Mortgage Relief
Unemployed borrowers and homeowners whose residences are "underwater" are the focus of a new government program designed to help the ailing real estate market.
Announced Friday by the Obama administration, the $14 billion relief effort will let people who owe more on their mortgages than their properties are worth get new loans backed by the Federal Housing Administration, a government agency that insures home loans against default.
And people receiving unemployment benefits would see their mortgage payments drop to no more than 31 percent of their monthly income - but only for three to six months.
The new program takes direct aim at Southwest Florida, which has been among the hardest-hit areas of the country for foreclosures.
Lee County's real estate market had the second highest foreclosure rate in the country in 2009: 11.9 percent of housing units, second only to Las Vegas, received some kind of foreclosure notice, according to RealtyTrac.
On a typical day, 50 to 100 foreclosure lawsuits are filed in Lee circuit court. In 2009, 21,678 were filed here - fewer than the 26,125 recorded in 2008 but far more than in any other year. There were 1,420 foreclosures filed in February.
Administration officials cautioned that the plan isn't an instant cure, won't stop all foreclosures or help all troubled homeowners. Instead, officials said their goal is to meet their original target, announced last year, of helping 3 million to 4 million borrowers avoid foreclosure.
"In general, I am supporting of any action against people losing their homes," said David Hall, president of First Community Bank of Southwest Florida in Fort Myers.
"Banks don't want to take back homes. On the other hand, customers have to be making their payments. If the government helps them make their payment, it would be wonderful," Hall said. He said it's somewhat like a double-edge sword - on one hand the government wants banks to write down mortgages to ease those who are under water. But on the other side, they continue to watch a bank's balance sheet and keep the economic pressure on.
He was unsure of just what the ramifications of Friday's announcement might mean to the banking community, but he's certain of one thing: There are still a lot of constraints from banking regulators. Fort Myers attorney Charles Phoenix, who has handled numerous foreclosures, called Friday's action "window dressing."
He said those on unemployment get a "meager amount," and even if their mortgage were reduced by 31 percent, they're still in trouble. In Florida, the benefits are up to $300 a week.
"How much it helps .... for me, it's just more money down the tubes," Phoenix said.
On the other hand, Phoenix said, "It's a step in the right direction. A couple of years too late, but still it's a step in the right direction. This creates a lot of hope, which is a good thing."
According to the latest statistics, about 14 million borrowers owe more than their home is worth, and two thirds of those owe at least 20 percent more than the current value.
These people would be helped in either of two ways: Their mortgage companies can cut the total amount they owe, or they can refinance into loans backed by the FHA.
Taken from the News Press
Announced Friday by the Obama administration, the $14 billion relief effort will let people who owe more on their mortgages than their properties are worth get new loans backed by the Federal Housing Administration, a government agency that insures home loans against default.
And people receiving unemployment benefits would see their mortgage payments drop to no more than 31 percent of their monthly income - but only for three to six months.
The new program takes direct aim at Southwest Florida, which has been among the hardest-hit areas of the country for foreclosures.
Lee County's real estate market had the second highest foreclosure rate in the country in 2009: 11.9 percent of housing units, second only to Las Vegas, received some kind of foreclosure notice, according to RealtyTrac.
On a typical day, 50 to 100 foreclosure lawsuits are filed in Lee circuit court. In 2009, 21,678 were filed here - fewer than the 26,125 recorded in 2008 but far more than in any other year. There were 1,420 foreclosures filed in February.
Administration officials cautioned that the plan isn't an instant cure, won't stop all foreclosures or help all troubled homeowners. Instead, officials said their goal is to meet their original target, announced last year, of helping 3 million to 4 million borrowers avoid foreclosure.
"In general, I am supporting of any action against people losing their homes," said David Hall, president of First Community Bank of Southwest Florida in Fort Myers.
"Banks don't want to take back homes. On the other hand, customers have to be making their payments. If the government helps them make their payment, it would be wonderful," Hall said. He said it's somewhat like a double-edge sword - on one hand the government wants banks to write down mortgages to ease those who are under water. But on the other side, they continue to watch a bank's balance sheet and keep the economic pressure on.
He was unsure of just what the ramifications of Friday's announcement might mean to the banking community, but he's certain of one thing: There are still a lot of constraints from banking regulators. Fort Myers attorney Charles Phoenix, who has handled numerous foreclosures, called Friday's action "window dressing."
He said those on unemployment get a "meager amount," and even if their mortgage were reduced by 31 percent, they're still in trouble. In Florida, the benefits are up to $300 a week.
"How much it helps .... for me, it's just more money down the tubes," Phoenix said.
On the other hand, Phoenix said, "It's a step in the right direction. A couple of years too late, but still it's a step in the right direction. This creates a lot of hope, which is a good thing."
According to the latest statistics, about 14 million borrowers owe more than their home is worth, and two thirds of those owe at least 20 percent more than the current value.
These people would be helped in either of two ways: Their mortgage companies can cut the total amount they owe, or they can refinance into loans backed by the FHA.
Taken from the News Press
