How to Further Heal Florida’s Foreclosure Problem

Sarah ParrI was contacted by a blogger who wanted to post as a guest on my page.  After reading some of her work, I decided to give it a go.  Here is a guest post by Sarah Parr. Sarah Parr is a Central Florida-based writer who blogs about foreclosure issues in America.

 

How to Further Heal Florida’s Foreclosure Problem

Florida, with the nation’s highest foreclosure rate for the sixth consecutive month, still needs healing from the foreclosure crisis. Florida reported one foreclosure for every 282 housing units last month, according to data from RealtyTRAC. The statistics also show that one in 849 homes in the United States faced a type of foreclosure action last month, further proving that the reality of distressed homeowners still exists.

In order for the housing market to continue rebounding, it’s time lenders, courts and legislatures made more progress in handling foreclosures better and providing additional relief to homeowners.

Prevent dual-tracking with better communication

It can be difficult communicating with a mortgage company. Often, a company passes a borrower around to many different departments of the company, and the borrower speaks with many people about the same issue. Some homeowners report that they have faxed over the same document many times. Important paperwork can go missing, and instances of “dual-tracking” have been reported recently. Dual-tracking occurs when a homeowner receives a notice of foreclosure around the same time he or she is discussing a loan modification with the lender. Dual-tracking will be restricted in January 2014, but until then, it could continue occurring. A single point of contact for each borrower could potentially solve the problem of scattered communication and dual-tracking mistakes with banks and lenders.

Alleviate backlog of cases, with homeowners’ rights in mind

States that process foreclosure cases solely through the courts see some of the longest processing times for foreclosure-related documents. Florida foreclosure attorneys handle foreclosure documents that take nearly 29 months to process, compared with the nation’s average of 13 months. This forms a build-up of cases for courts and more anxiety for homeowners. States that process cases through administrative processes in addition to judicial-foreclosures see shorter processing times for foreclosure-related documents. Currently, a handful of legislation is floating around in Florida’s legislature with the intention of curing the build-up of foreclosure cases.

Protect homeowners with bill of rights

Certain states, such as California, have passed several bill of rights measures to protect homeowners and further regulate the mortgage and housing relief industries. The law prohibits a few practices coupled with predatory lending: dual tracking and “robo-signing,” a term describing the robotic signing and production of fraudulent mortgage documents. California’s law also mandates that lenders provide a single person of contact for the borrower, and gives the borrower the power to sue for violations of the laws. California has seen a decrease in foreclosure activity since its law went into effect early this year.

Based on the ideas proposed by many different people, Florida will likely see changes in its foreclosure process soon.

 

Foreclosure Prices Rising For All The Wrong Reasons

NAR’s REALTOR Magazine just released an article about the rising sales price of foreclosures. This should be good news. In a number of cities and states, including my Orlando area market, we have seen an increase in sales prices. What we have also seen is a decrease in supply. Supply of homes for sale over the past year has dropped significantly. The supply of bank owned (REO) properties for sale has dropped even more dramatically over the past year. It is not for lack of supply. Those of us in the hardest hit states (FL, AZ, NV, CA) don’t need to drive too far before seeing a vacant home that has been owned by a bank for months or more that is just sitting, sitting, sitting. On a personal level, I have a neighbor who has been living in a home that has been owned by Bank of America for about 2 years now. When they will list it for sale is a mystery.

This limited supply of inventory has caused frustration for many buyers in the market. There is not as much to chose from as there has been in the past and competition is fierce. Multiple offers abound and cash buyers often beat out buyers who are in need of financing to secure a home. This lack of supply has helped to prop up the market and bring us some increases in sales prices.

Banks have been controlling the real estate market for a while now, and it seems they like to go to extremes.

When the market first crashed, banks flooded us with inventory and values plunged to a disgustingly low level. Now, banks are doing the opposite. Banks have a strangle-hold on inventory and are trickling it out to the public ever so slowly. The inventory they are releasing to the public is being priced 10-20% above market. Some of the inventory is move in ready which may help justify paying a little more for a property that needs nothing but there is a portion of this overpriced inventory that really needs some work – new roofs, work on plumbing, significant updates. No matter how you slice it, these properties are not worth the price they are being listed at. I understand the logic behind it, but really? What ever happened to moderation. Let’s get a supply out there that matches demand so we can really get down to stabilizing our market.

Instead, banks trickle out supply to try and get the general public to pay top dollar for a new home or investment property while privately selling properties in bulk to investors (possibly cronies?) at rates below market. Doesn’t seem right to me….