Due to the high levels of home price declines and unemployment in the Sunshine State, Florida Housing Finance Corporation (Florida Housing) was selected as one

of five state housing finance agencies to receive funding through the administration’s Hardest Hit Fund. Of the initial $1.5 billion in federal funding allocated for these markets, Florida Housing is slated to receive $418 million, pending the approval of its proposal.

In its proposal, which is currently being reviewed by the Treasury Department, Florida Housing outlined two strategies that will help homeowners either stay in their home or achieve an outcome that is better than losing their home at a foreclosure sale. In addition, the agency proposed a third strategy designed to protect home values across the state.

Through the first strategy, named the mortgage intervention strategy, Florida Housing plans to help both unemployed and underemployed homeowners by partnering with banks and credit unions as well as mortgage investors, such as Fannie Mae and Freddie Mac,

to extend the time period for homeowners to become re-employed at a salary that is sufficient to either resume making the full mortgage payments or qualify for a mortgage modification. The agency said it will use the hardest hit funds to pay up to nine months of mortgage payments on behalf of a homeowner in return for the lender or investor forgiving up to nine months of payments.

Florida Housing’s second strategy, designed to complement the mortgage intervention strategy, is intended to help homeowners who have already had a mortgage foreclosure action filed against them in court. This legal representation strategy will provide homeowners with the services of an attorney to ensure that they have the opportunity to achieve an outcome other than foreclosure, if appropriate.

The final strategy, downpayment assistance and mortgage rate reduction, is designed to protect home values by providing incentives to prospective homebuyers to purchase homes and help stabilize the housing price decline that Florida continues to experience. This strategy will be used in conjunction with Florida Housing’s first time homebuyer program to encourage buyers to purchase homes that they will live in as their principal residence.

The hardest hit funding will be used in each of these three strategies. Florida Housing plans to use $353 million – the bulk of its $418 million allocation – for the mortgage intervention strategy, and $40 million will be used for the downpayment assistance and mortgage rate reduction strategy. The remaining $25 million will go towards the legal representation strategy.