MIAMI– The Federal Housing Finance Agency (FHFA) says lenders will be contacting more than 1,400 South Florida homeowners at risk of foreclosure with offers to reduce their unpaid mortgage balances.
The one-time modification would lower their monthly payments in addition to the total amount owed on the mortgages, FHFA said.
To qualify, owners must have a mortgage backed by Fannie Mae or Freddie Mac; live in the home; be 90 days or more delinquent as of March 1; have an outstanding unpaid mortgage balance of $250,000 or less as of March 1; and owe more than 115 percent of what the house is worth.
Statewide, 6,260 homeowners are potentially eligible for the principal reduction program, according to FHFA. Nationwide, 30,761 could qualify, the agency said.
During the worst of the housing crisis, mortgage principal reduction was considered a last resort among lenders because so many people across the country owed more than their homes were worth, said Guy Cecala, publisher of the Inside Mortgage Finance newsletter in Bethesda, Md.
What's more, there was concern that homeowners would intentionally default on mortgages to qualify for a principal reduction, and lenders did not want to reward those people, Cecala said.
Now that the housing crisis is over, reducing mortgage balances for struggling homeowners won't result in big dollar losses for the government, according to Cecala.
"The numbers are quite small," he said. "The inventory of distressed properties has shrunk dramatically. Dealing with it now is much more manageable."
To accept the offer, homeowners have to make three on-time payments and sign an acceptance letter, according to FHFA.
The agency encourages homeowners who think they qualify but have not received an offer in the mail to contact their individual lenders directly.
Even if homeowners aren't eligible for principal reduction, they may qualify for another program, FHFA said.
"The sooner you let them know you're having difficulty, the greater the number of options your servicer will have at their disposal to help," the agency said in a blog post.