(Source: The Miami Herald / By Toluse Olorunnipa) – When Florida’s Hardest Hit Fund program opens up to South Florida’s legion of distressed homeowners later this month, thousands will be able to access up to $35,000 each in federal assistance to help them pay their mortgages. That’s if they can qualify.The federal government’s $1 billion fund for distressed Florida homeowners is slated to provide much-needed relief for those on the verge of foreclosure, but it comes with a long list of requirements that will disqualify many South Floridians right off the bat.

“We want to make to sure that we’re helping the right people,” said Cecka Rose Green, a spokeswoman for the Florida Housing Finance Corp., which is administering the program. “That’s why we have a pretty exhaustive review process that we go through with these applications.”

In South Florida, where there are hundreds of thousands of distressed homes and the unemployment rate is stuck in the double-digits, the program is likely to pique a lot of interest.

But once homeowners begin to look at the laundry list of requirements, many will realize that they simply don’t qualify for Hardest Hit, which was created by the U.S. Treasury Dept. last year.

Aside from having to prove economic hardship such as unemployment or unexpected medical emergency, a homeowner must be able to show that the home is their primary residence and the mortgage is no more than 180 days past due. Investment properties and second homes are not eligible for this program.

Also, there’s a stipulation specifically for homeowners who owe more on their property than it is worth —being underwater. The home must be worth at least half of the amount owed on it. For example, a homeowner that owes $200,000 on a property worth $99,000 would not qualify. That requirement is particularly pertinent in South Florida, where home values have dropped 54.8 percent since 2006 and more than 300,000 mortgages are underwater.

Another requirement says that if you’re already involved in the federal government’s Home Affordable Modification Program, HAMP, you won’t be eligible for Hardest Hit funding.

Still, for those who are able to qualify, Hardest Hit will provide much-needed relief as they try to get their finances in order and get caught up on their mortgage loans.

“The tremendous benefit of this is that it takes the burden off from families by paying their mortgages for up to 18 months,” said LeeAnn Robinson, chief operating officer of Neighborhood Housing Services of South Florida. Robinson added that there were “misconceptions about what this program can do.”

Ray Payano, who owns a home in Cutler Bay and struggled last year to keep up with the mortgage after he and his wife, Arnellys, were laid off, had a baby and exhausted their savings all in the span of a year, is considering applying for Hardest Hit help. He began looking at the program last month and said its Mortgage Loan Reinstatement component, which helps homeowners get caught up on past due payments, would be particularly helpful.

He and his wife are both now self-employed and they make enough money to cover their $1,450 monthly mortgage payment, he said, but they cannot afford to make up all the payments they missed during their jobless stint. The Payanos, who have three children, are trying to work something out with their lender, Citi Mortgage, but that process is still ongoing.

“It’s been a very humbling experience I have to say,” said Payano, who owns an energy conservation company called ConservPros. “We learned how to budget ourselves better and we have a different outlook on what’s really important. If I can get some type of help, that would do wonders for us.”

The money would come in the form of an interest-free loan, paid directly to the bank and forgivable over five years, basically acting as a grant. But that’s only if the Payanos can qualify.

One piece of fine print that might stand in the way is the requirement that homeowners not own outright any assets worth more than $5,000. Payano said that he and his wife have always avoided taking on too much debt, so they own their 2003 Saturn L200 free and clear.

Green said the $5,000 limit on assets helps Hardest Hit focus the aid on those homeowners who are truly in distress, and have exhausted all available options prior to accepting government help.

“What we’re saying is if you have assets, you should liquidate those first,” she said.

In a similar vein, there’s a requirement that a homeowner’s mortgage payment cannot be less than 31 percent of their income.

Like many large-scale government programs that have been unveiled in the past two years to fight off the recession, the Hardest Hit Fund must rely on strict requirements and cumbersome reporting guidelines in order to make sure unscrupulous individuals do not game the system. Because the $787 billion federal stimulus program gave birth to hundreds of new programs unprecedented in scope or in sheer dollar amount, the risk for fraud and abuse has been high.

“We had a customer the other day who was trying to set up a [financial] hardship,” Robinson said. “He said ‘What if my wife and I get a divorce? Will that be considered a hardship?'”

A pilot program for Hardest Hit has been running in Lee County for the past five months, helping administrators work out the kinks before launching across the state. A statewide rollout date has not been set in stone, but Green said the plan is to open up the fund to all Floridians before the end of March.

Hardest Hit is expected to help at least 20,000 homeowners in the state, a large chunk of them in South Florida.

The sheer level of distress in South Florida’s foreclosure-ridden housing market will likely lead to a deluge of applications from struggling homeowners when the program does launch. It’s something program administrators are expecting.

“Please keep in mind that interest in these programs is high,” the program’s promotional brochure reads. “So your appointment may be set for several weeks after you are initially contacted.”

For information about this program, visit www.flhardesthithelp.org.

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Copyright (c) 2011, The Miami Herald

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A service of YellowBrix, Inc. Publication date: 2011-03-02