Florida court favors homeowners in key foreclosure ruling

Homeowners in foreclosure may have a better chance of getting a true trial, instead of a quickie judgment, following a Floria district court of appeals decision that requires banks to prove ownership of the note at the time they file for repossession.

The ruling this week in Palm Beach County was heralded by foreclosure defense attorneys who said it may even force banks to dismiss some cases and start over with new paperwork.

The ruling follows a rare Florida Supreme Court decision last week to take up an already settled Greenacres foreclosure case that involved an allegedly backdated assignment of mortgage that the bank used to show ownership. The court said it wanted to rule on the case because its opinion could have an impact on the "mortgage foreclosure crisis throughout the state."

This week's ruling was on the case of Robert McLean vs. JP Morgan Chase and involved a 2009 Broward County foreclosure.

According to the decision, which reversed a lower court's verdict in favor of the bank, Chase originally filed the foreclosure claiming the note - basically the IOU from the borrower - was "lost, stolen or destroyed."

That sort of claim has been made thousands of times as lenders rushed without the proper documentation to take back homes tangled up in the real estate boom's securitization frenzy.

Although most notes are found before a final foreclosure judgment is entered, Florida's 4th District Court of Appeals said the note also must be correctly dated and endorsed to show ownership before the foreclosure is initially filed - something that Chase didn't have, according to the ruling. The court also questioned a mortgage assignment made to Chase that was dated three days after the foreclosure was initially filed.

If there is substantial doubt about the note, the bank should dismiss and refile the case or the homeowner should be entitled to an evidentiary hearing instead of a more hasty "summary judgment," the ruling said.

Chase did not respond to a request for comment.

One leading West Palm Beach attorney downplayed the significance of the 4th DCA decision, calling it a technicality that doesn't impact the legitimacy of the foreclosure. Gerald Richman, who represents the Boca Raton-based foreclosure firm Shapiro & Fishman, also said the ruling could force an unnecessary expense on lenders if they have to refile a complaint.

Richman said he couldn't measure the impact the ruling will have on Florida's already overwhelmed courts because he doesn't know how many similar cases are out there. But Tampa-area foreclosure defense attorney Mark Stopa said the ruling will apply to the majority of his cases.

"In my view, this is the biggest foreclosure case in Florida, ever," he said of this week's ruling.

Some Florida lawmakers want to repossess foreclosed homes more quickly

Some Florida lawmakers want to amend a rarely used fast-track foreclosure law to shrink the state's court backlog and as an end-run around Wall Street reforms that may bar nonjudicial foreclosures.

The Senate Judiciary Committee, which has discussed ways to reduce the average two-year timeline to repossess a home in Florida, is scheduled to meet this week in Tallahassee.

Committee member Sen. David Simmons, R-Maitland, said this week that he has drafted a bill that would change section 702.10, Florida Statutes, a 1993 law that requires a property owner to "show cause" why a final foreclosure judgment should not be entered on an expedited basis.

According to a foreclosure report by Senate staff that was presented to the committee last month, bank lawyers haven't used the law because they believe it is limited to non-residential property and doesn't allow for a deficiency judgment to be entered against the owner.

The report also says that the federal Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law in July 2010, puts limits on nonjudicial foreclosures and that adopting a nonjudicial process would require substantial changes to property laws.

Simmons said the Florida Bankers Association asked him to work on a proposal that will help clear an estimated court backlog of 371,000 foreclosure cases. His bill, which would affect current foreclosures, is still being drafted and not yet available online, he said.

"We've got to create an expedited method of dealing with this that will take down the backlog where the homeowner has no defenses and is simply waiting it out, or where the homes are abandoned," Simmons said. "At the same time, if there is a legitimate defense that a homeowner wants to raise, then they need to be able to raise it."

Florida is one of 21 states that have strict judicial foreclosure proceedings, meaning banks must get a judge's approval before repossessing a home.

Rep. Kathleen Passidomo, R-Naples, was the first this year to file a bill aimed at expediting foreclosures. The proposal, HB 213, has since been substantially rewritten to include changes to the same statute Simmons hopes to amend, she said Tuesday.

She said her changes would require the courts to decide whether a homeowner has a legitimate defense to fight the foreclosure. If not, the judge could issue a final judgment.

"Some defenses should be heard, but if the borrower just responds by saying 'I don't want to move out,' that doesn't do anyone any good," Passidomo said. "At some point, we've got to get these houses back on the market and this issue resolved."

Passidomo said her bill also would allow third parties, such as homeowners associations, to move foreclosures forward when banks are delaying action.

Foreclosure defense attorneys and homeowner advocates have opposed changes to Florida law that would take cases out of the court system. They argue that chain of ownership confusion created by the mass securitization of mortgages, as well as paperwork problems caused by banks taking foreclosure shortcuts, would sail through without correction if judges were taken out of the process.

Expedited foreclosure legislation has failed the past few years in Florida, but bank representatives and lawmakers believe they have a better chance of getting something passed during the 2012 session.

"Everyone is starting to realize that to turn around the economy we have to get through this housing market," said Anthony DiMarco, executive vice president of government affairs for the Florida Bankers Association.

Nearly 9,500 Homeowners Statewide Apply To Receive Assistance in Program's First Week

TALLAHASSEE—Today Florida announced that 9,439 homeowners have submitted applications to receive financial assistance from the Florida Hardest-Hit Fund (HHF) program as of Friday, April 22. The application process was made available to troubled homeowners in all 67 counties a week ago on April 18. Currently, these applications are in various stages of completion; all homeowners who fully complete and submit an application will undergo eligibility determination by HHF Advisor Agencies statewide.

The counties with the largest number of applications are Broward (1,638), Miami-Dade (1,027), Orange (957) and Palm Beach (939). Homeowners in every Florida county may apply for financial assistance from the fund.

Programs available through the HHF are as follows:

The Unemployment Mortgage Assistance Program, or UMAP, will provide up to $12,000 to pay monthly mortgage and escrowed mortgage-related expenses for up to six (6) months, or until the homeowner can resume making mortgage payments, whichever comes first. In addition, homeowners in the UMAP will be required to pay 25 percent of their monthly income toward their monthly mortgage payment, with a minimum payment of $70 per month.

The Mortgage Loan Reinstatement Payment Program, or MLRP, will provide up to $6,000 to bring the homeowner’s past-due first mortgage current if the homeowner can show the ability to resume making mortgage payments on his own; for a homeowner who received funding from the UMAP program, any unused funds up to $12,000 may be used in addition to MLRP funds to help bring the first mortgage current.

UMAP and MLRP program funds will be in the form of a 0% percent, deferred-payment loan; the loan can be forgiven over a five-year period, at a rate of 20% each year.

Florida homeowners should continue to be aware that several "imposter" websites have been identified and applicants are strongly encouraged to verify that the website they are using is, in fact, the official Florida HHF website before providing their personal information.

First announced on February 19, 2010, by the US Department of the Treasury (Treasury), the "Housing Finance Agency (HFA) Innovation Fund for the Hardest-Hit Housing Markets" (HFA Hardest-Hit Fund) provides federal funding to states hardest hit by the aftermath of the burst of the housing bubble. To date, $7.6 billion has been infused into the HFA Hardest-Hit Fund for 18 states and the District of Columbia; Florida’s total allocation currently stands at more than $1 billion. The goal is to help troubled homeowners sustain and keep their homes, ultimately, to avoid foreclosure.

Florida Hardest-Hit Program Goes Statewide Today

One billion dollars for helping homeowners avoid foreclosure became available Monday through the statewide roll-out of the Florida Hardest-Hit Fund program.

Florida began taking applications Monday morning for the federally funded program that will provide nearly 40,000 unemployed and underemployed homeowners with up to six months of cash assistance to make payments on mortgages that would otherwise go unpaid.

Created by the U.S. Treasury in February 2010, the Housing Finance Agency Innovation Fund for the hardest-hit housing markets sets aside funds from the 2008 federal stimulus package to five states: Arizona, California, Florida, Michigan and Nevada, states with the highest levels of foreclosures. The program was later expanded to 18 states. Florida's cut to date is $1 billion of nearly $9 billion in federal funds.

Florida is the last state of five original recipients to get its program under way. The program was rolled out last year in Lee County as a pilot. The region was the epicenter of a housing bust resulting in thousands of foreclosures.

Florida's original program would have provided as much as $35,000 in assistance over an 18 month period for homeowners who were looking for work and behind on their mortgages. After taking office, however, Gov. Rick Scott ordered a review of the program and changed its parameters.

The new program reduced the maximum award up to $12,000 and shortens the duration of benefits, which advocates said could reduce the program's effectiveness for recipients whose job search takes longer to complete, as Florida's economy recovers more slowly than other states.

The program also offers up to $6,000 for residents who have gone back to work to pay delinquent mortgage payments.

About 70 agencies are assisting in outreach efforts including not-for-profit groups and for-profit companies.

Florida Launches Statewide Hardest-Hit Fund Program

TALLAHASSEE—On Tuesday, April 5, Florida announced that unemployed or underemployed homeowners in Florida, who are having difficulty paying their mortgages, will be able to apply for financial assistance from the Florida Hardest-Hit Fund (HHF) beginning at 9 a.m. on Monday, April 18. On this day, the program will become available to troubled homeowners in all 67 counties in the state.

After reviewing information gleaned from the pilot in Lee County and in consultation with the Governor’s Office, there are a few changes to the HHF program benefits, as follows:

The Unemployment Mortgage Assistance Program, or UMAP, will provide up to $12,000 to pay monthly mortgage and escrowed mortgage-related expenses for up to six (6) months, or until the homeowner can resume making mortgage payments, whichever comes first. In addition, homeowners in the UMAP will be required to pay 25 percent of their monthly income toward their monthly mortgage payment, with a minimum payment of $70 per month.

The Mortgage Loan Reinstatement Payment Program, or MLRP, will provide up to $6,000 to bring the homeowner’s past-due first mortgage current if the homeowner can show the ability to resume making mortgage payments on his/her own; for a homeowner who received funding from the UMAP program, any unused funds up to $12,000 may be used in addition to MLRP funds to help bring the first mortgage current.

The minimum qualifications a homeowner must meet to be considered for assistance from either or both HHF programs will remain the same.

UMAP and MLRP program funds will be in the form of a 0% percent, deferred-payment loan; the loan can be forgiven over a five-year period, at a rate of 20% each year.

There are several reasons for these changes to the program. Most importantly, the need for this program continues to grow and Florida wants to assist as many homeowners as possible. These changes could allow Florida to provide financial assistance to nearly 40,000 homeowners statewide, or twice as many as previously estimated could be helped.

Florida homeowners should also be aware that several websites posing as HHF application sites have been identified. Once the application process opens, applicants are strongly encouraged to verify that the website they are using is, in fact, the official Florida HHF website before providing any personal information.

Applying for the Florida Hardest-Hit Fund program is FREE-OF-CHARGE, and applicants will not be asked to pay for any eligibility determination services in conjunction with applying for the program.

First announced on February 19, 2010, by the U.S. Department of the Treasury (Treasury), the “Housing Finance Agency (HFA) Innovation Fund for the Hardest-Hit Housing Markets” (HFA Hardest-Hit Fund) provides federal funding to states hardest hit by the aftermath of the burst of the housing bubble. To date, $7.6 billion has been infused into the HFA Hardest-Hit Fund for 18 states and the District of Columbia; Florida’s total allocation currently stands at more than $1 billion.

Treasury has approved both of Florida's housing programs to provide temporary assistance to eligible unemployed or underemployed homeowners. The goal is to help them sustain and keep their homes, ultimately, to avoid foreclosure.

Foreclosure Prevention Program to Accept Statewide Applications in April

A much-anticipated state program to help homeowners avoid foreclosure has been revised and now is expected to debut statewide in mid-April, the state announced Friday.

Changes to the Hardest Hit Fund will mean less money for those who qualify, but Florida will be able to help about 40,000 homeowners, twice as many as initially expected.

Hardest-Hit will cover mortgage payments for single-family homeowners who are unemployed or in jobs with salaries below what they need for basic living expenses. Money also will be used to bring delinquent mortgages current for homeowners who have returned to work or found higher-paying jobs.

The revisions call for homeowners to share in the cost of the program. They will contribute at least $70 per month or 25 percent of their monthly incomes, as determined by eligibility advisers.

Florida Hardest-Hit Fund Statewide Launch Delayed

The launch date of a new federal mortgage assistance program designed to aid families in states hit hard by the economic and housing market downturn has been delayed until late March.

The Florida Hardest Hit Fund, which has a little more than $1 billion available for Floridians struggling to pay their mortgage, will be rolled-out beyond its pilot phase later than its anticipated target of the last week of February.

Homeowners who qualify for financial assistance may receive up to 18 months of monthly mortgage payments or money to pay past due mortgage payments to bring the mortgage current. The money, up to $35,000 per household, will be paid by the state program directly to the lender.

Eligibility requirements are stringent and only about 20,000 Floridians could receive assistance through the program. Online applications will be accepted on a first-come, first-served basis when the program becomes available locally.

There are two programs within the Florida Hardest Fund program:

The Unemployment Mortgage Assistance Program provides money that can be used to pay monthly mortgage and escrow-related expenses until the homeowner can resume payments or for up to 18 months, whichever occurs first.

The Mortgage Loan Reinstatement Payment Program is money that can be used to bring the pastdue first mortgage current. Up to four months will be paid.

Florida is one of 18 states and the District of Columbia that will share in the $7.5 billion allocated for the program.

The Hardest Hit Fund was announced by President Obama and the U.S. Department of Treasury in February 2010 for states that were struggling with unemployment rates above the national average or had steep home price declines — greater than 20 percent after the housing bust.

The state just wrapped up its pilot program in Lee County, where 963 total applications were received.

Florida Revises Application Requirements for The Hardest Hit Fund

Application Requirements Are Revised for Lee County Homeowners Seeking Assistance from Hardest-Hit Fund

Today Florida announced that troubled homeowners in Lee County who want to apply for financial assistance from the Florida Hardest-Hit Fund (HHF) may now be up to 180 days delinquent on their first mortgage. To date, more than 780 applications have been submitted. Applications may be submitted only by homeowners living in Lee County, the pilot site for the program. The application process opened on Monday, October 25, and will remain open until 1,000 applications are received.

On October 29, Fannie Mae and Freddie Mac both issued notices that require servicers to work closely with housing finance agencies (HFAs) that administer mortgage assistance programs (such as HHF) to homeowners who are unemployed/underemployed through no fault of their own. Specifically, servicers have been instructed to accept payments from HFAs, subject to certain limitations, on behalf of homeowners enrolled in programs that provide unemployment mortgage assistance or mortgage reinstatement plans.

Florida has two HHF programs: (1) Unemployment Mortgage Assistance Program (UMAP), which will provide up to 18 months of first mortgage payments directly to the lender on behalf unemployed or underemployed homeowners until they can resume making payments on their own; and (2) Mortgage Loan Reinstatement Payment (MLRP) Program, which will be used to bring a delinquent mortgage current for homeowners who have returned to work or recovered from underemployment.

UMAP and MLRP program funds will be in the form of a 0% percent, deferred-payment loan. The loan can be forgiven over a five-year period, at a rate of 20% each year.

Homeowners in Lee County who thought about applying, but did not because their mortgages are more than 90 days past due should apply for assistance. This is the only change made to the eligibility requirements for the HHF program.

U.S. Treasury Approves Florida's Mortgage Intervention Strategy for Hardest Hit Fund

The federal government has allocated funding to help pay the mortgages of qualified homeowners who are unemployed or underemployed through no fault of their own. Currently, this funding is only available to homeowners in Lee County, Florida, as a pilot program. We expect the program to become available statewide early in 2011. Please check this website frequently for updates.

Homeowners who qualify for financial assistance may receive up to 18 months of monthly mortgage payments and/or funds to pay past due mortgage payments to bring the mortgage current; these funds are paid directly to the loan servicer/lender.

You must meet all eligibility requirements to be considered for the program. Please review the following criteria prior to applying for Hardest Hit Fund assistance.

An eligible homeowner:

• Must be a Florida resident;
• Must occupy property as primary residence (the property cannot be vacant, abandoned or rented);
• Must have suffered an approved hardship that makes the first mortgage unaffordable;
• Must have documented total income at or below 140% of the area median income (AMI), adjusted for household size (in Lee County, the total income for a household of four cannot be more than $86,240);
• May not have unencumbered assets of $5,000, or three times the current monthly mortgage payment (whichever is greater);
• Cannot have a bankruptcy that has not been discharged or dismissed; and
• Cannot have been convicted of a mortgage-related felony in the last 10 years.

The current mortgage:

• Must be serviced by a participating lender, who agrees to accept payments on behalf of the homeowner;
• Must not be more than 90 days past due at the time of application;
• Must have been originated on or before January 1, 2009; and
• Must have an existing principal balance of less than $400,000.

This list is not all inclusive; other information and documents will be required prior to determining eligibility.

Florida Almost Ready to Implement Hardest-Hit Fund

Pilot program set for Lee County in Fall of 2010

Florida's mortgage intervention and foreclosure avoidance assistance using federal Hardest-Hit funding will be available to troubled homeowners in Lee County—the pilot site—as detailed in the information below. As reported earlier, the U.S. Treasury requires that a pilot site be established prior to Florida making this assistance available statewide. The pilot is expected to be in place for a minimum of 90 days, with Mortgage Intervention assistance becoming available statewide sometime thereafter.

On August 11, 2010, U.S. Treasury expanded the existing Housing Finance Agency (HFA) Innovation Fund for the Hardest-Hit Housing Markets (known as the Hardest-Hit Fund) to include a total of 18 states and the District of Columbia, and an additional $2 billion; Florida’s allocation from this new announcement is $238.8 million, which added to Florida's initial allocation of $418 million, brings the state’s total funding to $656.8 million.

This means MORE MONEY to help MORE PEOPLE for a LONGER PERIOD OF TIME.

MORE MONEY: This additional funding means Florida now has more than half-a-billion federal dollars to help troubled homeowners facing foreclosure.

HELP MORE PEOPLE: This additional funding allows the number of homeowners assisted to be increased to approximately 20,000.

LONGER PERIOD OF TIME: This additional funding allows us to now make payments on the homeowner’s behalf for up to 18 months.

These funds may also be used to pay arrearages on behalf of a qualified homeowner to bring the mortgage current.

The U.S. Treasury is requiring that Florida use this new funding specifically for a targeted unemployment program that provides temporary assistance to eligible homeowners by paying their mortgage while they seek re-employment, additional employment or undertake job training.

In order to fully comply with the Treasury’s requirement for the use of this new funding Florida will modify its initial plan to assist unemployed homeowners. As required by the Treasury, Florida will submit the modified plan to them by September 1; Florida hopes to have approval to move forward with the modified strategy by the end of that month.

Additionally, to ensure Florida's revised unemployment plan aligns with the Treasury’s guidelines for the new money, Florida must reschedule the implementation of the pilot in Lee County. Right now, the pilot is expected to be implemented in the autumn of 2010.

Florida to Receive More than Half-A-Billion Dollars Under Expanded Federal HFA Hardest-Hit Fund

TALLAHASSEE—The State of Florida will receive more than half-a-billion dollars in federal funding from the Housing Finance Agency Innovation Fund for the Hardest-Hit Housing Markets (Hardest-Hit Fund). Florida will submit a revised implementation plan to U.S. Treasury to ensure this funding will be available to troubled homeowners in the pilot area by early fall.

The additional funding the State of Florida will receive from the federal Hardest-Hit Fund will give the state more money to help more people for a longer period of time. To do that, it will be necessary for Florida to revise its current Mortgage Intervention plan and reschedule the implementation of the pilot in Lee County until early fall.

First announced on February 19 by the U.S. Department of the Treasury (Treasury), the Hardest-Hit Fund was established to provide federal funding to states hardest hit by the aftermath of the burst of the housing bubble. This funding is to be used to provide meaningful financial support to troubled homeowners to help them avoid foreclosure on their homes. To date, 18 states and the District of Columbia have been allocated $4.1 billion in funding from the fund. Florida’s Hardest-Hit funding includes $418 million from the first announcement and, most recently, $238.8 million, which totals $656.8—more than half-a-billion dollars.

The treasury requires that the new allocation be used specifically for a targeted unemployment program that provides temporary assistance to eligible homeowners by paying their mortgage while they seek re-employment, additional employment or undertake job training. To fully comply with this requirement, Florida Housing will submit a revised Hardest-Hit plan to the Treasury by September 1. Florida hopes to have approval on the revised plan by the end of September, and to move forward with the pilot in Lee County pilot by mid-October. Statewide implementation is tentatively scheduled for February 2011.

Florida’s total allocation from the Hardest-Hit Fund means more money to help more people for a longer period of time:

More Money: This additional funding means Florida now has more than half-a-billion federal dollars to help troubled homeowners facing foreclosure.

Help More People: This additional funding allows us to increase the number of homeowners helped to approximately 20,000.

Longer Period of Time: This additional funding allows us to now make payments on the homeowner’s behalf for up to 18 months, including the payment of arrearages on behalf of a homeowner to bring the mortgage current.

Florida's Hardest-Hit Fund Proposal Submitted to U.S. Treasury

Frequently Asked Questions

Q: What is the HFA Hardest-Hit Fund (or Florida Hardest-Hit Fund)?

The “Housing Finance Agency Innovation Fund for the Hardest-Hit Housing Markets” (HFA Hardest-Hit Fund) was announced by the US Department of Treasury (Treasury) on February 19, 2010, as a means to provide meaningful financial support for families in the nation’s hardest-hit housing markets.

Florida is slated to receive $418 million as one of five states that will share in $1.5 billion in funding through this program. States’ proposals were due to Treasury by April 16, 2010. Treasury will review the proposals to ensure that each meets established program guidelines. For our state, the program is being called the Florida Hardest-Hit Fund. The other states that will share in the $1.5 billion allocation are: California ($699.60 million); Michigan ($154.5 million); Arizona ($125.1 million); and Nevada ($102.8 million).

Q: Are the strategies in Florida Housing’s proposal for the Hardest-Hit funding final?

The strategies outlined in Florida Housing’s proposal are not final. They will be reviewed by Treasury within the next four to six weeks. We expect to communicate with Treasury regarding the proposal to ensure it meets Hardest-Hit program guidelines prior to finalizing the strategies for implementation around early fall 2010.

Q: What strategies does the Florida proposal contain?

Florida Housing’s proposal contains the following three strategies:

(1) Mortgage Intervention Strategy;

(2) Legal Representation Strategy (as a complement to the Mortgage Intervention Strategy); and

(3) Downpayment Assistance (DPA) and Mortgage Rate Reduction Strategy.

How will each of these strategies help troubled homeowners?

The Mortgage Intervention Strategy and the Legal Representation Strategy are designed to assist in keeping homeowners in their homes, or to at least achieve an outcome that is better than losing their homes due to foreclosure.

The Mortgage Intervention Strategy proposes to help the unemployed or underemployed homeowner sustain and keep their home by working with banks and credit unions, and mortgage investors such as Fannie Mae and Freddie Mac, to extend the period of time the homeowners need to become re-employed at a salary that is sufficient to either resume making full mortgage payments, or qualify for a mortgage modification to make the mortgage payments affordable for the homeowner.

The Legal Representation Strategy can complement the Mortgage Intervention Strategy and help a homeowner who already has a mortgage foreclosure action filed against them in court. This program will provide these homeowners with legal representation to ensure they have the chance to achieve an outcome other than foreclosure, if appropriate. For homesteaded foreclosure cases, the Florida Supreme Court has mandated managed mediation, at which lenders are required to have a representative present who has the authority to negotiate on the lender’s behalf. This strategy will allow homeowners to also have representation to make their case for a loan modification, or other outcome, that is better than foreclosure and may allow the homeowner to keep their home.

The third program is the Downpayment Assistance (DPA) and Mortgage Rate Reduction strategy, which is designed to help protect home values by providing incentives to prospective homebuyers to purchase homes as their primary residences. In many areas of Florida, homes are coming on the market more quickly than there are buyers to purchase them. A significant number of these homes are distress sales that are listed below fair market value and contribute to the continuing sales price declines in the state. By providing DPA in conjunction with Florida Housing’s First Time Homebuyer (FTHB) Program, prospective buyers now have incentives to purchase homes, which helps to stabilize both neighborhoods and the sales price declines around the state.

What portion of the $418 million will be earmarked for each of the three strategies?

Florida Housing is proposing that of the $418 million Florida is slated to receive:

(1) $353 million will be provided to the Mortgage Intervention Strategy;

(2) $25 million will be provided to the Legal Representation Strategy; and

(3) $40 million will be provided to the Downpayment Assistance and Mortgage Rate Reduction Strategy.

These amounts are inclusive of administration costs.

How did Florida Housing determine which areas of the state are the hardest hit in order to distribute funding throughout the state?

To determine geographical targeting for distributing Hardest-Hit funding, Florida Housing analyzed data similar to that used by Treasury. Three measures were evaluated for all 67 counties:

A. Housing Price Decline from peak prices—a measure of the change in housing prices over a specified period of time;

B. Unemployment Rate—a measure of the proportion of workers who are without employment over a period of time; and

C. Seriously Delinquent Mortgage Loans—a measure of active first mortgage loans in each county that are 90+ days past due or are in foreclosure. For this measure, there may be concern that some counties would receive higher allocations mainly due to high counts of delinquent investment properties; however, Florida Housing’s analysis showed that there is minimal impact to the allocation from non-primary home properties.

Update on Federal Hardest-Hit Fund

WASHINGTON, DC -- Today, the Obama Administration released the next steps in the recently-announced Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets ("HFA Hardest-Hit Fund").

On February 19, 2010, President Obama announced additional funding for innovative measures to help families in the states that have been hit the hardest by the aftermath of the burst of the housing bubble. States where house prices have fallen more than 20% from their peak are eligible for this funding. Those states are Nevada, California, Florida, Arizona and Michigan. The HFA Hardest-Hit Fund will help housing finance agencies ("HFAs") in these states further respond to the most pressing problems in their communities. HFAs have an understanding of the most urgent local challenges and an ability to address them expeditiously. For that reason, the Obama Administration has committed $1.5 billion in funding under the Emergency Economic Stabilization Act of 2008 (EESA) to help HFAs expand their assistance to struggling homeowners and innovate new ways to address housing challenges.

Today the Administration released detailed guidance for eligible HFAs to submit program proposals for funding. The HFA Hardest-Hit Fund is designed to allow the maximum possible flexibility to eligible HFAs in designing programs that are tailored to the needs of their state. Today's guidance provides instruction to HFAs to ensure that program proposals meet basic guidelines and comply with the purposes of EESA. All programs must protect home values, preserve homeownership, promote jobs and economic growth, and provide accountability to the public.

Funding allocations were also released today based on a formula to provide relief in direct proportion to the scale of each state's housing challenges. Funds have been allocated based on home price declines, unemployment rates, and mortgage delinquencies.

Eligible HFAs may submit program proposals to the Department of the Treasury up to the April 16th deadline, after which the review period will begin. The U.S. Treasury will provide additional updates to the public as the program progresses.

President Obama Announces Help for Hardest Hit Housing Markets

Today President Obama announced funding for innovative measures to help families in the states that have been hit the hardest by the aftermath of the housing bubble. In each of these states, the average price for all homes in the state has fallen more than 20% from the peak.

Home prices across the country are beginning to stabilize since the Administration’s economic policies began to take effect in mid-2009. But the legacy of price declines, together with the effects of high unemployment, means that many working and middle class families in these especially hard-hit areas are facing serious challenges, in many cases beyond what their families’ resources can handle. This new innovation fund will help housing finance agencies in the hardest-hit areas and localities further respond to the most pressing problems in their communities.

President Obama said, "During these difficult economic times, we will work to help responsible homeowners stay in their homes and stabilize the housing market so home values can rise. This program will allow housing finance agencies in the places hardest-hit by the housing crisis find innovative ways to help homeowners stay afloat, and empower local agencies that know these communities best. With the help of Harry, Tim and Shaun, we’ll continue to work together to stabilize the mortgage markets and hasten our recovery."

Secretary of the Treasury Timothy Geithner said, "This innovative program will allow us to work directly with states and localities to tailor housing assistance to local needs. It's an opportunity to provide additional relief to the hardest hit states while continuing to strengthen our housing market stabilization efforts."

Secretary of Housing and Urban Development Shaun Donovan said, "Although the housing market has come a long way in just one year, there are many communities like Las Vegas that are still struggling. The funding announced today will help target resources to those hardest hit markets, promoting innovation that tailors programs to meet local needs and complementing our national foreclosure relief efforts."

Help for the Hardest-Hit Housing Markets

This new program will apply to states that have suffered an average home price drop of over 20% from the peak. State and local Housing Finance Agencies (HFAs) in each state are already familiar with the urgent challenges facing their communities and have demonstrated the ability to address these challenges. For that reason, we will work with these HFAs to expand the capacity to help address these challenges, with $1.5 billion from the funds set aside for housing under the Emergency Economic Stabilization Act of 2008 (EESA).

The HFAs will determine the priorities facing their local markets. The program will be under strict transparency and accountability rules. The increase in HFA activities in these areas will support families in these markets, combining with the numerous other steps the Administration has taken to address housing markets.

Funds can be used for innovation to take steps to address difficult, locally-important challenges for the hardest-hit housing markets, including unemployed borrowers, underwater borrowers, and second liens.

Programs must meet funding requirements under EESA. These include that the recipient of funds must be an eligible financial institution and that the funds must be used to pay for mortgage modifications or for other permitted uses under EESA. Treasury will announce maximum state level allocations in the next two weeks, along with rules governing the submission of program designs by HFAs, and provide a period thereafter for HFAs to submit their program designs in order to receive funding.

Housing markets vary considerably from state to state, and often within a single state. Housing Finance Agencies are intimately engaged already in their local housing markets, and will play the lead role in determining what sorts of programs are most appropriate to local conditions. Three sorts of problems that may be addressed with funding are unemployed borrowers, underwater borrowers, and second liens:

1. Unemployed borrowers. Since the recession began in 2008, unemployment has hit many families who own homes. In previous times, when house prices were rising, families with unemployment could often sell their homes for more than they had paid, using the proceeds to tide them over. Today, by contrast, families in states where prices have dropped more than 20% often find themselves owing more than the house is worth in the current market. Such homes are often difficult to sell, and families with unemployment often can’t pay the current mortgage and may not have enough income to qualify for a modification. In such circumstances, one use of funds would be for HFAs to begin programs to help unemployed homeowners until they have secured a new job. HFAs can consider a variety of programs to help unemployed borrowers.

2. Underwater borrowers. For states with more than 20% home price declines, a large portion of homeowners are "underwater" -- they owe more than the house is worth in the current market. Such borrowers often find it difficult to sell their homes -- lenders may not agree to a sale that fails to pay back a mortgage in full. HFAs may experiment with programs that would assist borrowers to negotiate with lenders to write down mortgages.

3. Second liens. An important challenge can arise for some borrowers who have a home equity line of credit or other second mortgage on their home. Often, a first mortgage lender who may be willing to modify the loan by reducing principal can run into difficulties in coordinating between the first and second mortgage lender. To smooth this coordination problem, and help assure that homeowners get an overall modification that works best, funds can be used to pay incentives to the second mortgage holders, addressing this potential obstacle to reducing principal and keeping borrowers in their homes.