Florida home foreclosures hit record levels due to the mortgage meltdown of 2008. As interest rates rose and home values fell, homeowners with adjustable-rate mortgages saw their monthly payment skyrocket. Many homeowners could not afford the new monthly payments and defaulted on their mortgages. Since home prices will never reach the level achieved prior to the crash of the housing market, Florida will continue to feel the ripple effect of the mortgage meltdown.
Knowledge and Alternatives
Since the crash, total borrower defaults and foreclosure proceedings are starting to level off. However, many homeowners still face the threat of default or foreclosure as they struggle to make timely mortgage payments. Therefore, homeowners should arm themselves with knowledge on alternatives to the foreclosure process.
Home Affordable Foreclosure Alternatives Program (HAFA)
HAFA, a program sponsored by the Federal Government, provides homeowners with the opportunity to depart their homes and receive a release on their mortgage debt. Through a short sale or deed-in-lieu of foreclosure, banks and lenders release borrowers from their mortgage obligation. In some instances, HAFA provides homeowners with $10,000 in relocation assistance. However, only borrowers who obtained their mortgage before January 1, 2009 qualify for the program.
Loan Modifications
In response to the housing crisis, banks and lenders in cooperation with the Federal Government may offer loan modifications to borrowers facing financial hardships. Using a loan modification, the bank or lender lowers the principal balance or the interest rate on the mortgage, which in turn lowers the borrower’s monthly mortgage payment. However, navigating through the loss mitigation process with banks and lenders is stressful and complicated. Florida homeowners struggling to make their mortgage payments should not enter the loss mitigation process with banks without consulting with our law firm first.
*Note- Borrowers that pursue a deed-in-lieu of foreclosure are responsible for the remaining balance of the mortgage if the bank sells the home for less than is owed.
