Unemployment can have devastating and long-lasting financial effects for a family.
Many people fall behind on their mortgages and in danger of foreclosure. If you’ve been unemployed, you should know that Florida has a special program that can help people avoid foreclosure during an extended period of unemployment or reduced income.
In February 2010, the U.S. Treasury created the “Housing Finance Agency Innovation Fund for the Hardest-Hit Housing Markets” and allocated funds to five states: Arizona, California, Florida, Michigan, and Nevada. The funds were allocated to these states because of their excessive housing market depreciation and to assist in foreclosure prevention efforts. The funding came, in part, from the fines imposed on predatory mortgage lenders for practices that contributed to the housing market crash of 2006-2009.
Homeowners who are underemployed, unemployed, or have had at least a 10 percent reduction of income through no fault of their own and are experiencing a financial hardship may qualify for assistance from the Florida’s Hardest Hit Fund, which is administered by the St. Johns Housing Partnership. Loan funds can be used to pay monthly mortgage and escrowed mortgage-related expenses (i.e., property taxes, homeowner insurance, and mortgage insurance) until the homeowner can resume payments or for up to 12 months, with a cap of $24,000, whichever occurs first. The loan can also provide up to $18,000 as a onetime payment to bring the past-due first mortgage current.
Program funds come in the form of a zero-percent interest, deferred-payment loan that will be subordinate to current mortgages on the home. It’s technically a lien against the property that is forgiven at a rate of 20 percent per year over a five-year period. The homeowner will be required to complete a quarterly certification that she/he continues to be eligible for the payments.
The lien doesn’t affect your ability to sell your home, and the unforgiven portion is only paid back if your home is sold prior to the end of the five years and there are sufficient proceeds from the sale to pay off all the other home loans. If you have to sell at a loss, for example, you’d pay nothing back.
Eligible homeowners must meet the eligibility criteria, including being a legal U.S. resident or legal alien and Florida resident. The borrower and/or co-borrower combined income must meet eligibility guidelines, and the combined monthly cost of the mortgage payment, must be greater than 31 percent of the total household’s gross income after the financial hardship event. The fund won’t provide a loan for a mortgage with an outstanding balance of more than $400,000.
Deanna O’Flaherty of the St. Johns Housing Partnership says that their team of counselors will help homeowners understand the terms of the program and complete paperwork. They also help homeowners with financial coaching and connect them with resources to help them refinance at more favorable rates. “Some homeowners can qualify for both the catchup funding and the mortgage assistance,” she says. “If you’re on unemployment, you should definitely call us to see if you qualify.”
Find more information at flhardesthithelp.org or contact The St. Johns Housing Partnership at sjhp.org.