Florida Governor Charlie Crist has taken back his proposal of suspending foreclosures across the state during the holidays after meeting with Alex Sanchez, the president of the Florida Bankers Association.
Sanchez has apparently explained the position of the banking industry very well because Crist backtracked on the moratorium that he had discussed in several occasions. The Florida foreclosure rate is the third highest in the country. In October this year, the state had 54,324 foreclosure filings, 13 percent higher from the previous month and 80 percent higher from October 2007.
This must be the reason why Crist made his foreclosure moratorium proposal. But evidently, Crist later saw what the foreclosure situation really was from both sides of the problem.
The act of forcing borrowers and their families out of their foreclosed homes during the holidays seems to be a cruel act, but keeping people out from reality and from their responsibilities will worsen the housing situation and the mortgage market and ultimately the economy.
In addition, most mortgage banks have been finding their own ways to help borrowers avoid foreclosure. They know that foreclosing immediately on homeowners who have the potential to restore their finances will boomerang on them. One foreclosed property sold in the depressed market is one source of loss for the banks. So they examine first the records and current financial situations of their borrowers before filing for foreclosures.
What the banks are trying to prevent is the situation where borrowers are allowed to freeload on the money of investors during the holidays and where borrowers will walk out on their loans whatever intervention program is offered to them. Besides, the mortgage banks should not be prevented from minimizing their losses.
Another argument is the need to prop up the housing market. Postponing the foreclosure process until after the holidays will cause one big wave of foreclosures in the first month of 2009, overloading the market with foreclosed homes and depressing home prices.
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pm mnzr December 3, 2008 9:26PM EST
Obviously no one read the letter I sent last week.
November 26, 2008
Dear Governor Crist and Florida Legislators,
I am writing this letter on behalf of my fellow condominium homeowners and myself; all residents of the state of Florida. We applaud your efforts to try to help those in need of help with foreclosure actions, but you need to be aware that your actions may also result in a grave injustice and possible insolvency for those of us who depend on the collection of monthly fees to support our communities as mandated by Florida Statute 718.We receive no monthly fees (assessments) for these units. Approximately 60% of these units are abandoned by their owners, some for over a year, and the banks have done little to resolve the legal limbo so they may avoid paying the maintenance assessments. In the interim the balance of the homeowners are responsible for the bills and assessment shares for these abandoned units. Additional costs for liens and foreclosures for the Association may be upwards of $2,000 per unit with no ability to clear the first mortgage. Driving up our costs endangers the ability of the remaining homeowners and our community to survive and meet our responsibilities under Florida Statute 718. We barely managed to survive a 300% increase in our premiums for the insurance that the State of Florida mandates we carry. You will help to send our Association into bankruptcy if you pursue this action.Please reconsider saving the homeowners and condo associations that are struggling under the burden the lenders have helped to create. Insist that they immediately take ownership of all abandoned properties and fulfill their responsibilities under Florida Statute 718. Resolve to provide relief for Associations, as a whole, and require the mortgage companies and banks to ensure the monthly assessments and or fees are paid current “during†the foreclosure process. Do not let them benefit, financially, by delaying the legal process any longer.The lenders created their own problems. The federal government has elected to help them, not us. Please reconsider your ban on foreclosures in regards to condominiums. PM
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