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Half-a-Million Foreclosures That Didn’t Need to Happen

You’ve seen the headlines. From the Tampa Bay Times: “Untangling Florida’s Foreclosure Crisis.”  From Bloomberg:“Florida Defies Housing Rebound as Foreclosures Soar.”  And from the Sun-Sentinel: “South Florida, State Lead U.S. in Foreclosures.”

How did Florida get into this mess? Simply put, banks lent more money to more people than they should have, and when those homeowners couldn’t keep up with their minimum monthly payments, they faced losing their property.

According to figures from RealtyTrac, Florida has ranked first in the nation in the rate of foreclosures for the last 10 months straight. But now comes word that many of these foreclosures didn’t have to be.

Economist Says Half a Million Consumers Could Have Kept Homes

In an interview with NPR, Columbia University economist Chris Mayer says as many as 500,000 people nationwide could have stayed in their homes if government-backed relief efforts had been better executed. He based his estimate on data from Freddie Mac.

The same NPR report says many homeowners could still qualify for mortgage relief today but are reluctant to take advantage of refinancing programs because even the legitimate ones sound like a scam.

Former Congressman Mel Watt now directs the Federal Housing Finance Agency, which runs the Home Affordable Finance Program, or HARP.  According to Watt, homeowners who signed up for the program are saving an average of $200 per month.

The program works by restructuring mortgage loans based on the lower interest rates now available on the market. Watt told NPR as many as 800,000 more families could benefit from HARP if they would step forward.

Do you qualify for relief through HARP?

To be clear, not all homeowners will qualify. HARP’s website lists the following requirements:

  1. The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
  2. The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
  3. The mortgage cannot have been refinanced under HARP previously, unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
  4. The current loan-to-value (LTV) ratio must be greater than 80%.
  5. The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.

Other Options Besides HARP

Even if you don’t meet the qualifications for relief under HARP, other options may be available to remain in your home or minimize the financial hardship if your mortgage is “upside down” – meaning you now owe more on the property than what the home is worth.

At the Law Offices of Larry E. Bray, our experienced real estate team is well versed in this area. We’ll walk you through your options step by step, including how to obtain a mortgage renegotiation or a short sale if that’s what is best based on your unique financial situation.

Short sales occur when, after a property is worth less than the mortgage, the bank accepts the net proceeds of the sale, despite the fact that it is less than the mortgage owed.

It’s a complicated process, but our team is dedicated to working with our clients to find the best solutions available. Contact our Lake Worth, West Palm Beach, or Boca Raton office to arrange an initial consultation.

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