Posted by: swfloridarealestate | December 3, 2008

Foreclosure Delay: Will it help or hurt?

Gov. Charlie Crist on Monday announced a 45-day moratorium on home foreclosures – but Lee County lenders and court officials said the measure would have little effect here and might actually harm the economy.

Foreclosure Drop Sharply Lee County

County Clerk of Courts Charlie Green said the moratorium is ill conceived because it will interfere with a plan by court officials to push more than 25,000 backlogged foreclosure actions through the court system.

“Has the government become Santa Claus?” Green asked sarcastically. “The government’s the reason we’re here, with all the loose lending policies” that encouraged people to

Meanwhile, the number of foreclosures dropped sharply in November from a record October, a bit of encouraging news after two years of steadily worsening conditions.

Crist called a news conference Monday with Alex Sanchez, head of the Florida Bankers Association, and Aletta Shutes, representing the state’s credit unions, to proclaim the “voluntary” respite for troubled homeowners.

They emphasized that the break – which applies to both new foreclosure filings and foreclosure sales – only applies to homesteaded primary residences.

“This is to help people who really need help,” Crist said. “This is not for people who bought a lot of condos on spec.”

About 30 percent of the foreclosure actions in Lee County in recent months have been homesteaded properties.

Green and the Lee circuit judges plan in December to hold 2,555 hearings in foreclosure cases in order to schedule sales on the courthouse steps.

“We worked our buns off to get those hearings,” he said. “The judges busted their tails, the mortgage companies busted their tails.”

In addition, lenders said, the moratorium has little potential to help homeowners.

Mark Morris, president and CEO of Commerce Bank of Southwest Florida, noted that the county’s courts are clogged with foreclosures, so any filed now would not result in someone actually losing a home until months after Christmas. “It’s a moot point.”

“His heart’s in the right place,” he said of Crist’s announcement.

But, he said, “My concern is, ‘Does this ultimately delay the overall recovery by pushing it back a period of time?’ I can certainly understand over the holiday season not wanting to upset the homeowners in this particular time of need. I also worry about the fairness between not foreclosing on someone and the next-door neighbor who’s got a second job and trying to keep his payments current.”

Elmer Tabor, owner of Wonderland Realty and chairman of the board of Cape Coral-based Riverside Bank of the Gulf Coast, said he doubts whether postponing sales on homesteaded property will actually keep anyone in his home.

“Once they get the letter from the lawyer that says legal process has started, they bolt,” he said. “Then the house is typically in the court foreclosure system for six to nine months” with nobody living in it.

As for Riverside, Tabor said, “I can guarantee you to a certainty” that none of its foreclosure sales in December or January involve an occupied primary residence.

He also questioned the wisdom of postponing foreclosures and then putting them back on the market at the same time, further depressing prices. “If we postpone for two months and dump them all in January, that’s not going to be a good thing at all.”

Until November, foreclosures had been rising steadily for more than two years as prices have fallen following the collapse of the housing market in late 2005. From a high of $322,300 in December 2005, the median price of an existing single-family home sold with the help of a Realtor has fallen 57 percent to $139,500 in October 2008, the last month available, according to the Florida Association of Realtors.

But the number of foreclosures filed in November dropped to 1,681, down sharply from the record 2,665 in October, according to a report Monday by the Southwest Florida Real Estate Investors Association. Foreclosures numbered 1,538 in November 2007.

Will that falloff continue?

“It’s cool that there are a thousand fewer people last month who didn’t get their day ruined,” said Jeff Tumbarello, president of the association, but he’s not willing to call it a trend unless it continues through January.

Some of the decline in November came because as a short month that includes Thanksgiving, it had fewer business days. But he noted that, even taking that into account, the number of filings per business day fell from 121 in October to 88 in November.

Green said the reason for the decline may be the sheer volume of what’s come before. “We’re running out of places to foreclose on.”

From the News-Press

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