By Paul OwersSun Sentinel
1:13 p.m. EDT, September 20, 2013

Florida housing officials on Friday announced a $350 million program to reduce the mortgage balances for eligible homeowners owing more than their properties are worth.“Underwater” borrowers current on their mortgage payments can start applying online at 9 a.m. Wednesday for the Florida Hardest-Hit Fund Principal Reduction Program. The application is available at Florida Housing Finance Corp. said 25,000 applications will be accepted initially, with the goal of finding 10,000 eligible homeowners. The agency said it will accept more applications if additional federal funding becomes available.A toll-free information line will operate from 9 a.m. to 5 p.m. Saturday and Sunday to answer questions. The number is (877) 863-5244.

“While our state’s housing market continues to recover, many Florida homeowners have remained current on their mortgage payments in spite of their homes being substantially underwater,” Steve Auger, Florida Housing’s executive director, said in a statement. “For those who qualify, this new program can help to reduce their principal balance, which can result in a lower monthly payment and put more money in their pockets.”

Agency spokeswoman Cecka Green said there is no fee to apply, and the program is on a first-come, first-served basis.

“It’s important that (homeowners) finish their applications,” she said. “We won’t hold places for homeowners who are waiting to get their documents in.”

The program is meant to provide up to $50,000 to homeowners who owe at least 125 percent more than their property is worth. Green said the average amount of aid per homeowner is expected to be $35,000.

Among the eligibility requirements: The first mortgage must have originated before 2010, the unpaid balance can’t be more than $350,000, and total household income must be less than 140 percent of the area median income. South Florida’s AMI is $46,648.

Ken H. Johnson, a real estate professor at Florida International University, said the program is needed, but he’s concerned about the restrictions.

“I don’t think it’s going to reach near enough people,” he said.

Florida’s $1 billion Hardest-Hit Fund was established in 2010 as part of the national Troubled Asset Relief Program to help homeowners hurt by the housing bust and recession.

Florida Housing initially started helping homeowners avoid foreclosure by covering past-due mortgage payments. The agency said that by Sept. 1 it had received 53,805 completed applications and approved funding for 12,492 homeowners. Broward County leads the state with 7,290 completed applications.

Florida Housing officials on Friday suspended applications for the past-due payment assistance program until Oct. 1 so they can focus on the launch of the principal reduction plan.

Accepting applications for the two programs simultaneously “would be very confusing and could create a hardship for staff,” Green said.

Florida Housing has been criticized for doling out aid too slowly. Some homeowners who were denied mortgage assistance said eligibility requirements were too restrictive. The agency has since eased some of those requirements.

Earlier this year, U.S. Sen. Bill Nelson, D-Fla., called for a federal audit of Hardest Hit. A special inspector general launched a probe in April. A spokesman said Friday the audit is not yet completed.

“We’ve taken issue with the governor over his handling of that program before, and we think it should be applied as broadly as possible to help out as many people as we can,” Nelson spokesman Ryan Brown wrote Friday in an email.

In a letter to Nelson, Auger defended his agency’s management of Hardest Hit. Officials have said it was never meant to reach everyone who needed assistance.

Rising home prices are helping many homeowners regain equity following the housing bust, but underwater mortgages will remain a problem for at least the next two to three years, real estate website said last month.

A third of the 333,521 Broward County homes with a mortgage are worth less than what’s owed, down from 44 percent a year ago, according to second quarter data from Zillow.

In Palm Beach County, 32 percent of 249,941 mortgaged properties are underwater, compared with 41 percent in the second quarter of 2012.

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