Obama sets aside more money for unemployed, underwater home owners
Florida is one of at least five states where more federal money is on the way to help homeowners Foreclosure crisis
February 19, 2010
By William E. Gibson
South Florida Sun-Sentinel
WASHINGTON – South Florida homeowners who lost their jobs or owe more than their property is worth could be in line for a big new dose of federal housing aid.
President Barack Obama on Friday unleashed $1.5 billion to help homeowners in Florida and other states hit hardest by unemployment and a flood of foreclosures.
"It's going to allow lenders to help homeowners who are underwater," Obama said, referring to those whose houses are worth less than their mortgages. "And it will help folks who've taken out a second mortgage modify their loans."
The announcement raised hopes that the aid could be used to help homeowners avoid foreclosure by making payments affordable.
Four of every 10 owners of single-family homes with a mortgage in South Florida owe more than the property is worth, according to Zillow.com, a real estate research firm based in Seattle.
While Florida's property values have plunged, the unemployment rate statewide has soared to nearly 12 percent.
State officials were delighted by the unexpected burst of federal spending and began devising plans to apply for it.
"The exciting thing about it is that we are looking at actual help, real money on the street, for a fair number of people who are in a difficult situation," said Cecka Rose Green, spokeswoman for the Florida Housing Finance Corp.
The money will not flow for weeks or months, however.
The Treasury Department will decide over the next two weeks how to dole out the $1.5 billion among Florida and at least four other states – California, Nevada, Michigan and Arizona. State housing agencies will then submit plans for how to use it to meet local needs.
The Florida Housing Finance Corp., a state-funded group, cannot refinance loans, Green said, but may be able to bring in other agencies and partners to help homeowners.
Some analysts foresee short-term loans at no interest or low interest or deferred payments to help unemployed Floridians keep their homes until they find jobs.
"It could be used to pay off second loans so that whoever holds the first mortgage can refinance it," said Mike Larson, a housing analyst with Weiss Research in Jupiter.
"This is an add-on program targeted at those states where the crisis is most acute, and Florida is at the top of the list," Larson said. "It's not some huge game-changer, but another way to help."
William E. Gibson can be reached at Wgibson@SunSentinel.com or 202-824-8256.