A $1 billion program to help struggling homeowners pay their mortgages is getting a huge overhaul, potentially opening the door for thousands of previously ineligible Floridians to receive aid.
Since last year, only about 5,500 homeowners have received assistance from the Florida Hardest Hit Fund, and tens of thousands have been rejected or discouraged from applying due to the program's strict eligibility rules. The board of Florida Housing Finance Corp., which runs the program, voted to loosen those rules Friday.
"These changes are really good news and are going to be helpful to a lot of Hardest Hit Fund participants and applicants," said David Westcott, the agency's director of homeownership programs.
The federally funded program offers two types of help: Monthly mortgage payment assistance to borrowers suffering from financial hardship such as unemployment, and lump sum aid to help borrowers catch up on past-due mortgage bills.
The program was slated to help tens of thousands of homeowners, but so far only about 5,500 have qualified. Only $101.8 million of the $1 billion has been set aside for homeowners so far, and even less than that has actually been paid out. After reviewing the program's first-year performance, the agency pushed for aggressive changes, including scrapping the six-month cap on mortgage delinquency. That means homeowners who are more than six months behind on their mortgages would now be able to qualify under the new rules.
The FHFC also moved to raise limits on how much aid homeowners could receive, doubling aid to unemployed borrowers to $24,000 and tripling mortgage "catchup" assistance to $25,000.
"It's going to open a lot more doors for homeowners," said Mordy Lafortune, of Miami-based Neighborhood Housing Services of South Florida. "In the long run, it's better to stabilize the economy itself and homeowners."
Lafortune said he has worked with many homeowners who were initially excited to learn about the program, only to find out that they did not qualify.
When the program launched last April, the Miami Herald reported on how strict requirements would disqualify a lot of homeowners off the bat. According to FHFC data, 12,516 homeowners were rejected, and another 23,407 either withdrew their applications or did not complete them. Only 5,540 applicants were approved.
The FHFC said it will reach out to homeowners who were initially rejected to check if they qualify under the new rules.
Ray Payano, a Miami-Dade homeowner who told the Herald last year that he would apply for the program, said he would take another look now that the requirements have been eased.
He struggled in 2010 to keep up with the mortgage after he and his wife were laid off, had a baby and exhausted their savings — all in the span of a year. He has since started his own energy conservation consulting company and can afford his $1,450 mortgage, but could use some help making up the overdue amounts. Under its new rules, the Hardest Hit Fund could provide him up to $25,000 to get caught up on his mortgage, provided that his bank agrees.
Not all banks are on board with the program. Several mortgage servicers have declined to accept mortgage assistance money, opting instead to foreclose on the homeowner.
Payano said his bank has been giving him the runaround, forcing him to send in the same financial statements every month.
"It seems like they just want us to give up or something," he said. "I feel that we need advice from an attorney or an expert to guide us. I'm just afraid of how much an attorney might charge for those services."