Florida offers $350M aid to underwater home borrowers

24 09 2013

Thousands of Florida homeowners who owe far more on mortgages than their houses are worth could get a break of up to $50,000 if they qualify under a new state program.

The Florida Housing Finance Corp. announced that homeowners in Florida who meet eligibility requirements will be able to apply online for money to reduce mortgage principal beginning 9/25/13 under the $350 million plan. The program is restricted to homeowners whose mortgages are 125 percent or more than the current market value of their house, which is considered to be severely underwater on a mortgage.

The program, formally known as the Florida Hardest Hit Principal Reduction Program, also envisions that most affected mortgages will be refinanced or recast, reducing monthly payments.

“For those who qualify, this new program can help to reduce their principal balance, which can result in a lower monthly payment and put more money in their pockets,” said Steve Auger, Florida Housing’s executive director.

The online application process will begin at 9 a.m. on 9/25/13 at http://www.principalreductionflhhf.org. The unpaid balance of the mortgage cannot exceed $350,000.

Initially, the program will be restricted to 25,000 applications on a first-come, first-served basis but could be expanded, Auger said. The money is just a portion of the $1 billion Florida has received under a federal program aimed at states where housing suffered the most during the economic recession.

At least 200,000 underwater homeowners in Florida could probably qualify for the program, said David Westcott, director of home ownership programs at Florida Housing. Out of the 25,000 initial applications, Westcott said he expects about 10,000 homeowners will actually qualify for the money.

“You have to be severely underwater,” he said.

Among the other rules to qualify:

• Homeowners must be Florida residents and legal U.S. residents and must occupy the house as a primary residence.

• Total household income for everyone 18 and older living in the home cannot exceed 140 percent of the area’s median income.

• Mortgage payments must be current, and a payment cannot have been 60 or more days late in the past 24 months.

• The mortgage had to originate prior to Jan. 1, 2010.

The money will be provided in what’s called a forgivable loan. That means, depending on the type of loan, it will either be forgiven in 20 percent increments over a five-year period or forgiven in total at the end of five years.

If the house is sold before the five years are up, Westcott said the homeowner would be required to repay the remaining, unforgiven amount of the loan if there’s enough money from the sale to do so.

The housing agency has come under some criticism from U.S. Sen. Bill Nelson, D-Fla., and others who say it has been slow to get money to homeowners who need it and has been poorly managed. A federal audit was begun earlier this year at Nelson’s request, although agency officials have said their management has been favorably reviewed by the U.S. Treasury Department and state regulators.

Source: The Associated Press

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Investor Demand in Housing Market Begins to Wane

11 09 2013

The proportion of investors involved in the housing market has fallen in the last few months. As their numbers dwindle, it may allow other buyers to step in. Can this be the sign that the housing market is cooling down?

Investors have gone from accounting for 23 percent of home purchases in February to about 20 percent in June – the lowest level since September 2012, according to data from Campbell/Inside Mortgage Finance survey.

Their numbers will likely decrease even more in the coming year. About 48 percent of investors recently surveyed say they plan to lessen their home purchases over the next year, according to a recent survey by ORC International. Only 20 percent of the investors surveyed say they plan to buy more homes in the next year, a drop from 39 percent 10 months earlier.

“Investors helped stabilize a housing market that was in free-fall and they did so by taking advantage of fire-sale home prices,” says Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. “Now you see few fewer bargain prices in the market and that’s a reason investor demand is coming off its peak.”

In recent years, many buyers – particularly first-time homebuyers – may have lost out to investors’ all-cash offers on homes. Both banks and sellers may have been lured by the quick deal that cash offers typically provide over offers from buyers who require financing.

But with less competition from investors, some housing experts say this may allow an opportunity for other potential buyers to get into the market.

Source: Reuters








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