Despite a drop in foreclosures at the end of the year, Florida was one of the most active states in 2010 for defaulting home loans, with the second-highest number of foreclosed homes and third-highest rate of foreclosure.
More than 485,000 properties in Florida received a foreclosure last year, according to a report released Thursday by Realty Trac, a California-based company that tracks foreclosed properties. That means one of every 18 Florida homes received a foreclosure filing, despite a drop in filings in November and December.
The end-of-year decrease in foreclosures came as a result of the fallout from the robo-signing controversy that was discovered in October, and is not necessarily a sign of a recovering housing market. Florida foreclosures fell more than 53 percent in December compared to the previous year and 6 percent overall in 2010 compared to 2009.
Several banks voluntarily halted foreclosure proceedings in many states, including Florida, when reports surfaced of law firms, dubbed foreclosure mills, giving scant review to foreclosure paperwork and even actively using fraudulent papers. The controversy has sown confusion over ownership of properties in foreclosure that is delaying court cases and adding to the backlog in Floridas courts.
The brief foreclosure moratorium may have reduced filings at the end of the year, but is likely to pad the statistics for 2011.
Even so, 2010 foreclosure activity still hit a record high for our report, and many of the foreclosure proceedings that were stopped in late 2010 -- which we estimate may be as high as a quarter million -- will likely be restarted and add to the numbers in early 2011, said James Saccacio, CEO of Realty Trac.
Florida and 49 other states are conducting ongoing investigations into law firms suspected of faulty foreclosure practices, but none could be as important as the case of the David J. Stern law firm, which helped spur nationwide inquiries.
The Florida Attorney Generals Office said that its investigations into Sterns firm and three others are ongoing. The negative publicity has already gutted the Plantation-based firm, which employed 1,400 people at its height but now has only 200 workers.
Of the other firms being investigated, the Marshall C. Watson law firm is cooperating with investigators and say they have changed the way they handle foreclosure cases, according to the Attorney Generals Office. The investigations into the Shapiro & Fishman firm and the Florida Default Law Group are on appeal.
Meanwhile, Florida agencies are trying to use federal money to prevent more foreclosures from clogging the states courts. Florida has $1 billion in federal funds to put toward foreclosure prevention. The Florida Housing Finance Corp. began a pilot program of the Hardest Hit Fund in Lee County in October 2010 and plans a statewide rollout of the program in February.
The programs qualification requirements and the intransigence of mortgage providers, however, has led to a sputtering start. In order to qualify, a homeowner must be unemployed or underemployed, use the home as a primary residence, not own another residence, have monthly mortgage payments eat up 31 percent of their income and be less than 180 days past due. The FHFC has also struggled to coax home lenders to accept payments from the program, leaving some qualified participants in the lurch.
The Lee County pilot program began at the end of October, and of the 942 applicants, 54 are receiving funds through the program. About 400 applicants were either cancelled or ineligible and there are 471 applications under review. Two applications have been declined and there are 13 files waiting to close.
A separate federal program isnt living up to expectations, either. The Home Affordable Mortgage Program was expected to aid between 3 million and 4 million homeowners when the program started in 2009, but so far just 550,000 people have had their monthly mortgage payments reduced.
Reach Gray Rohrer at grohrer@sunshinestatenews.com or at (850) 727-0859.
