Florida Lags in Disbursing Foreclosure Aid Federal Report Says
Industry Update
October 6, 2015
Florida, long ranked as the top state for foreclosures, has the country’s worst rate of disbursing $1 billion in federal foreclosure-relief funds, according to a new report by a federal enforcement agency.
Five years into a foreclosure-relief program known as the Hardest Hit Fund, a lack of oversight by the U.S. Treasury Department has allowed Florida to deny more applicants and disburse a lower percentage of funds than other states, according to the Special Inspector General for the Troubled Asset Relief Program.
“Florida has the lowest homeowner admission rate of any Hardest Hit Fund state, one of the highest withdrawn application rates, and has consistently denied homeowners at higher rates than the national average,” reads the findings released Tuesday.
For years, homeowners throughout Central Florida have voiced frustrations about trying to apply for the money, starting with a computer crash the day Florida rolled out its mortgage principal-reduction program in 2013 — a time when the real estate market had started recovering from the crash that started in 2007.
The Treasury Department responded to the findings by noting that no one found any fraud, waste or abuse in terms of spending the money. In addition, Florida has shown “significant progress” assisting homeowners in recent years and even pioneered new ways of distributing the funds to qualified applicants. It crafted new reverse-mortgage programs for seniors, new down-payment assistance programs for buyers and other programs, officials said.
The special inspector’s office, though, criticized the Treasury for failing to set spending targets and goals that would have forced Florida to deliver assistance earlier on in the economic downturn.
“Hardest Hit Fund Florida was slow in getting assistance to homeowners and lacked effectiveness during the first years of the program, which was the height of the crisis, when Florida homeowners needed it most,” the report stated.
The Florida Housing Finance Corp. delayed a February 2010 launch of the program when newly elected Gov. Rick Scott asked that the assistance be cut from a proposed $35,000 over 18 months to just $12,000 over six months. At the time, the chairman of the state’s housing agency raised concerns that six months of assistance wasn’t enough to help struggling homeowners with reduced wages.
Report findings included:
- Despite Florida’s unemployment rate of 11.8 percent in early 2010, “unemployed homeowners would have to wait more than one year before the statewide rollout of Hardest Hit Fund unemployment assistance.”
- For the first three years of the Hardest Hit Fund, Florida had nothing tailored to underwater homeowners, even though about half of homeowners were underwater after prices had begun to collapse in 2007.
- For the first 21/2 years of the program, nearly half of Floridians applying for the assistance were deemed ineligible.
Since the program started in 2010, Florida has spent $520.6 million. Of that, $411.8 million was spent during the last two years. About 23,234 Floridians have qualified for assistance from the program.
Florida improved its programs after Treasury officials “pressured” them to do so and helped get mortgage servicers on board to cooperate with the mortgage-relief programs, the report stated.
The Florida Housing Finance Corporation, which manages the Hardest Hit fund, stated that Florida is second only to California in terms of total dollars disbursed. Florida is also second only to California in the allocations of Hardest Hit Funds.
Florida has a handful of programs to address housing issues that include: delinquent borrowers who have struggled due to unemployment, underemployment, divorce, or family death; underwater homeowners; senior homeowners struggling with reverse mortgages; and credit-qualified first-time homebuyers.
Source: Orlando Sentinel
