Good news for underwater homeowners current on their mortgage payments: There's still time to apply for a program that could cut your unpaid balance by up to $50,000.
Florida housing officials re-opened a federally funded mortgage relief program last week. As of Thursday, 4,127 homeowners had signed up.
That's way down from September, when the Hardest Hit Fund Principal Reduction Program hit its cap of 25,000 applicants within a few days. So far, 2,400 of those homeowners have been helped and more than 6,000 have been turned down.
The current application period began May 16 and will remain open indefinitely. Unlike in September, when the program was new and homeowners rushed to get in under the cap, there has been less "urgency'' in applying this time, officials said.
"This go round, we are not anticipating closing the application any time soon, so homeowners have time to really review the eligibility criteria … and make an informed decision as to whether they may qualify,'' said Cecka Rose Green, spokesperson for Florida Housing Finance Corp.
Tampa homeowner Jayne Lisbeth offers another reason for the relatively low number of new applicants: Trying to get the mortgage aid "is an extremely lengthy, frustrating, difficult process.''
She and husband Tim Gibbons, an art teacher, bought their Seminole Heights home in 2006 for $279,000, then a reasonable price in an up-and-coming Tampa neighborhood. But values plunged, thanks to the recession and a wave of foreclosures in the area. The 1,900-square-foot house is now worth $133,000, while they still owe $216,500 on their mortgage.
That made the couple ideal candidates for the program, which requires that homeowners owe at least 125 percent more than their home's value.
Like other applicants, they were assigned an adviser, who repeatedly asked for proof that their income was below 140 percent of the median income for a two-person household — $64,400 in the Tampa Bay area.
When IRS tax returns showed they once had a "little cottage industry making jam,'' as Lisbeth put it, the adviser wouldn't take the couple's word that the business was defunct.
"We had to have our accountant send an affidavit saying that what I said was true, and I had to pay (the accountant) $250 to do that,'' Lisbeth said.
In January, the couple were notified that they met the eligibility requirements and that their application would go to underwriters to determine the amount of Hardest Hit help. The underwriters "then asked many of the same questions, and we had to provide more documents, many of which we had already provided,'' Lisbeth said.
On Feb. 8, four months after they applied, the couple got a letter saying they had been approved for "up to $50,000'' in principal reduction. Wells Fargo, however, wouldn't accept the federal money because Lisbeth and Gibbons have a mortgage on which they were allowed to pay just the interest, not the principal.
That's when they called U.S. Rep. Kathy Castor's office.
"A homeowner should not have to contact a member of Congress to have a case resolved,'' Castor, a Tampa Democrat, said in a statement. "But I am happy to weigh in … and cut through red tape.''
Wells Fargo said it could not comment on individual cases.
Lisbeth said she was "absolutely thrilled'' when Castor's staff told her the bank had reversed itself and would reduce their principal, though the amount of the reduction remained unclear Thursday.
"What spurred me onward,'' Lisbeth says, "is the inequity of my tax dollars bailing out the banks, and the banks refusing to bail out the homeowner based on a flimsy excuse they themselves created."
Susan Taylor Martin can be contacted at [email protected]