A state program created nearly two years ago to help 40,000 unemployed or underemployed homeowners has approved funding for fewer than 8,100 as of Dec. 1, records show.
Some critics say eligibility requirements for the Hardest Hit Fund are too restrictive, while others accuse Florida housing officials of not working fast enough.
“Sure looks like the state is still dragging its feet,” U.S. Sen. Bill Nelson, D-Fla, said in an emailed statement Thursday.
The Florida Housing Finance Corp. defended its handling of the Hardest Hit program, saying it loosened the eligibility standards earlier this year to reach more, including those who previously didn’t qualify because they were 180 or more days delinquent.
Even as Florida Housing continues to process nearly 11,000 Hardest Hit applications, the agency is poised to create another program that would target “underwater” borrowers — a large, at-risk group whose plight threatens the fragile housing recovery.
That initiative would pool federal and nonprofit dollars to modify mortgages and reduce the balances of underwater loans.
The agency likely will announce a $50 million pilot program next year that would include 2,000 mortgages, said Cecka Green, spokeswoman for Florida Housing. If the pilot is successful, the program could launch statewide, she said.
More details, including specific eligibility criteria, have not been determined, but it will be designed for homeowners who are severely delinquent on their Federal Housing Administration-insured mortgages, Green said.
Underwater borrowers still current on their mortgages aren’t expected to qualify. Green said she understands those homeowners’ frustration, but “our mission is to help those most vulnerable to losing their homes.”
The plan may help people like Shannon Havasi and her husband, Ryan, who bought their home in suburban Delray Beach for $365,500 in June 2005, near the peak of the housing boom. Palm Beach County appraised the property this year for $131,304.
The couple say a principal reduction orchestrated by the state may be their best chance to stay in the home long term.
“My husband gets so upset,” said Shannon Havasi, 35, an elementary schoolteacher in Boynton Beach. “When he talks to the bank, he starts freaking out. He wants to work with them, but they don’t work with you.”
Florida Housing and other groups have been criticized for not trying to help underwater borrowers sooner, considering the scope of the problem.
Roughly 1.3 million Florida homes, including more than 235,000 in Palm Beach and Broward counties, are worth less than their mortgages, according to Seattle-based real estate website Zillow.com. Estimates by RealtyTrac Inc. of Irvine, Calif., put the numbers even higher.
The federal government has given $7.6 billion to 18 states and the District of Columbia — areas hit hardest by the housing downturn.
Florida Housing used part of its $1 billion Hardest Hit Fund allocation to cover mortgage payments for homeowners who are unemployed or in jobs with salaries below what they need for basic living expenses.
Despite rising prices in recent months, it may be years before people who owe more than their homes are worth can break even in a sale. They are in danger of letting the homes fall into foreclosure, analysts say.
While no individual plan can fix the housing crisis, “anything that gets at the heart of the equity issue will be more successful than other programs,” said Mike Larson, an analyst for Weiss Research in Jupiter. “Once you push the reset button on the mortgage, you give people the incentive to stick around in their homes.”
Broward County resident Barbara Mullenix applied for the first program offered by Florida Housing, but she said she was turned down. She eventually completed a short sale of her Sunrise home and rented an apartment in Plantation.
Mullenix said the program being created for underwater borrowers has promise. “It’s another shot, but a lot of people have lost heart,” she said.