Florida should not waste its second chance to help struggling homeowners avoid foreclosure. The federal government plans to give the state more money for its Hardest Hit Fund and has extended the program's disbursement deadline by three years. This should be welcome news to Florida, whose program has consistently failed to meet expectations and helped far too few homeowners in need.
The U.S. Treasury Department announced earlier this month that it would give up to $2 billion in additional money from the Troubled Asset Relief Program to states with exceptionally high foreclosure risks. The money will be disbursed in two phases of $1 billion each. In the first phase, Florida stands to receive $77.8 million, a number determined in each state by its demonstrated ability to "effectively deploy funds." States will have to apply to receive a portion of the second $1 billion and demonstrate that they have made good use of previous payouts and could benefit from additional funding. If Florida succeeds, the state could get an additional $250 million, bringing its total take to $1.3 billion since the HHF program began.
The HHF was established in 2010 to provide $7.6 billion in foreclosure aid to 18 states and the District of Columbia where housing markets collapsed during the recession. Florida, which was one of the first five states selected to participate, received $1 billion to address its massive foreclosure crisis. But state officials have moved at a glacial pace in awarding the money and have made it too hard for struggling homeowners to get relief. The state also lost sight of the fund's original mission when it launched a program last summer to award down payments or closing costs to first-time home buyers. There is nothing wrong with assisting new homeowners, but that help shouldn't come at the expense of existing homeowners. Florida's HHF had provided aid to only 24,071 homeowners as of September. More than 116,000 people have applied.
Florida now has a much-needed opportunity to press the reset button on its foreclosure prevention efforts. The Treasury Department had initially planned to reabsorb states' unused HHF funds at the end of 2017. But now the department has given HHF states more money and set 2020 as the new deadline for spending it. The extra time gives Florida a chance to get its act together. State officials should embrace the opportunity to re-examine Florida's HHF offerings and rework requirements so that more distressed homeowners can qualify.
The Treasury Department is right to provide states with more mortgage relief. The possibility of foreclosure remains a real concern for many families, especially in Florida, which still leads the nation in underwater mortgages. But the government also should keep a close watch on Florida to make sure the aid actually reaches homeowners who need it most. If Florida founders, federal officials should step in. There is no reason for Floridians to lose their homes when relief is so close at hand.