Borrowers in South Florida could get mortgage loan reductions

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Nearly 1,500 South Florida borrowers may be eligible for reductions of their outstanding mortgage loan balances under a federal program.

Nearly 1,500 South Florida borrowers may be eligible for reductions of their outstanding mortgage loan balances under a federal program announced in April. The program is intended to help “underwater” and severely delinquent borrowers whose loans are owned or guaranteed by mortgage companies Fannie Mae or Freddie Mac.

The Federal Housing Finance Agency, which oversees Fannie and Freddie, said more than 30,000 borrowers coast-to-coast could qualify. Florida has 6,260 possibly eligible borrowers, the leading number of any state, according to FHFA. The tri-county region of Palm Beach, Broward and Miami-Dade counties has 1,487 homeowners who could qualify, fourth-most among metro areas after New York (4,164), Philadelphia (2,436), and Chicago (2,311).

To be suitable for the program, a borrower must reside in the home, be 90 or more days past-due as of March 1, 2016, and have an unpaid balance of $250,000 or less.For a thorough list of eligibility requirements or for more information, visit FHFA.gov or send an email to PRM@FHFA.gov.

Representatives for the program could not specify how much buyers could expect to save off of their principal. The amount depends on the value of their property and area of the country, they said. “The national housing market has significantly improved in recent years, but there are still areas of the country where home values have not recovered and [underwater mortgages remain] a real problem,” FHFA Director Melvin L. Watt said in April.

Watt also stated that the plan “will no doubt be viewed by some as too small and too late and viewed by others as too large and unnecessary. “Still, he said the program is warranted because it will help proprietors avoid foreclosure and not have a negative financial impact on Fannie and Freddie.

“There is still a significant number of folks who are saying, ‘I owe $450,000, my house is worth $400,000, why am I still making the payments?'” said Ken Johnson, an economist and real estate professor at Florida Atlantic University. “This program is a very good thing, even if it hits only a fraction of the market.” FHFA said distinct mortgage companies should be reaching out to possibly eligible borrowers for a so-called Streamlined Modification.

That will momentarily stop any foreclosure proceedings and allow borrowers who think they may qualify for a principal reduction to start making reduced monthly payments, but accepting the modification doesn’t guarantee a homeowner will get a mortgage principal reduction, FHFA said. Lenders are projected to make all principal reduction offers by Dec. 31. Homeowners who think they are eligible should contact their mortgage companies directly, FHFA said.

If you have questions about Foreclosure, Loan Modification, Bankruptcy, Short Sale, or other alternatives, please feel free to call my office at 888-886-0020, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

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