Hot off the AP wire!  A brand new program for Florida Homeowners launches Wednesday, September 25th which could help underwater borrowers get a break of up to $50,000 if they qualify.  But space is so limited – you need to apply immediately because all the spots could fill in a day or so!

The Florida Housing Finance Corp. said people who meet eligibility requirements will be able to apply online for money to reduce mortgage principal beginning Wednesday under the $350 million plan. The program is restricted to homeowners whose mortgages are 125% or more than the current market value of their house.

The program, formally known as the Florida Hardest Hit Principal Reduction Program, also envisions that most affected mortgages will be refinanced or recast, reducing monthly payments.

“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,” said Steve Auger, Florida Housing’s executive director.

The online application process will begin at 9 a.m. on Wednesday at www.principalreductionflhhf.org. The unpaid balance of the mortgage cannot exceed $350,000.

Initially, the program will be restricted to 25,000 applications on a first-come, first-served basis but could be expanded, Auger said. The money is just a portion of the $1 billion Florida has received under a federal program aimed at states where housing suffered the most during the economic recession.

At least 200,000 underwater homeowners in Florida could probably qualify for the program, said David Westcott, director of home ownership programs at Florida Housing. Out of the 25,000 initial applications, Westcott said he expects about 10,000 homeowners will actually qualify for the money.

“You have to be severely underwater,” he said.

Among the other rules to qualify:

• Homeowners must be Florida residents and legal U.S. residents and must occupy the house as a primary residence.

• Total household income for everyone 18 and older living in the home cannot exceed 140 percent of the area’s median income.

• Mortgage payments must be current, and a payment cannot have been 60 or more days late in the past 24 months.

• The mortgage had to originate prior to Jan. 1, 2010.

The money will be provided in what’s called a forgivable loan. That means, depending on the type of loan, it will either be forgiven in 20 percent increments over a five-year period or forgiven in total at the end of five years.

If the house is sold before the five years are up, Westcott said the homeowner would be required to repay the remaining, unforgiven amount of the loan if there’s enough money from the sale to do so.

The housing agency has come under some criticism from U.S. Sen. Bill Nelson, D-Fla., and others who say it has been slow to get money to homeowners who need it and has been poorly managed. A federal audit was begun earlier this year at Nelson’s request, although agency officials have said their management has been favorably reviewed by the U.S. Treasury Department and state regulators.

Making a claim? Be punctual!

“If you qualify under the claim requirements, get paperwork together and apply at 9 a.m. on Wednesday,” says John Sebree, senior vice president of public policy for Florida Realtors. “We’ve been working with Gov. Scott’s staff and FHFC for some time to make this happen, but funding is limited. Only 25,000 completed applications will be accepted, at least at first – and a partial application won’t make the cut.” Apply here.