Florida homeowners under threat of foreclosure were offered a ray of hope last week by reports that some banks were suspending foreclosure proceedings all over the U.S. due to faulty paperwork.
GMAC Home Mortgage, Inc., J.P. Morgan Chase & Co., and Bank of America have suspended tens of thousands of foreclosure proceedings in 23 states, including Florida, according to a Wall Street Journal report.
The delays result from robo-signers, who sign thousands of affidavits related to foreclosures each week. Defense attorneys say that shows that those who authorized the documents couldnt review all the facts related to the foreclosure case.
In Florida, the state with the second-highest foreclosure rate for August (behind Nevada), the delays could have a profound effect on the real estate market.
After the real estate bubble burst, an influx of foreclosure and distressed sales flooded the market, driving down prices. The slow, uneven recovery has been hampered by remnant foreclosures, but there are signs of a slowdown of distressed sales. Floridas foreclosure rate of one in every 155 housing units in August, while still high, was down nearly 9 percent in the year-over-year comparison.
In Lee County -- home to the Cape Coral-Fort Myers metro area, which has one of the worst foreclosure rates in the nation over the past two years -- the amount of foreclosure filings has decreased, according to Clerk of Courts Charlie Green. Last year, his office recorded 1,583 filings in September; this year, that number was down to 933.
For the last six months its gone down, Green said.
All that could change with the recent hiccups in the foreclosure process, but Green said he isnt worried about a potential backlog tripping up the real estate markets already-stumbling recovery.
I dont think itll be much of a backlog. I think itll just prolong the agony of the people going through it, he said.
Market analysts and real estate professionals are tracking the story, but say its too early to tell what the statewide effect on sales might be.
Weve shared that story with our members, but what that means, I dont think anybody knows yet, said Marla Martin, communications manager for the Florida Association of Realtors.
Green is no stranger to the desire to process thousands of foreclosure cases in a hurry. He received national attention in recent years for his rocket docket when he put extra judges on foreclosure cases to handle the extra casework. But urgency is no excuse for shoddy paperwork and Green sympathizes more with the families facing foreclosure than with the mortgage companies.
We have no ability to screen what they give us. Im hoping that theres mediation for homeowners. Its a very ugly period, he said.
But the period of rampant foreclosures and depressed home prices could be uglier and more prolonged if those already in dire financial straits and in danger of losing their homes see the faulty paperwork of mortgage companies as a safety net.
I think some people will start trying to do this (contest foreclosure proceedings) to save their house and I dont know if thats going to work. I hope it doesnt create a huge amount of false hope, Green said.
Reach Gray Rohrer at grohrer@sunshinestatenews.com, or at (850) 727-0859.
