Article Courtesy of The Tampa
By Susan Taylor Martin
February 26, 2016
Struggling Florida homeowners got some good news
Friday: The state is eligible to get up to $327 million in additional
federal Hardest Hit Funds to help reduce foreclosures and stabilize
communities slammed by the housing bust.
The not-so-good news: The state might have been eligible for even more
had it done a better job of using the money it originally was allocated.
The U.S. Treasury Department announced Friday that it is adding $2
billion to the $7.6 billion Hardest Hit Fund, created in 2010 to help
Florida and 17 other states with high rates of foreclosure. It also said
that the fund's life will be extended to 2020, three years later than
"While the housing market has strengthened in recent years, there are
still many homeowners and neighborhoods experiencing the negative
effects of the financial crisis," said Mark McArdle, Treasury's
assistant secretary of financial stability.
Florida originally was allotted $1 billion, which it is spending in a
variety of ways, including principal reduction, bringing delinquent
mortgages current and helping seniors with reverse mortgages pay their
property taxes and homeowners insurance.
However, the federal investigator who oversees Treasury's management of
the Hardest Hit Fund says Florida has consistently "under-performed''
other states in its use of the money. Florida has spent just 56 percent
of its share while Michigan, Rhode Island and several other states have
already used so much of their allotments that they have stopped taking
As of September, 116,484 Floridians had applied for help but only 24,071
had received it, barely one in five.
Treasury officials said the $2 billion added to the Hardest Hit Fund
will be allocated in two phases.
In the first phase, states that opt in by March 4 can receive extra
funds based on their population and how "effectively'' they have used
Hardest Hit money to date.
Florida will be eligible for $77.9 million. That is less than what three
smaller states — Illinois, Ohio and North Carolina — are eligible to
receive and reflects the fact that Florida has been less effective in
helping struggling homeowners.
In the second phase, states have until March 11 to request an amount
equal to 50 percent of their original Hardest Hit allotment, or $250
million, whichever is less. Because its original allotment was so large,
Florida could receive the full $250 million, bringing its grand total of
Hardest Hit funds over the years to $1.33 billion.
The Florida Housing Finance Corp., the state-run agency that
administer's Florida's Hardest Hit Fund, said it is reviewing how best
to use the extra money.
"Since 2010, when the federal HHF program was announced, Florida has
been deliberative about developing and implementing programs that
respond to the housing market challenges in our state,'' spokesperson
Cecka Green said in an email.
Although the agency has six different Hardest Hit programs, critics say
it has done a poor job of actually getting the money out to desperate
homeowners. Many people complain that they are repeatedly asked to
submit the same documents and forced to wait months, only to eventually
be turned down.
Florida has among the longest waiting times and highest rejection rates
of any Hardest Hit state, records show.
Critics also have questioned why Florida is using up to $50 million in
Hardest Hit money to make down payments and pay closing costs for people
buying homes in Hillsborough and four other counties instead of spending
money to help people stay in homes they already have.
Pam Marron, a loan originator in Pasco County, said she hopes the state
will use at least part of the extra money to help underwater homeowners
with second mortgages. Currently, only borrowers with first mortgages
qualify for a popular principal reduction program and then only if they
owe at least 115 percent more than their homes are worth.
"The problem is that people may be 109 percent underwater on the first
mortgage but they're 140 percent underwater when you factor in the
second mortgage,'' she said. "They need to apply (Hardest Hit money)
toward both the first and second mortgages.
Marron noted that Florida still leads the nation in the number of
severely underwater borrowers — 1.1 million, including more than 100,000
in the Tampa Bay area.