Mortgage Relief?

Courtesy of the Fort Myers News-Press
Southwest Florida foreclosure experts say a program rolled out Monday by President Barack Obama offers a ray of hope to people still paying on mortgages worth more than their homes.

But they were also wary of the new plan because earlier federal efforts to help homeowners fizzled out.

Obama outlined the new initiative in a speech in Las Vegas, the metro area in the nation hit hardest by the foreclosure crisis.

“I’m here to say that we can’t wait for an increasingly dysfunctional Congress to do its job,” the president declared outside a family home in Las Vegas, the epicenter of foreclosures and joblessness. “Where they won’t act, I will.”

The new rules remove the requirement in existing federal programs that the mortgage could be no more than 125 percent of the home’s value.

Wilda Acosta-Mesa of Lehigh Acres said she’d love to take advantage of the program so she can stay in the house she bought in 2008 for $95,500.

“I owe more than my house is worth, and would be interested in refinancing,” Acosta-Mesa said, but she hasn’t been able to get her lender to cooperate.

“This is something they should have done a few years ago,” said Gary Tice, president and CEO of Naples-based First National Bank of the Gulf Coast. “I think it’s a great help to the economy. It’s an outstanding maneuver.”
But the issue is how many will be helped, others said.

“I honestly think a very small percentage of the people are going to make use of it,” said Jeff Tumbarello, director of the Southwest Florida Real Estate Investment Association.

“On the bigger scale it probably doesn’t mean much,” he said, although some families likely will benefit.

Tumbarello noted that in Lee County the damage has already been done: 74,000 foreclosures since the boom ended in 2006.

Eddie Felton, executive director of the private, nonprofit Home Ownership Resource Center, said the new initiative is “an excellent program”— but only if it’s actually implemented. “They have to make sure that the banks are going to participate.”

Earlier mortgage assistance programs failed because some banks refused to participate, he said.

Still, Felton said, anything the new program can offer will be welcome. “We are in desperate need for any kind of assistance. The foreclosure situation is not getting any better.”

Tom Ray, president and CEO of Naples-based Encore National Bank, said, “I’m glad we have a program out for people making their payments” but that “I don’t know what the economic effects are. I’m not sure that helps create jobs.”

He also questioned who’d buy the mortgage-backed bonds created by the new program, “even if it is guaranteed by the government.”

Although the notes may be guaranteed, Ray said, companies servicing the mortgages might be concerned about the added costs of dealing with a mortgage gone bad if the program doesn’t work out for a homeowner in the long run