Taxpayers Foot the Bill for Bank Foreclosure Costs in $1 Billion Homeowner Help Plan
“Even though it’s a good intentioned program, it is a funnel to the banks. The end result seems to be the banks get the money and the homeowner doesn’t get the house.”
Taxpayers foot the bill for bank foreclosure costs in $1 billion homeowner help plan
Banks are getting tens of millions of taxpayer dollars through Florida’s key foreclosure prevention program to pay down borrower debt, but are also using the money to pay off their own attorney’s fees and other costs associated with taking back people’s homes.
The more than $1 billion Hardest Hit program has been operating statewide for two years, awarding struggling borrowers 12 months of mortgage payments and between $18,000 and $24,000 to bring a mortgage current.
But some homeowners exiting the program are finding themselves still in debt and on the same path to foreclosure after their lender subtracted legal costs from the Hardest Hit stipend.
While the Hardest Hit program allows lenders to use the money to pay their attorney fees and out-of-pocket expenses, the federal law that authorized the plan forbids homeowners from doing the same.
The Treasury Department determined in 2010 that legal aid for borrowers was not allowed under the Emergency Economic Stabilization Act of 2008. One of Florida’s original proposals to use Hardest Hit money was rejected because it included $25 million for legal counseling and representation for homeowners.