as reliant on foreclosure fees as it was then, but another drop in foreclosure filing fees could lead to another shortfall for the courts – despite an additional $42.6 million in national mortgage foreclosure settlement funds dedicated to reducing the foreclosure backlog.

Passidomo noted that fees from the first wave of foreclosures after the onset of the Great Recession have already been spent, but the cases themselves are still stuck in the system. She said the state needs to become less reliant on foreclosure fees to fund the courts but also that the new law should aid that goal – if the law works as intended and foreclosure cases don’t get stuck in the system.

“If the case sits there for four years... you still have to handle the case. All that takes time that was paid for earlier on,” Passidomo said. “The whole judicial system should not depend on foreclosure cases.”

Weidner said the Legislature has failed to account for the potential impact of the new law and filing fees.

“Where are the policy makers preparing for this?” Weidner said. “It’s a mess and getting worse.”

 

June 20, 2013

Compliance monitor files first report card in mortgage settlement case

Banks graded as mostly incomplete

The five largest banks that agreed to a $25 billion settlement with 49 attorneys general in 2012 got their first "report cards" Wednesday, but they received mostly incomplete scores from the government-appointed monitor who issued the grades.

Joseph A. Smith, Jr., the monitor, released the Summary of Compliance dated June 19, 2013, on Bank of America, JP Morgan Chase, CitiMortgage Inc., ResCap (formerly GMAC/Ally), and Wells Fargo. According to a report by Smith last month, the banks have reported distributing $50.6 billion in direct relief to more than 620,000 homeowners through the settlement.

On Wednesday, Smith found that the banks failed eight servicing standards they agreed to in the settlement, mostly related to processing loan modifications, a sure sign that the banks haven't hired enough staff to manage the cases.

The banks did pass the majority of the standards they were tested on, but they weren’t tested on all of the 29 areas outlined in the settlement because of delays in providing agreed-upon services or documentation that would verify compliance. Bank of America was tested on only a dozen, Chase on only 11, CitiMortgage on 15, ResCap on 11, and Wells Fargo on 20.

The incomplete gaps led to some considerable holes in reporting. For instance, Bank of America has come under fire in Florida and other states for not providing timely documents or alerts during the foreclosure process. In a June 6 letter, Florida Attorney General Pam Bondi slammed Bank of America and threatened to sue over the bank’s alleged failure to modify mortgages in an efficient manner.

Two of the 17 categories that Bank of America wasn’t tested on are related to this very issue.

Bank of America itself reported to Smith that it failed two tests: (1) A requirement that it consistently send borrowers accurate information before foreclosures begin, and (2) A requirement to notify the borrower of missing documents in loan modification application process within the five days outlined in the settlement. The bank has begun working on proposed resolutions for these potential items, Smith noted in the report.

Chase disclosed that it potentially violated a requirement that it failed to meet a 15-day notification requirement to borrowers, but Smith said the bank has refunded premiums for over 2,000 borrowers because of the mistake. It also alerted Smith that it didn’t provide timely decisions on loan modification applications.

CitiMortgage reported to Smith that it wasn’t alerting borrowers of incomplete loan modification applications in a timely manner. Smith concluded this was a widespread problem and he’s reviewing solutions.

Wells Fargo reported it wasn’t alerting borrowers their loan modification agreements in a timely fashion, which Smith said he will update in his next report.

During a conference call with reporters, Shaun Donovan, the U.S. Secretary of Housing and Urban Development, said the report signifies that the banks have improved, but need to get better.

“The good news is that gains have been made,” Donovan said. “The practice of robo-signing - where banks sign off on foreclosures with little or no review - has come to an end. We’ve also confirmed that the five banks have stopped charging distressed borrowers a fee just to process a loan modification request.

“Unfortunately, other abuses shamefully endure,” he said. “Most notably, these financial institutions consistently fail to send notices and communicate decisions to shareholders in a timely manner. This is unacceptable.”

Donovan warned that if this behavior continues, the banks will face fines of up to $5 million for each failure or they will be sued again.

Whether this will mollify some other critics of banks, like New York Attorney General Eric Schneiderman, is unclear. Schneiderman has threatened to sue Bank of America and Wells Fargo because he says they aren’t complying. California has reported widespread cases in which the banks aren’t complying.

Donovan had four other attorneys general - including Bondi - with him during Wednesday’s conference call.

Bondi, who had earlier talked down litigation as a solution, didn’t rule it out. She said her office has four employees dedicated to answering complaints about the five banks in the lawsuit, which make up about 60 percent of the mortgages.

“It’s clear that the banks still have a long way to go to live up to the commitments they made when they entered this settlement,” Bondi said in a news release. “Ultimately, if the banks do not comply, we will not hesitate to take further legal action.”

 

June 8, 2013

Governor signs mortgage foreclosure reform bill into law

Gov. Rick Scott decided against veto requests and ignored a lawsuit threat when he signed House Bill 87 into law on June 7. The bill was designed to speed up the foreclosure process in Florida in an effort to clear the state’s nearly 400,000-case backlog. HB 87 was first covered here on January 3.

The Sunshine State was one of the hardest hit by the national collapse in the real estate market that began in 2008. Those foreclosure cases quickly swamped an already overworked court system.

Rep. Kathleen Passidomo, R-Naples, who filed HB 87 on January 3, said earlier this year that her bill preserves due-process rights for distressed homeowners while trying to stimulate Florida's real-estate market by getting foreclosed property "back into the stream of commerce."

The new law is designed to make banks prove in more detail that they own a mortgage or explain why they can't prove ownership. It also creates a process for others besides mortgage-holders to ask the court to speed up foreclosure cases.

Another key provision would reduce the statute of limitations, or amount of time, for banks to go after foreclosed homeowners on deficiency judgments – from five years to one year. Deficiencies are the difference between the money obtained from selling a foreclosed home and what the original homeowner still owes on it.

Scott, in a bill signing letter, contended that the legislation would "bring more certainty to the housing market."

"This process will put these homes back onto the housing market and allow Florida families who have experienced a foreclosure to begin working to repair their credit and finances," Scott wrote.

The bill was strongly opposed in the Florida Senate by Sen. Darren Soto, D-Orlando, who urged other senators to vote against the bill and wrote a letter to Scott recommending a veto.

A group of lawyers who represent homeowners in foreclosure cases – calling itself Florida Consumer Justice Advocates – has already said it plans to challenge the new foreclosure law in court "immediately." Matt Weidner, a St. Petersburg attorney who leads the group, said one of the provisions of the law that limits the ability of a judge to correct a simple mistake in a foreclosure order, is unconstitutional.

"This finality of foreclosure provision provides that if a home is lost to foreclosure, even if the foreclosure was the product of gross fraud, complete error, or total mistake, the innocent consumer can never, ever get their home back," Weidner said in a statement.

HB 87 has been added to the official Laws of Florida as Chapter 2013-137. For the official legislative summary of HB 87, click here.

UPDATE: Lawyer group backs away from lawsuit threat.

 

May 29, 2013

Attorneys pledge lawsuit if Governor signs foreclosure reform bill

Members of a group of foreclosure attorneys say they will quickly file a lawsuit should Governor Rick Scott sign House Bill 87, a bill designed to speed up the foreclosure process, which they claim is unconstitutional. The bill was passed by the Florida Legislature on May 3.

Florida Consumer Justice Advocates, a group formed by foreclosure attorneys to fight the bill, says the “finality of foreclosure” provision in the bill is unconstitutional. It prevents a homeowner unfairly foreclosed through error or fraud from getting his home back if the house has already been sold to a third party. Instead, the homeowner could only seek monetary damages.

“The bill removes the power of a judge to undo a mistake,” said Matthew Weidner, president of Florida Consumer Justice Advocates. “The judge, even recognizing this should never have happened, can’t do anything about it.”

Other consumer advocate groups criticized the bill as it made its way through the Legislature, decrying other provisions that speed up the show-cause hearing, making defendants prepare their defense more quickly.

Supporters of the bill point to its increased consumer protections, such as requiring banks to provide more proof of ownership of a mortgage note before starting foreclosure proceedings and reducing the amount of time for a bank or lender to seek a deficiency judgment for the remainder of the loan from five years to one year.

However, opponents of the bill say those measures don’t do anything to punish the banks and lenders, who contributed to the foreclosure crisis with rampant subprime loans and exacerbated it by trying to rush fraudulent paperwork through the courts in the “robo-signing” scandal.

Weidner said a decision about whether to file suit in federal court or state court should Scott sign the bill is yet to be made. It is also not clear on whose behalf the lawsuit would be filed. Weidner did state, though, a lawsuit will be filed immediately if the bill is signed.

“We would file it immediately. We wouldn’t wait for someone to lose their house first,” Weidner said.

Florida Consumer Justice Advocates is not the only party opposed to HB 87. Sen. Darren Soto, D-Orlando, fought against the bill during the legislative session this year. On May 7, Soto sent a letter to Scott, describing the bill as "disturbing" and "anti-homeowner" and urged Scott to "do the right thing and veto this bill."

The bill was received by Scott's office on May 28, which means his deadline is June 12 to either sign the bill, veto it, or allow it to become law without his signature.

Click here for the official legislative summary of HB 87.

UPDATE: House Bill 87 signed into law by Gov. Scott.

UPDATE: Lawyer group backs away from lawsuit threat.

 

May 9, 2013

Florida to begin using non-judges to hear foreclosure cases

The Florida Supreme Court issued an order today requiring the state’s circuit courts to hire magistrates to hear foreclosure cases in an effort to clear a docket-clogging backlog numbering in the hundreds of thousands.

The order was in response to recommendations made by the Foreclosure Initiative Workgroup, a committee of judges and court administrators that was formed in January.

Magistrates are common in family court but are rarely used in foreclosure actions. Typically they make recommendations on how judges should rule on a case, and a judge has the final say as to whether to accept the recommendation.

According to today’s ruling, foreclosure court magistrates will be appointed by chief judges, must be members of the Florida Bar, and cannot practice law of the “same case type” in the county or court where the magistrate serves.

Some foreclosure defense attorneys criticized the move, questioning whether the magistrates will have enough substantive knowledge of the law to handle foreclosure cases and how they will be held accountable since they are not subject to election as traditional judges are.

But others said it could be good for homeowners, who may get a more thorough hearing before a magistrate than by a judge overwhelmed with cases.

“Folks in foreclosure may get a more meaningful review since there are more people available, but that’s providing they hire qualified magistrates,” said Sen. Darren Soto, D-Orlando, who has asked Gov. Rick Scott to veto a fast-track foreclosure bill approved this legislative session.

As of February, there were an estimated 358,000 foreclosure cases pending in Florida’s 20 circuit courts, according to the 55-page report from the foreclosure workgroup. It is predicted an additional 680,000 cases will be filed by 2016.

Broward County has the highest backlog of cases with 42,992. Miami-Dade is second-highest with 41,681.

Most courts already use retired judges (also known as senior judges) to hear foreclosure cases, but the workgroup said senior judges are in limited supply and are required by law to wait one year after retirement before returning to work.

Another “fundamental” problem identified by the workgroup was the lack of urgency on the part of banks to move forward with foreclosures.

The group concluded that foreclosure “clearance rates need to be improved, and the due process rights of the litigants must be protected, while maintaining the integrity of the process.”

Today’s order allows for homeowners to object to the use of a magistrate in their case, but they must file that objection within 10 days of being served.

 

May 8, 2013

Florida Legislature passes foreclosure reform bill

Florida lawmakers will soon send to Gov. Rick Scott a bill designed to accelerate the residential mortgage foreclosure process in Florida, where the real estate market went into a crash dive during the national housing crisis of 2008.

Supporters of the measure (House Bill 87, first covered here on January 3) said they hope it will provide a partial remedy to rejuvenate the state's housing sector.

“I don’t think our real estate market will really start getting back to normal in Florida with new home building … until we can reduce this backlog,” said Sen. Jack Latvala, R-Palm Harbor, sponsor of the Florida Senate's version of the legislation (Senate Bill 1666).

HB 87 was passed by the Senate on a 26-13 vote on May 3, the final day of the Legislature’s 60-day session. It passed the House of Representatives by an 87-26 vote on April 29.

It wasn’t immediately clear whether Scott supports the measure.

Latvala said the bill will make overdue improvements to the foreclosure process.

Sen. Darren Soto, D-Orlando, was an outspoken critic, saying the bill chips away at long-established property rights and fails to protect Floridians who lost their homes due to fraud.

The House bill's sponsor, Rep. Kathleen Passidomo, R-Naples, said the bill would help streamline Florida's bogged-down foreclosure process, which she said must operate justly and expeditiously.

Latvala said the bill has safeguards that tilt more in favor of homeowners than banks.

Florida was one of the states hardest hit by the national collapse in the real estate market that began in 2008. Foreclosure cases quickly swamped an already overworked state courts system.

If HB 87 becomes law, it would make banks prove in more detail that they own a mortgage or explain why they cannot prove ownership. It also creates a process for third parties, such as condominium homeowner associations, to ask the court to speed-up foreclosure cases.

Another key provision would reduce the amount of time for banks to go after foreclosed homeowners on deficiency judgments – from five years to one year. Deficiencies are the difference between the money obtained from selling a foreclosed home and what the original homeowner still owes on it.

Soto said he was told by a judge recently that the cause for the mortgage case backlog is not due to state law, but is a calculated move by banks to keep foreclosed properties from glutting the market, which would collapse housing prices.

“So, what we’re going to see here is, we’re going to reduce property rights … that have been on the books for generations and it’s not even going to work,” Soto said. “This isn’t a legacy that I want to leave.”

The debate comes amid signs that the nation’s foreclosure crisis is abating and the housing market is improving.

The number of U.S. homes repossessed by lenders last month fell to the lowest level in more than five years. While some states still saw increases in homes taken back by banks, nationally home repossessions fell three percent in March from the previous month and were down 21 percent from a year earlier, according to foreclosure listing firm RealtyTrac, Inc.

As of today, the Legislature had not yet sent the bill to Gov. Scott. After Scott receives the bill, he will have 15 days to decide whether to sign the bill into law, veto it, or allow it to become law without his signature.

Soto wants a veto. On May 7, he sent a letter to Scott, describing the bill as "disturbing" and "anti-homeowner" and urged Scott to "do the right thing and veto this bill."

Click here for the official legislative summary of HB 87.

UPDATE: Attorneys threaten lawsuit if Gov. Scott signs HB 87.

 

April 30, 2013

Florida lawmakers pass legislation to spend $200 million in foreclosure settlement dollars

The Florida Legislature today unanimously passed Senate Bill 1852, which appropriates the remaining $200 million of Florida's allocation from the national mortgage foreclosure lawsuit settlement. The funds will be spent in various ways to aid Floridians in a number of housing-related programs.

“Attorney General Pam Bondi helped negotiate a national mortgage foreclosure settlement with banks and finance companies, securing more than $8 billion in relief of Floridians, $200 million of which the Florida Legislature has the responsibility to appropriate,” said Senate President Don Gaetz,R-Niceville. “By focusing this one-time infusion of resources on those most in need of housing assistance, we are making targeted investments that improve the availability of affordable housing options for thousands of persons with disabilities, elders, and extremely low income Floridians,” Gaetz said.

The funds are to be spent in a number of ways through various avenues, as follows:

$159 million – Housing Assistance Focused on Elders, Extremely Low Income Floridians, and Persons with Developmental Disabilities

  • $60 million through the State Apartment Incentive Loan (SAIL) Program:

  • $40 million for the State Housing Initiatives Partnership Program (SHIP) to be used for:
    • Rehabilitating or modifying owner-occupied houses (including blighted homes and neighborhoods);
    • Assisting low income families to purchase existing housing;
    • Providing housing counseling services;
    • Providing lease-purchase assistance; and
    • Implementing other approved strategies to assist households impacted by foreclosure, using existing housing stock.
    • 20 percent of the SHIP funds must be used for persons with special needs, which includes disabled veterans, former foster care young adults, and domestic violence survivors. First priority for these funds will be for persons with developmental disabilities. The funds will be used for home modifications, including technological enhancements and devices which will allow homeowners to live independently and safely in their own homes.

  • $50 million In Competitive Grants for Housing for Floridians who are Disabled, Homeless or Who Have Been the Victims of  Domestic Violence:
    • $20 million for rehabilitation of existing housing for low-income persons throughout Habitat for Humanity;
    • $20 million for competitive grants for housing for homeless individuals and persons with disabilities; and
    • $10 million for competitive grants creating more domestic violence center beds.

  • $ 9.1 million for Take Stock in Children to purchase prepaid dormitory contracts for students in grade 10 or 11 who are participating in the Florida Prepaid Tuition Scholarship Program.

$41 million – Support for the Judicial Branch to Address Foreclosure Cases

  • State Courts System – $31 million to address the foreclosure case backlog:
    • $16 million for temporary court staffing;
    • $9.7 million for temporary staffing for the clerks of court; and
    • $5.3 million for court technology improvements.

  • Legal Aid Programs – $10 million for:
    • Legal aid services for low and moderate-income individuals experiencing foreclosure, and
    • Legal aid services for such persons at eminent risk of foreclosure on their homestead residence.

Click here to see the official legislative summary of SB 1852.

UPDATE: SB 1852 was signed by Governor Scott on June 4.

 

March 20, 2013

Florida Legislature begins deciding how to spend $200 million in housing aid

Florida lawmakers announced a plan today for appropriating more than $200 million in housing aid from a national mortgage settlement that has languished for nearly a year.

The Florida House of Representatives Appropriations Committee agreed to introduce a committee bill containing a plan for the money, which would be directed toward housing aid for teachers, veterans, rural physicians, public defenders, and others. The plan would also provide funding for legal services and additional court staff to help streamline Florida’s clogged-up foreclosure system. People who have suffered from foreclosure or other housing troubles could benefit from additional funding for affordable housing contained in the bill.

Last year, Florida became the slowest state to make any use of its settlement funding, which was about $300 million. The Legislature and Florida Attorney General Pam Bondi debated over who had authority to spend the money.

In November 2012, Bondi and legislative leaders announced plans to amend the state budget to spend $60 million of the funds during the current state fiscal year for down-payment assistance for Floridians, foreclosure-related legal assistance and counseling, state court initiatives to ease the foreclosure backlog, and Bondi's own enforcement efforts. Bondi indicated she would designate approximately $40 million of the settlement funds as additional civil penalties.

Bondi and the Legislature agreed that lawmakers would appropriate the remaining $200 million during the 2013 legislative session, to be spent during the state's 2013-2014 fiscal year that begins July 1, 2013.

A separate part of the settlement directed banks to process homeowner aid directly. That program has helped thousands of struggling homeowners, though Florida's foreclosure rate remains the highest in the nation.

The Florida House of Representatives began today to discuss a plan for spending the $200 million. The plan received bipartisan support despite concerns from some lawmakers.

Rep. Ed Hooper, R-Clearwater, who is backing the bill, acknowledged that not everybody would be happy with how the money would be spent.

“The needs are incredible and the number is a finite number,” he said. “And you do the best you can.”

Democrats agreed to support the bill, though they said they would have used some of the money in different ways. Rep. Mia Jones, D-Jacksonville, said more of the cash should be spent to help people who lost their homes.

“I [wish] that there was more of a focus on making sure that those foreclosed families would have received those dollars,” Jones said.

Bondi, who has fought to make sure that the money did not get siphoned away for non-housing purposes, said she was happy with the House’s proposal.

"I appreciate the House's work on this legislation,” she said. “And I will continue to work with the Legislature on our shared goal of ensuring that the mortgage settlement funds are used to address Floridians' housing needs and to remedy the effects of the foreclosure crisis in our state."

Click here to see the House bill, which is designated PCB APC 13-01 until it receives a regular bill number. A Florida Senate plan for spending the settlement money has yet to emerge.

UPDATE: House bill officially numbered as HB 7111. Senate version gets filed as SB 1852.

 

March 6, 2013

Foreclosure bill advances in Florida House while courts request extra funding

Senate bill finally gets filed

A bill in the Florida House of Representatives to expedite the foreclosure process was passed by its second committee of reference today, and court administrators are asking lawmakers to use money from a foreclosure fraud settlement with major banks to help clear Florida’s foreclosure backlog.

Despite objections from consumer advocates who fear HB 87 would trample on the rights of homeowners fighting foreclosure, the bill passed through the House Justice Appropriations Subcommittee by a 9-2 vote. The bill is now in the Judciary Committee, which is its final committee of reference.

House bill 87 would allow third-party lienholders to start foreclosure proceedings and would expedite the final judgment of foreclosure if a homeowner does not file a legitimate defense. The measure also includes consumer protection provisions, such as forcing banks and lenders to show proof of ownership of a mortgage before filing suit and reducing the time for a sufficiency judgment from five years to one year.

Senator Jack Latvala, R-St. Petersburg, filed a similar bill, SB 1666, on March 2. That bill has yet to be referred to Senate committees and is therefore well behind the House bill in terms of getting through the legislative process.

Meanwhile, Florida’s court system is looking for more money to pay for judges to help reduce the foreclosure backlog.

The average foreclosure takes more than two years to clear Florida’s court system. There is a backlog of 366,000 cases in the courts as of January 31, State Courts Administrator Lisa Goodner told the Senate Appropriations Subcommittee on Criminal and Civil Justice today.

Lawmakers have given the courts $10 million over the past three years to pay for retired judges to help clear the backlog. This year, the Legislative Budget Commission used $5 million of Florida’s share of a foreclosure fraud settlement with five major banks to pay for more judges and technology upgrades.

Per an agreement between legislative leaders and Attorney General Pam Bondi, lawmakers must use $200 million of the settlement money to help troubled homeowners and Florida’s housing market.

Goodner told the panel the courts are asking for $35 million over three years to pay for more senior judges and technology upgrades to clear the backlog. She said foreclosure filings are not projected to come down to normal levels until the 2016-17 state fiscal year. She pointed to lenders that are unmotivated to move cases along and extensive paperwork as the main reasons for delays.

“Two major issues that the [circuit courts] report to us that continue to cause delay in these cases – one is that the plaintiffs in these cases do not have any sense of urgency to move the cases forward,” Goodner said. “The other challenge that we still face is paperwork problems.”

UPDATE: Lawmakers pass HB 87 on final day of 2013 Legislative Session.

 

February 8, 2013

Florida Supreme Court rules for banks in landmark foreclosure lawsuit

The banks were the winner Thursday in a highly anticipated Florida Supreme Court decision involving a Greenacres foreclosure case.

Justices upheld a procedural rule allowing lenders that had filed foreclosure cases to voluntarily dismiss cases as a tactic to avoid being penalized for filing fraudulent documents.

The ruling was issued in the case of Roman Pino v. the Bank of New York, first covered here on May 8, 2012.

It was the first significant foreclosure case to be heard by the high court since Florida’s epic housing collapse and was unusual because justices took up the complaint after Pino had settled with his lender. At the time, a divided court said the legal question of whether a bank could still be held accountable if it voluntarily dismisses a case could affect the “mortgage foreclosure crisis throughout this state.”

Thursday’s 44-page ruling was unamimous.

“I would say the Supreme Court has spoken loud and clear that it doesn’t care about litigants that abuse of the court system and that fraud is OK,” said Royal Palm Beach-based foreclosure defense attorney Tom Ice. “There are no ramifications if you get caught defrauding the court. Just take a voluntary dismissal and start over.”

A voluntary dismissal allows the bank to refile later.

Ice, whose firm represented the 42-year-old Pino, had challenged a document created by the former Law Offices of David J. Stern and sought to question employees about its veracity. On the eve of those depositions, the bank moved to dismiss the case, blocking Ice’s opportunity to argue for sanctions. Pino later settled with the bank in an agreement that allowed him to keep his house.

Michael Allan Wolf, a University of Florida law professor, said although the justices supported current rules of civil procedure, they did address other penalties that could be invoked if fraudulent documents are filed. Those include referring an attorney to the Florida Bar and asking the bank to pay court costs and attorney fees if a case is voluntarily dismissed.

The court also asked for a recommendation from a rules committee on whether explicit sanctions should be allowed after a case is voluntarily dismissed. The opinion addressed civil procedures in general and not specific foreclosure-related actions.

“In a sense, this was theoretical fraud, not actual fraud, because the bank withdrew the lawsuit early enough,” Wolf said. “I think (the justices) were reading the rules and statutes in a common-sense fashion.”

Florida's 4th District Court of Appeal had previously agreed with a circuit court ruling on the case that a voluntary dismissal could not be reversed, but said it wanted the high court to weigh in because “many, many mortgage foreclosures appear tainted with suspect documents.”

Ice and Wolf noted that the Supreme Court’s opinion made no mention of mortgage wrong-doing.

“This doesn’t talk about why this was so high profile,” Ice said. “I expected, at the very least, some strong language saying Florida’s courts weren’t going to stand for this.”

Banks had warned of a “widespread financial crisis” if the Supreme Court ruled in favor of Pino.

They argued lenders would cut back on awarding home loans and be discouraged from filing legitimate claims if, when they find a paperwork error, they can’t voluntarily dismiss the case, correct the error, and refile.

“It would have been quite provocative if this had gone the other way,” Wolf said.

Ice made headlines with the Pino case in 2010 when he was featured in a national magazine article about Florida’s so-called “foreclosure mills” and the discovery of allegedly fraudulent documents.

The robo-signing scandal was just coming to the public’s attention at the time. Lenders temporarily halted home repossessions to revamp and rework cases, but ramped them up again last year.

“The banks won again, and like everything else in this state, we missed the chance to just say ‘stop,’” said St. Petersburg defense attorney Matt Weidner about the Pino ruling.

 

February 7, 2013

House committee gives foreclosure bill its first hearing

Hoping to speed up the rate of foreclosures, a subcommittee of the Florida House of Representatives' Judiciary Committee today approved a bill that backers say will allow mortgage holders and consumers to more quickly resolve their issues and get on with their lives.

But the subcommittee got an earful from consumer advocates and homeowners, who contend that they are being asked to do too much to reduce the number of foreclosed homes in Florida, which leads the nation in the percentage of homes facing some type of foreclosure proceeding.

Sponsored by Rep. Kathleen Passidomo, R-Naples, the bill, HB 87, makes changes aimed at shortening the time period involved in a foreclosure proceeding and relaxing restrictions on who can request an expedited procedure and the standards for what can be filed.

Passidomo said the bill is an attempt to remedy a problem that extends far beyond the state and on which the state has limited authority.

"The relationship between the borrower and the lenders ... begins way before it reaches a foreclosure proceeding and is something the state does not regulate," Passidomo told members of the subcommittee.

Florida posted the nation’s highest state foreclosure rate in 2012, according to statistics compiled by RealtyTrac. That report found that 3.1 percent of Florida housing units, one in 32, received a foreclosure filing during the year.

The bill, a version of which passed the House last year, raised concerns at today's hearing from a number of stakeholders including bankers, legal aid organizations, and homeowners, who objected to different aspects of the measure that would also significantly reduce the amount of time lenders and lien holders have to challenge a homeowner.

Among its more contentious provisions, the bill would reduce from five years to one the length of time a lender could pursue a claim after a foreclosure action and require lenders to provide more, a provision that Florida Banking Association lobbyist Anthony DiMarco called "draconian."

Homeowner advocates, meanwhile, are skeptical of changes making it easier for a judge to forgo further proceedings if the paperwork is in order.

"The bill appears to diminish the rights of consumers to streamline the process," said Lynn Drysdale, an attorney representing Jacksonville Area Legal Aid.

The bill is expected again to draw considerable attention. Today, representatives from different groups of lawyers took opposing sides in the debate, with those who work in consumer law opposing the proposal while a representative of the Bar’s probate section offered his support.

Senator Jack Latvala, R-St. Petersburg, is expected to file a Senate version. Latvala said today that his proposal would differ from a measure he filed last year but would not elaborate on what changes he will propose this time.

 

February 3, 2013

Deadline officially extended to claim foreclosure settlement dollars

New deadline is February 15

Even with the sad distinction of the highest foreclosure rate in the country, Florida is still having difficulty getting millions of dollars in relief into foreclosed homeowners' hands.

Only 55 percent of the 167,000 Floridians who were foreclosed on between 2008 and 2011 have filed claims under a $25 billion settlement reached with big banks, Florida Attorney General Pam Bondi said Friday.

Efforts to bring in more responses -- including paying nearly $200,000 for operators to call people directly -- have still netted a response rate lower than the national average. The deadline for filing claims has been pushed back to Feb. 15.

"What happens if you've had your house foreclosed on and you get a letter from the bank? You're going to toss it, probably, not thinking it's good news," said Bondi, who spoke alongside Tampa Mayor Bob Buckhorn and St. Petersburg Mayor Bill Foster at a downtown Tampa press event. "It's their money. That's what makes it so frustrating."

About $170 million was set aside for people whose foreclosures included a bank abuse like "robo-signing," in which automated or shoddy paperwork was filed to speed up foreclosures. Settlement checks are expected to be sent out later this year to qualified borrowers who file claims.

The settlement was reached last year between attorneys general and Ally Financial, Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo over claims of bank abuse.

Between March and September, banks offered 49,000 Floridians about $3.6 billion in loan modifications, principal reductions, and refinancings, according to banks' unconfirmed reports to a settlement monitor.

Most of that money has been spent toward short sales, in which borrowers must leave their home but are forgiven of mortgage debt.

Unresponsive homeowners, attorneys said, could be plagued by "borrower fatigue" under an avalanche of bills and bank mailings. Others may simply question the effort. Thousands of Floridians who sought similar relief from the Independent Foreclosure Review were told last month that their submissions would be discarded in favor of an $8.5 billion settlement with flat payouts.

Banks could also share some blame for the tepid response. More than 300 Floridians have filed complaints over issues with the broader settlement, a monitor said in November.

Bondi encourages prospective settlement recipients to check eligibility or file a settlement claim by calling 866-430-8358 or by visiting NationalMortgageSettlement.com.

 

January 25, 2013

Attorney General urges Floridians to seek mortgage settlement cash, despite deadline

Settlement dollars could be awarded

Florida Attorney General Pam Bondi on Thursday urged Floridians who believe they are eligible for a portion of the National Mortgage Settlement to continue to apply, even though the deadline expired Friday, January 18.

Bondi said about 50,000 Florida homeowners – just 51 percent of those eligible – had secured financial assistance totaling $3.6 billion under the $32 billion national settlement reached with mortgage lenders last year.

"If you feel you're owed money, please, please just contact either myfloridalegal.com or look at the information you've received and please follow-up on that, because there's still many people who are owed money and I want them to get that money that's well-deserved," Bondi said.

As of September 2012, Bondi's office had mailed announcements to more than 167,000 borrowers who lost their homes to foreclosures, with the deadline of January 18, 2013, to return a claim form.

Borrowers are asked on the claim form to identify bank wrongdoing, such as if they were foreclosed on during negotiations for a loan modification.

A new deadline has not been set, but Jenn Meale, communications director for Bondi's office, said the Multi-state Monitoring Committee made a determination that claims could continue to be accepted for a few weeks after the Friday deadline, "while certain necessary processing work was being performed prior to claims being processed."

Qualified residents include those who had their mortgage loans serviced by Ally/GMAC, Bank of America, Citi, JPMorgan Chase, and Wells Fargo.

Bondi said she's hoping to get up to 65 percent of those eligible to apply.

UPDATE: Deadline extended to February 15

 

January 24, 2013

State leaders tackle Florida's surging foreclosure problem

Lawmakers in Tallahassee are renewing their focus on Florida’s foreclosure problem, after the state ended 2012 as America’s foreclosure capital.

Attorney General Pam Bondi, Senate President Don Gaetz, and House Speaker Will Weatherford held a press conference today to discuss a newly approved $60 million program for housing aid.

The program – which includes money for homebuyer assistance, legal aid, and foreclosure prevention – is part of last year’s multi-billion dollar national settlement that included cash payments to states.

As part of the settlement, Florida homeowners have received billions of dollars worth of direct mortgage assistance from banks.

“Almost 50,000 Floridians have received at least $73,000,” Bondi said. “That’s a lot of money.”

While lawmakers diverted $74 million from the foreclosure settlement for general spending, another $200 million remains to be spent. Lawmakers will decide how to allocate the money during the 2013 legislative session, which begins March 5. Bondi, Gaetz, and Weatherford have committed to using the money for housing-related causes.

In the House Subcommittee on Civil Justice on today, legislators got a glimpse of how bad the foreclosure problem is in Florida.

During a workshop on the foreclosure problems faced by state, the committee heard from experts in housing, state courts, and consumer advocacy.

“Among all U.S. metropolitan areas, Florida had seven areas that were in the top 10 in the country,” for foreclosures, said Amy Baker, chief economist for the Florida Legislature.

The number of foreclosure filings rose by more than 53 percent in the state last year, giving Florida the highest foreclosure rate in the nation. On average, it takes about 850 days for a foreclosure to run its course in Florida, according to a report released today by the Florida Legislature's Office of Economic and Demographic Research, or EDR, headed by Baker.

A high rate of long-term unemployment, a tight credit market, and relatively low home values are contributing to state’s mortgage delinquency problem, Baker said. Currently there are more than 300,000 homes in foreclosure and at least 285,000 foreclosure filings are expected in state fiscal year 2013-14, according to EDR.

 

January 10, 2013

Attorney General outlines plans for $60 million in housing aid

Florida Attorney General Pam Bondi and the Florida Legislature have announced the first plans for spending the state's portion of a multi-billion dollar mortgage settlement with major banks.

At a meeting of the Legislative Budget Commission (LBC) next week, Bondi will present plans to spend $60 million of the $334 million settlement on a wide range of housing aid programs.

If approved by the LBC, the cash will go to the following programs:

  • $35 million for Down Payment Assistance
  • $10 million for Foreclosure Counseling
  • $5 million for Reducing the Foreclosure Backlog
  • $5 million for Legal Aid
  • $5 million for Attorney General’s Legal Fees

Florida has come under criticism for being the last state in the country to decide how to spend the state portion of last year's settlement. For several months last year, the money sat in escrow while Bondi and leaders in the Legislature debated over who had the authority to spend it.

In November, Bondi, House Speaker Will Weatherford, and Senate President Don Gaetz announced an agreement that would give the Legislature authority to decide how the money is spent, while committing to use it for housing aid as Bondi intended.

Some states have diverted some of the settlement money from housing-related causes, while others have used all of it for housing programs.

About $74 million of Florida's $334 million was diverted to state coffers for general spending. Under the latest proposal, another $5 million will be cut out for legal fees at the Attorney General's office.

Florida currently has the nation's highest foreclosure rate, with more than 500,000 homeowners currently stuck in the foreclosure process. Some homeowners have already received direct relief from the foreclosure settlement, which required banks to work directly with homeowners to prevent foreclosures.

Most of the state's portion of the settlement will not reach homeowners until after the Legislature meets for its 60-day session which begins in March.

UPDATE: The LBC adopted Bondi's proposal on January 17, 2013.

 

January 3, 2013

Bill filed in state Legislature to speed up Florida foreclosures

A "faster foreclosures" proposal that faced sharp consumer outcry and protest last year has resurfaced in a more moderate form this year, with a new bill filed by Rep. Kathleen Passidomo, R-Naples, Thursday.

The bill, HB 87, offers many changes to the civil procedures governing foreclosures in Florida, the state with the highest foreclosure rate in the country.

Most of the provisions appear to be aimed at speeding up and cleaning the foreclosure process, which currently takes more than 600 days, on average, to run its course in Florida.

The bill would require mortgage lenders to certify that they have the correct paperwork proving they have the right to foreclose. Paperwork problems gummed-up the foreclosure system in Florida and across the nation in 2010 and 2011, leading to a massive $25 billion mortgage settlement with banks accused of using faulty documents to foreclose on homeowners.

The bill would also give condominium associations the ability to speed up the foreclosure process when a bank is moving too slowly. Condo associations have been forced to shoulder significant maintenance costs while banks carry out foreclosures. Banks have been accused of purposefully slowing down the process in order to limit their costs.

For their part, banks would get a bit of a gift as well. Under the bill, if a lender forecloses on a home and is later sued for doing so wrongfully, the lender could only be forced to pay monetary damages. That would mean the homeowner could not get his or her house back. Returning ownership of the house to the previous owner would be especially difficult if the bank has sold the home to an unsuspecting third party. Passidomo’s bill would theoretically eliminate that awkward scenario and free banks from having to recoup a house sold to another party after a faulty foreclosure.

The bill sheds some of the controversial provisions of the 2012 proposal, which passed the Florida House but died in the Senate last year. That bill led to a protest march on the state Capitol by homeowners and "occupiers."

A provision in the 2012 bill that would have allowed for faster foreclosures on homes that appeared to be abandoned and another measure reducing banks’ ability to go after homeowners for additional fees after a foreclosure, have been omitted from the new bill. The 'abandoned home' measure faced backlash from consumer advocates, and the latter measure had been opposed by the banks.

The 2013 version of Passidomo’s foreclosure bill could be high-profile during the upcoming legislative session as the housing market begins to show signs of life but is plagued by a high number of pending foreclosures. The bill is partially retroactive and would apply to pending cases already in process and to future foreclosure cases.

No similar bill has yet been filed for 2013 in the Florida Senate.

 

January 2, 2013

Fiscal cliff law extends tax relief for homeowners facing foreclosure

Florida homeowners have one more year to complete a short sale and thereby benefit from a federal tax break that had been set to expire at the end of 2012, as reported here back in August.

Tucked into the 157-page "fiscal cliff" legislation – officially known as the American Taxpayer Relief Act of 2012 – is an extension of the Mortgage Forgiveness Debt Relief Act, which, since 2007, has allowed borrowers to exclude loan debt forgiven in a short sale, foreclosure, or loan modification from counting as income on their federal taxes.

The debt relief act has saved struggling Florida homeowners untold millions. Tuesday’s approval of the Taxpayer Relief Act – drafted primarily to address "fiscal cliff" issues – extends the debt relief act deadline through calendar year 2013.

The extension is particularly crucial in South Florida, where homeowners have seen housing prices plummet 46 percent since the area’s peak market in December 2006, according to Standard & Poor.

Some realtors warn that homeowners seeking to sell and to benefit from the debt relief act, need to complete the process in 2013 and not count on another tax break extension.

To avoid a lengthy foreclosure process, lenders have increasingly approved short sales, in which the bank agrees to a lower sales price than what the borrower owes on the mortgage.

While speedier than a foreclosure, short sales can still take time. Once a property is listed for sale, it will take time to find a buyer, even if the home is priced aggressively. Once a buyer makes an offer on the home, it could still take months before the sale is completed.

This is because the short sale process adds to the length of time it takes to close on a home. For these reasons, it is crucial that the home is listed for sale and the short-sale process is started soon enough to close by the December 31, 2013, deadline for the debt relief law.

Not everyone can benefit from the debt relief law. It covers only forgiven debt on principal residences and selling prices no greater than $2 million, or $1 million if married but filing separately. The act also does not apply to second mortgages if the money was used for non-household expenses.

The former deadline had realtors racing to complete sales by December 31, 2012, and roused the lobbying efforts of the nation’s attorneys general who worried the debt relief act's sunset would dilute the $25 billion national mortgage settlement. Without the extension, principal reductions and other debt relief offered in the settlement would be considered taxable income.

The settlement has already provided for $386.7 million in primary mortgage principal forgiveness for Florida homeowners. Another $2.2 billion statewide has been forgiven through short sales.

“This extension will help struggling homeowners take full advantage of the assistance offered them by the national mortgage settlement and other foreclosure relief programs,” Florida Attorney General Pam Bondi said today. “We need to continue to do everything we can to help Floridians who are doing the best they can to pay their bills and stay in their homes.”

The Congressional Budget Office estimated extending the relief could cost $1.3 billion in lost revenue to the federal government.

Anthony Sanders, a George Mason University real estate finance professor, predicted last month the extension would be approved. He just didn’t know when or in what form.

Today Sanders called the overall legislation to avert the fiscal cliff “dreadful,” saying it adds $4 trillion to federal budget deficits over 10 years. But, he supported the debt relief extension.

“The government was a major contributor to the housing bubble and burst, so it’s only fair that it extend the act to help households that have been absolutely crushed by the market,” he said last month.

 

December 24, 2012

Decline in foreclosure backlog might be misleading

More than 40 percent of foreclosures cleared from Florida's courts in recent months were dismissals and are likely to bounce back into the overloaded judicial system when lenders are better prepared, according to foreclosure defense attorneys.

In a four-month period beginning July 1, the state's foreclosure courts disposed of 69,513 cases – helped along by a $4 million state stipend. But the achievement is dampened by the fact that nearly as many new foreclosures were filed during the same time period and by a new concern that 43 percent of the cases were dismissals.

While a dismissal can occur because a short sale, deed-in-lieu of foreclosure, or loan modification has been negotiated, foreclosure defense attorneys say the majority are voluntary dismissals taken by banks that don't have their case in shape to proceed. The foreclosure can then be re-filed at a later date.

As of Oct. 31, Florida's 20 circuit courts had 377,272 pending foreclosure cases, according to the state courts administrator. That's a net of just 432 fewer cases than July 1 because of the 69,078 new foreclosures filed in the four-month span.

Florida's foreclosure pipeline has slowed since the worst of the meltdown in 2008 and 2009, which created a backlog of 462,339 cases by June 2010. But recent studies show it continues to flow at a higher pace than other states. On Thursday, RealtyTrac again ranked Florida top in the nation for foreclosure activity in November.

The foreclosure back-and-forth can be a harrowing experience for homeowners trying to defend their case or just wanting to get on with their lives.

A one-time, $4 million stipend awarded by state lawmakers has added staff to process foreclosures and some courts are attempting new tactics to speed along cases. The guideline in Florida for courts to close a foreclosure case is 18 months. The average foreclosure case in Florida takes about 29 months, according to RealtyTrac.

In Miami-Dade County, where judges are setting foreclosure cases for trial to hasten their closure, more cases were dismissed between July and October than disposed by a judge in either a default or non-jury trial. It was the only circuit court with more dismissals than judge dispositions. Palm Beach County had 2,218 dismissals and 3,157 cases disposed by a judge.

"Had the banks just kept their paperwork in order, they could get foreclosures processed," said West Palm Beach-based defense attorney Brian Korte. "I have to ask the banks for discovery over and over and over again, for years."

At the same time, some homeowner attorneys complain that lenders have gotten used to winning in Miami-Dade's courts and are heading to trial whether their evidence is admissible or not. When a case goes to trial when the sides say they are not ready, the judgment may be appealed, rejoining the backlog of foreclosure cases to be heard.

"By and large, if people are saying they need more time to get ready, and it's been sitting there for three or four years, three or four years is enough time to get ready," said Miami-Dade Circuit Judge Jennifer Bailey, who sat on the state's foreclosure task force. "The only way out of this is through it, but it's more important to do it right than fast."

 

November 19, 2012

Attorney general: $3.6 billion in mortgage relief helps 50,000 Floridians

Five of the nation’s largest banks have provided $3.6 billion in mortgage relief for Floridians as part of a nationwide foreclosure settlement, Attorney General Pam Bondi announced today.

The mortgage settlement, announced in February, has provided mortgage relief to nearly 50,000 Floridians, according to a monitor of the national program.

“Florida was one of only two states in the country that negotiated a guarantee in the settlement,” said Bondi. “The fact that servicers report $3.6 billion in relief to Florida’s borrowers within the first eight months of implementation is a promising indication that obtaining a minimum commitment from the banks has been effective.”

The five mortgage lenders – Bank of America, JPMorgan Chase, Ally Financial, Wells Fargo, and Citimortgage – are beginning to fulfill the terms of a $25 billion settlement with 49 attorneys general over foreclosure abuses and “robo-signing.”

The lenders have offered principal reductions, mortgage modifications, short sale relief, and cash payments to states. The average Florida homeowner participating in the program has received $73,663 in relief.

The largest chunk of relief has come from Bank of America (about $2 billion to help 26,520 homeowners) followed by Chase at more than $1 billion. Both banks announced that they have fulfilled their Florida obligations under the settlement.

“The relief the banks have reported is encouraging,” said national settlement monitor Joseph Smith. “But it is important to remember that no obligations will be met until I have reviewed, confirmed and credited them. I look forward to conducting that work in the coming months and reporting my findings to the public.”

An additional $240 million in additional relief for Florida is currently sitting in escrow until the Legislature decides how to use it.

Bondi originally said she had authority to spend the funding, which the banks had paid to the states, but lawmakers disagreed.

After several months of talks, lawmakers and Bondi reached an agreement earlier this month. Bondi said the money will eventually go to housing-related programs, but the Legislature will meet next year to decide exactly how the cash will be spent.

Florida was the last state to announce how the state-based funding will be used.

 

November 2, 2012

Attorney general and Legislature announce plan for foreclosure settlement dollars

Florida Attorney General Pam Bondi, Senate President-designate Don Gaetz, and House Speaker-designate Will Weatherford today jointly announced their support for a plan to allocate the remaining $300 million that the Attorney General recovered for Floridians from the national mortgage lawsuit settlement.

The plan is designed so that the entirety of the settlement funds will be spent consistent with the terms of the settlement agreement but also that the funds will be allocated through Florida's legislative process.

At the next meeting of Florida's Legislative Budget Commission (LBC), with the support of Gaetz and Weatherford, Bondi will seek approval for budget amendments to disburse $60 million of the settlement funds. Bondi anticipates proposing that the $60 million be used to fund down-payment assistance for Floridians, foreclosure-related legal assistance and counseling, state court initiatives to ease the foreclosure backlog, and Attorney General’s Office enforcement efforts.

No meeting date has been set for Florida's LBC, but the group is not likely to convene before December or perhaps January.

The balance of the funds will be allocated through the appropriations process in the upcoming legislative session, which begins March 5, 2013. Gaetz and Weatherford have agreed to support the appropriation of approximately $200 million for housing-related purposes, consistent with the terms of the settlement agreement.

Although the specific appropriations must be determined through the legislative process, possible uses of these funds include foreclosure prevention, neighborhood revitalization, affordable housing, homebuyer or renter assistance, legal assistance, counseling, and other housing-related programs. Bondi indicates she will designate approximately $40 million of the settlement funds as additional civil penalties.

"This plan gets much-needed assistance to the homeowners and communities suffering the effects of the foreclosure crisis, and ensures that the settlement funds are spent with the transparency, accountability and flexibility that comes from the legislative process," said Bondi.

In February of this year, Bondi entered the landmark $25 billion joint federal-state agreement with the nation's five largest mortgage servicers over foreclosure abuses and unacceptable nationwide mortgage servicing practices. In addition to the funds described above, the agreement provides direct relief to homeowners and it mandates extensive reforms of the banks' mortgage servicing practices.

UPDATE: LBC scheduled to meet on January 17, 2013

 

October 18, 2012

Attorney general and lawmakers debate about settlement dollars

About $300 million at stake

Florida is first in the nation for the number of homes in foreclosures and the number of people on the verge of losing their homes.

But the Sunshine State is tied for last in the nation when it comes to using the billions of dollars in available housing aid from a national mortgage settlement, according to a report released Thursday.

Six months after the nation’s largest banks signed a $25 billion mortgage lawsuit settlement in the wake of the robo-signing scandal, Florida and Texas are the only states that have not outlined a plan for how to use their share.

In February, Attorney General Pam Bondi, representing the state of Florida in the lawsuit, entered into the settlement. Bondi's web site indicates that the court-approved settlement calls for the Attorney General to direct approximately $300 million in consumer relief for purposes intended to avoid preventable foreclosures, to ameliorate the effects of the foreclosure crisis, and to enhance law enforcement efforts against financial fraud.

The funds are sitting in an escrow account for Florida. Bondi and the Florida Legislature are haggling over who is legally entitled to spend the money.

Leaders in the Legislature believe they have the legal authority to decide how state funds are spent. According to the state Constitution, the Legislature controls the purse and appropriates dollars spent by all three branches of government, including those that come into the state government's control from outside Florida.

However, the settlement is an unusual situation that is rarely encountered, and the money's disposition has become a matter of interpretation.

Bondi has mailed claim forms to the 167,398 borrowers who may be eligibile for Florida's settlement funds, but how such claims will be handled is unclear if the Legislature takes control of the funds.

A report by Enterprise Community Partners found that most states have already begun using their portion of the settlement to help homeowners, through programs like mortgage counseling, neighborhood revitalization and legal assistance.

Some states used all of their settlement money to help homeowners, while others diverted the funds to help shore up budget shortages or for other state purposes.

Even though the settlement terms dictate that the money should be used specifically for housing-related issues, lawmakers in Florida could decide to put the money to other uses, as some other states have.

Bondi has said repeatedly that she wants to use the money for housing-related initiatives, and she believes she has the sole authority to decide where the money should go.

“We are diligently working to get this money distributed as soon as possible to help homeowners,” she said. “I’m working as hard as I can -- my staff is working as hard as they can. This money needs to go to homeowners. That’s where it was meant to go, and that’s where it should go.”

Spokespersons for both incoming Sen. President Don Gaetz, R-Niceville, and incoming House Speaker Will Weatherford, R-Wesley Chapel, indicate they are working with Bondi to ensure the dollars are appropriated by the Legislature. Lawmakers have not ruled out using the money for non-housing related issues.

While Bondi and state lawmakers haggle over who should get to spend the money, Florida’s foreclosure rate continues to spike, even as national foreclosures are on the decline. For the first time since 2005, Florida recently became the state with the country’s highest foreclosure rate in the country, according to RealtyTrac.

One in every 117 Florida housing units had a foreclosure filing in the third quarter, more than twice the national average. One in five homeowners are delinquent on their mortgage, and likely to lose their homes soon without help. Foreclosure starts jumped 24 percent in Florida last month.

While governors in other states have played an active role in the mortgage settlement, Gov. Rick Scott has kept a low profile on this issue. When asked last week for his opinion about the $300 million and the disagreement between Bondi and the Legislature, he would only say, “I think Attorney General Bondi will do a good job.”

UPDATE: Attorney general and Legislature reach agreement

 

September 25, 2012

Attorney general seeking borrowers who lost homes to foreclosure

Settlement dollars could be awarded

More than 167,000 Florida borrowers who lost their homes to foreclosure are about to get a packet in the mail that may mean they are eligible for a piece of the $25 billion national mortgage settlement.

Florida Attorney General Pam Bondi announced Monday that claim forms are going out to 167,398 Floridians whose homes were repossessed between Jan. 1, 2008, and Dec. 31, 2011, by one of five mortgage servicers that signed the February settlement.

The agreement – which includes GMAC (now Ally Financial), JP Morgan Chase, Wells Fargo, Citigroup, and Bank of America – was negotiated between 49 state attorneys general as a way for lenders to atone for “widespread” foreclosure-related abuses.

About $1.5 billion of the settlement is earmarked nationally for payments to an estimated two million borrowers who lost their home to foreclosure, according to Bondi’s announcement.

Borrowers are asked on the claim form to identify bank wrongdoing, such as if they were foreclosed on during negotiations for a loan modification.

The remainder of the $25 billion will go to refinancing for homeowners whose mortgages are underwater, foreclosure prevention initiatives, and payments to state governments, which will decide how to spend the money.

Bondi’s office has not yet announced how it plans to spend its allotment of about $300 million.

Between March 1 and June 30, a total of $1.7 billion in mortgage relief had already been provided to Florida homeowners through the settlement, according to an August report from the Office of Mortgage Settlement Oversight and independent settlement monitor Joseph Smith.

In Florida, packets containing the one-page claim form and a return envelope will be mailed through Oct. 12 and must be returned by Jan. 18, 2013. Payment checks are expected to be mailed by the middle of next year.

According to the settlement, money received as part of this claims process is not to be considered forgiven debt.

UPDATE: Attorney general and lawmakers debate about settlement dollars

UPDATE: January 18 deadline gets extended

 

September 10, 2012

Settlement leads to an average Florida mortgage reduction of $114,000

Over a thousand Florida homeowners have seen an average debt reduction of $114,015 on their primary mortgage since the February 2012 approval of the national settlement between leading lenders and state attorneys general.

The hefty reduction to principal balances meant to save struggling borrowers from foreclosure was mentioned by U.S. Housing and Urban Development Secretary Shaun Donovan in remarks previewing his appearance today at the Florida Housing Coalition’s annual conference in Orlando.

Donovan said about one in six of homeowners nationwide who have benefitted from the settlement live in Florida.

“We require the lenders when they are doing principal reductions to create a payment and a situation for homeowners that will ensure they will be able to stay in their homes,” said Donovan, who praised Florida Attorney General Pam Bondi for her work on the settlement.

Between March 1 and June 30, a total of $1.7 billion in loan help was distributed in Florida through mortgage principal reductions, refinances, short-sale approvals, and activities such as providing moving assistance for people who can’t stay in their homes.

Nationally, $10.5 billion in mortgage relief, including $1.3 billion in debt reduction, was meted out by banks, according to a progress report issued by the Office of Mortgage Settlement Oversight and independent monitor Joseph Smith.

The banks included in the settlement are JPMorgan Chase, Wells Fargo, Citigroup, Bank of America, and Ally Financial, formerly GMAC. Loans held by Fannie Mae and Freddie Mac are not included.

Until recently, principal reductions on home loans were almost unheard of. But in May, Bank of America said it was offering about 200,000 underwater homeowners nationwide mortgage reductions that for the first 5,000 people approved had averaged $145,000 per borrower.

According to the progress report, about $115 million in primary mortgage debt in Florida was eliminated since March. JPMorgan Chase offered the most in principal reductions on primary loans at $76 million.

Donovan said he was generally pleased with the report.

“The key is whether they continue to deliver on those results, and we will be watching them like hawks to ensure they live up to their promises,” he said. “Certainly, banks expect homeowners to live up to their obligations each month and we should expect the same from the banks.”

Lenders have until Feb. 28, 2015 to meet the settlement requirements.

 

August 26, 2012

Debt relief law expires December 31

Homeowners planning short sales should start process NOW

Less than five months remain before the federal Mortgage Forgiveness Debt Relief Act of 2007 expires.

Homeowners considering a short sale of their homes must act now to avoid paying taxes to the IRS on any debt forgiven as a result of such a sale.

According to the act's provisions, anyone selling a home via a short sale agreement with the lender will be forgiven for the loan balance owed to your lender that still remains after the lender receives the proceeds from the short sale.

The property has to be the primary residence and the sale must close on or before December 31, 2012.

The exact reading from IRS Publication 4681 states, "You can exclude canceled debt from income if it is any mortgage you took out to buy, build, or substantially improve your main home."

This means that any first mortgages taken out to purchase or build the home, as well as any subsequent loans in which the proceeds were used to improve the home, can be excluded in terms of whether the loan forgiveness counts as taxable income.

The amount of forgiven debt that can be exclude from taxable income is up to $2 million, or up to $1 million if the taxpayer is married but filing separately.

A short sale is when the lender agrees to release the lien on your property for an amount of money that is less than what is owed on the remaining balance of the mortgage.

When a short sale is completed, sometimes the lender will forgive the borrower for the remaining loan balance; however, the IRS normally treats this forgiven debt as taxable income. The Mortgage Forgiveness Debt Relief of 2007 relieves struggling homeowners from having to pay taxes on forgiven mortgage debt if they sell.

When the homeowner cannot keep up with mortgage payments, a short sale is an option for homeowners to avoid foreclosure.

Most people choose to do a short sale instead of a foreclosure because a short sale usually looks better on a person's credit history compared to a foreclosure. If that person should seek a home loan again in the future, lenders view having a short sale on a credit history more favorably than they do a foreclosure.

With only a few months left in the forgiveness program, the timing is critical to both short-sell a primary residence and avoid having to pay the IRS taxes on the forgiven mortgage debt.

Once a property is listed for sale, it will take time to find a buyer, even if the home is priced aggressively. Once a buyer makes an offer on the home, it could still take months before the sale is completed.

This is because the short sale process adds to the length of time it takes to close on a home. For these reasons, it is crucial that the home is listed for sale and the short-sale process is started as soon as possible in order to close by the December 31 deadline.

Before proceeding with a short sale, it is a good idea to seek the advice of an experienced real estate attorney, tax attorney, or CPA so they can assess the situation and tell whether a short sale is the right option.

UPDATE: Fiscal cliff law extends debt relief act for one more year.

 

August 20, 2012

Deadline extended for free foreclosure review after few Florida homeowners apply

Florida residents who believe they have been wrongfully foreclosed on have until the end of the year to ask for a free review of their case after a September deadline was extended.

The new Dec. 31 deadline is the third time the Office of the Comptroller of the Currency has pushed back the cutoff date for the Independent Foreclosure Review, which could compensate a homeowner up to $125,000 if wrongdoing is found.

As of the end of May, just 3 percent of Florida homeowners who were sent letters about the program have applied to have their cases reviewed. Nationwide, 4.3 million letters were mailed with about 5 percent of recipients – 220,000 – asking to be included through July.

“This extension provides additional time to increase awareness and to allow the broadest participation in the free foreclosure review program,” said Comptroller of the Currency Thomas Curry. “Through this program, borrowers will receive a free, fair, and impartial review.”

A compensation framework announced in May lists varying awards for homeowners based on what a case audit finds.

For example, a homeowner whose loan modification was mistakenly denied could be eligible for $5,000, have their foreclosure rescinded and a new lower loan payment approved. A person whose home was repossessed during a trial loan modification period could receive the full $125,000 if the lender is unable to rescind the foreclosure.

To qualify for a review, a homeowner must have been in some process of foreclosure between Jan. 1, 2009, and Dec. 31, 2010, and the servicer has to be one of 27 participating in the review. The home must also be the applicant's primary residence.

Homeowners who request a review are not precluded from taking other actions against a lender or servicer, according to the comptroller’s office. A loan servicer is not permitted to require a borrower to sign a waiver of the borrower’s ability to pursue other claims in order to receive compensation under the review.

The audit is part of an agreement reached in April 2011 by bank regulators and the nation’s largest mortgage servicers after revelations that deficient foreclosure documents were used to repossess homes. The program, separate from the $25 billion attorneys general settlement reached in February, is also selecting files on its own to review.

For more information call 888-952-9105 or visit www.independentforeclosurereview.com.

 

June 28, 2012

Floridians can now apply for Hardest Hit Fund under new standards

Florida homeowners can now apply to the $1 billion Hardest Hit Fund mortgage assistance program under new eligibility guidelines created to allow more people to benefit from the federal plan.

The state approved a revamp of the Hardest Hit Fund in April and the U.S. Treasury Department signed-off on the changes in May.

But before the new guidelines could go into effect, counselors from 90 agencies statewide who deal directly with homeowners and their Hardest Hit applications needed training in the standards, which increase the amount of money homeowners can receive while eliminating some eligibility roadblocks.

The state announced that the new rules were in place as of Thursday.

Homeowners who previously applied for the Hardest Hit program, but were not eligible at that time, may request their application to be reconsidered by contacting the advising agency they initially worked with. They do not need to fill out a new application.

The Hardest Hit Fund is meant as a bridge for out-of-work or underemployed homeowners. Those who are eligible can receive up to a year of mortgage assistance with a cap of $24,000, and up to $18,000 to bring a mortgage current on payments. Homeowners seeking only to have their mortgage arrearage paid can get up to $25,000.

The program was announced nationally in 2010 and began statewide in Florida in April 2011.

As of last month, 28,556 Floridians had completed applications for Hardest Hit money. Statewide, 5,747 homeowners have been approved.

Thousands of applications that were ruled ineligible under the old standards may now qualify under the new guidelines.

Current program participants will automatically have their financial assistance extended in accordance with the changes.

 

June 5, 2012

Florida expands eligibility for Hardest Hit Fund program

New parameters take effect later this month

The U.S. Treasury Department has approved changes to the Florida Hardest Hit Fund as requested by the state in April.

Florida asked the Treasury to make the program's eligibility requirements more expansive in order to get more people qualified. The program is designed to help unemployed or underemployed homeowners hang on to their homes until they find a new job.

Homeowners who qualify for the program can receive up to $12,000 over six months to keep up with mortgage payments and up to $6,000 to pay the past-due balance on their loan, under the existing standards. Due to the restrictive requirements placed on the program, however, few homeowners have actually qualified, and only a fraction of the $1 billion allotted to Florida by the Treasury Department has gone to help troubled homeowners.

Currently, homeowners must have a loan that was issued before 2009 and be no more than 180 days behind on their mortgage. The new parameters eliminate the 2009 cut-off date and assign mortgage servicers to determine whether loans that are more than six months past due should qualify for the program. Other requirements will remain in place, such as Florida residency, owning the home as a primary residency, being unemployed through no fault of their own, and having a remaining balance that is less than $400,000.

If a homeowner qualifies, he or she will now be eligible for more assistance. As part of the changes, those eligible for the program can receive a maximum of $24,000 over 12 months for help with mortgage payments, or up to $25,000 to bring their balance current.

Florida will begin implementing the new parameters later this month and will conduct training sessions throughout the state to update staff and advisors about the changes. State experts are in Orlando this week and will be in Cape Coral and Tallahassee in coming weeks to retrain application reviewers and update mortgage servicers on the new program parameters.

The state will reach out to applicants who were originally denied but would qualify under the new requirements. Applicants who were previously denied can also contact the advisor that reviewed their application to see if they are now eligible. The state is encouraging such applicants not to reapply but to instead have their earlier case reopened.

Florida decided to seek the changes to the size and scope of the Hardest Hit Fund after the program's first-year data showed such a small portion of the applications were deemed eligible for assistance. As of May 1, the latest data available indicates that the state has reviewed 21,317 of the 28,556 completed applications received. Of those, more than 62 percent did not qualify for the program under the existing requirements.

 

May 9, 2012

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 the 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.

 

May 8, 2012

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.

UPDATE: Supreme Court issues ruling in Pino case.

 

April 30, 2012

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.

 

April 12, 2012

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.

 

April 12, 2012

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.

 

April 12, 2012

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.

 

February 9, 2012

Florida homeowners expected to get $8.4 billion in national mortgage settlement

The details of today's $25 billion multi-state mortgage settlement have been released, and Florida is a top beneficiary of settlement money.

The settlement is a joint federal-state agreement with the nation’s five largest mortgage servicers over foreclosure abuses and improper mortgage servicing practices.

Florida homeowners will receive an estimated $8.4 billion in relief in the form of principal reductions, mortgage refinancings, loan modifications, and cash payments for those who lost their homes improperly.

In exchange, the banks are released from prosecution for civil charges for robo-signing, a practice that was allegedly rampant in Florida. The settlement includes five major financial institutions: Bank of America, JPMorgan Chase, Wells Fargo, Ally Financial (GMAC), and Citigroup.

Florida Attorney General Pam Bondi released details of the settlement’s impact in Florida this morning.

“This agreement holds banks accountable and puts in place new protections for homeowners in the form of strict mortgage servicing standards,” Bondi said in a statement.

Details from the Attorney General's office are below:

Florida Enters $25 Billion Joint State-Federal Mortgage Servicing Settlement

TALLAHASSEE, Fla.-Attorney General Pam Bondi today formally entered a landmark $25 billion joint federal-state agreement with the nation’s five largest mortgage servicers over foreclosure abuses and unacceptable nationwide mortgage servicing practices. The proposed agreement provides an estimated $8.4 billion in relief to Florida homeowners and addresses future mortgage loan servicing practices.

The settlement generally releases civil claims related to robo-signing, other foreclosure-related abuses, and loan origination misconduct, but it provides no release of criminal claims or of claims related to mortgage securitization.

“This settlement will provide substantial relief to struggling Florida homeowners, and ensures that our state gets its fair share of the relief being provided nationally,” stated Attorney General Pam Bondi. “This agreement holds banks accountable and puts in place new protections for homeowners in the form of strict mortgage servicing standards.”

Florida’s share of the total monetary benefits under the settlement is approximately $8.4 billion.

  • Florida borrowers will receive an estimated $7.6 billion in benefits.
  • from loan modifications, including principal reduction, and other direct relief.
  • Approximately $170 million will be available for cash payments to Florida borrowers who lost their home to foreclosure from January 1, 2008 through December 31, 2011 and suffered servicing abuse.
  • The value of refinanced loans to Florida’s underwater borrowers would be an estimated $ 309 million.
  • The state will receive a direct payment of $ 350 million.

In addition to the terms of the national settlement agreement, Attorney General Bondi separately negotiated an agreement with the nation’s three largest mortgage servicers to ensure that a guaranteed portion of the overall settlement funds goes to Florida borrowers.

The unprecedented joint state-federal settlement is the result of a civil law enforcement investigation and initiative that includes state attorneys general and state banking regulators across the country, and nearly a dozen federal agencies. The settlement holds banks accountable for past mortgage servicing and foreclosure fraud and abuses and provides relief to homeowners. With the backing of a federal court order and the oversight of an independent monitor, the settlement reforms the mortgage servicing industry and protects against future fraud and abuse.

Under the agreement, the five servicers have agreed to $25 billion in monetary relief under a joint state-national settlement structure.

Nationally:

  • Servicers commit a minimum of $17 billion directly to borrowers through a series of national homeowner relief effort options, including principal reduction. Given how the settlement is structured, servicers will actually provide up to an estimated $32 billion in direct homeowner relief.
  • Servicers commit $3 billion to a mortgage refinancing program for borrowers who are current, but owe more than their home is currently worth.
  • Servicers pay $5 billion to the states and federal government $4.25 billion to the states and $750 million to the federal government. The state payments include funding for payments to borrowers for mortgage servicing abuse.
  • Homeowners receive comprehensive new protections from new mortgage loan servicing and foreclosure standards.
  • An independent monitor will ensure mortgage servicer compliance.
  • Government can pursue civil claims outside of the agreement, any criminal case; borrowers and investors can pursue individual, institutional or class action cases.

The settlement does not grant any immunity from criminal offenses and will not affect criminal prosecutions. The agreement does not prevent homeowners or investors from pursuing individual, institutional or class action civil cases against the five servicers. The pact also enables state attorneys general and federal agencies to investigate and pursue other aspects of the mortgage crisis, including securities cases.

The final agreement, through a consent judgment, will be filed in U.S. District Court in Washington, D.C., and will have the authority of a court order.

Because of the complexity of the mortgage market and this agreement, which will span a three year period, in some cases participating mortgage servicers will contact borrowers directly regarding loan modification options. However, borrowers should contact their mortgage servicer to obtain more information about specific loan modification programs and whether they qualify under terms of this settlement or other available programs.

More information will be made available as the settlement programs are implemented.

 

December 15, 2011

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.

 

December 7, 2011

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.

UPDATE: Similar bill filed for 2013 Legislative Session

 

April 25, 2011

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.

 

April 18, 2011

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.

 

April 5, 2011

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.

 

March 18, 2011

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.

 

February 25, 2011

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.

 

November 16, 2010

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.

 

October 15, 2010

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.

 

August 31, 2010

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.

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August 19, 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.

 

April 16, 2010

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.

 

March 5, 2010

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.

 

February 19, 2010

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.