When the recent recession hit the United States, many homeowners faced the prospect of their homes being foreclosed upon by their mortgage lenders. After the real estate market fell apart in 2008, millions of homeowners faced foreclosure. The Florida real estate market was especially affected and still currently accounts for approximately a quarter of the home foreclosures in the nation. However, the governor has recently approved of a plan to help homeowners in avoiding home foreclosure.
The state plan stems from a national settlement between mortgage lenders and state governments. The foreclosure agreement between the lenders and the state governments totaled $25 billion and was initially made public in Feb. 2012. The deal involved five of the largest mortgage lenders in the nation that decided to settle in order to avoid further investigations into potential foreclosure abuse. Much of the alleged fraudulent filings stemmed from what was termed as ‘robo-signers’ which were individuals who signed mortgage documents in an assembly-line fashion without knowledge of what the documents actually said.
Florida received a total of $8.4 billion as its part of the settlement agreement. Approximately $7.6 million of this was in benefits stemming from modification of loans, which included principal reduction as well as other types of debt relief. The recently approved state plan deals with a $200 million portion of the state’s cut from the settlement agreement. This was part of a $334 million payment to the state government from mortgage lenders.
Although some of these funds were used in general spending by the Florida government, the $200 million addressed in the recently approved plan will be used specifically to assist homeowners in avoiding home foreclosure. This will help many of these people from losing their homes to their mortgage lenders. However, for some people, this assistance will not be enough. Bankruptcy is often used as a responsible option for people looking to finally conquer unmanageable financial obligations.
Source: The Tampa Tribune, “Rick Scott Approves Use Of Foreclosure Settlement To Help Florida Homeowners,” James L. Rosica, June 5, 2013