Mortgage Settlement Relief

An article in the Sun-Sentinel by E. Scott Reckard reported on how the $25 billion dollars from the settlement with the five huge mortgage firms was spent.  Just 15% of the total had been applied to first mortgage forgiveness.   The settlement proceeds went primarily for short sales and forgiveness of second mortgages.   The short sale forgiveness, estimated at $21 billion, did nothing to help people keep their homes.  As to the release of second mortgages, these are amounts that the banks likely could never collect a dime.  It is possible that these releases could help homeowners  save their homes because they only had to maintain, if possible, their first mortgages.  I have had many clients in chapter 13 bankruptcy who have received these releases on property that we were stripping in the chapter 13 Plan anyway, so there was hardly a benefit.

Meanwhile, the Florida Hardest Hit program announced a $350 million Principal Reduction Program.  The Florida Housing Finance Corp. would initially accept 25,000 applications to try to find 10,000 eligible homeowners.  The property must be underwater in which the debt is more than 125% of the value, and the total household income must be less than 140% of the area’s median income.  This program only applies to homeowners who are current (unlike a separate program for those who are behind on their payments).   Information is available at www.PrincipalReductionFLHHF.org and 1-877-863-5244.



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