A pilot program to prevent foreclosures in Lee County will get a statewide rollout in February, pending federal approval, state officials said Wednesday.
The program, begun six weeks ago, is barely off the ground but will be spread across Florida. The state has $1 billion in federal funds to spend on the program, courtesy of the Emergency Economic Stabilization Act of 2008.
Lee County was chosen to participate in the Housing Finance Agencys Hardest Hit Fund because, since the housing bubble burst, it consistently has had one of the highest foreclosure rates in the nation.
The pilot program started in October, and while there are many trying to get assistance through the program, its parameters and requirements and the lack of participation on behalf of mortgage servicers has meant the program has stumbled out of the blocks.
So far, the program has received 823 applications. More than 230 were declined because they didnt meet the income or housing requirements or had incomplete applications. Some 547 applications remain under review, and only 14 mortgages are receiving payments under the program. Another 70 applications have been approved but are unable to receive help because the mortgage service company wont accept payments from HHF.
Officials from the Florida Housing Finance Corp., the state agency tapped to run the program, say that mortgage servicers are beginning to get on board with the program now that Fannie Mae and Freddie Mac, the government-sponsored mortgage handlers, have signed on.
One thing that has helped has been the guidance from Fannie Mae and Freddie Mac saying, Were the investor, we own these loans, you have to accept those payments, said David Westcott, director of homeownership programs for FHFC.
To qualify for assistance, those in danger of foreclosure must be unemployed or underemployed, use the home as a primary residence, not own another residence, have monthly mortgage payments that are 31 percent of their income, and not be more than 180 days past due.
The narrow range of people being helped by the HHF led some legislators to dampen their enthusiasm for the program.
I just want to be sure were not giving people false hope. Its a cruel thing to perpetrate another instance of false hope for people. Youre leading them down a primrose path and it's just going to be another dead end, said Sen. Ronda Storms, R-Valrico.
Because the programs assistance is limited to 18 months, it is reliant on an economic recovery that includes job creation in order for it to be a bridge to safety for those in danger of losing their home while looking for work.
For it to be successful, youre assuming that someone can be re-employed during the 18 months of assistance. Otherwise, you may have helped them for 18 months but its not going to prevent them from losing their home," Westcott said.
Meanwhile, Floridas courts are jammed with foreclosure cases that were not prevented. In many cases, the mortgage lenders or the homeowners are taking advantage of a broken system.
Foreclosure courts were already dealing with an overflow of cases when it was discovered recently that many lenders were using law firms as foreclosure mills -- mortgage servicers that try to push through the cases as fast as possible, using faulty or fraudulent paperwork.
The result is a vastly overloaded system. As of June 30, there was a backlog of more than 462,000 cases in Florida.
Judge Jennifer D. Bailey is in the trenches of the mess. The Miami-Dade County judge recently concluded 75 straight days of dealing with foreclosure cases. In all, she heard about 1,300 cases. About 700 of those were adjudicated, she estimates, while the others received stays.
More stays are being asked for because of the recent scandal of foreclosure mills. They used robo-signers to sign paperwork without reviewing the case.
While many cases are uncontested, those who sign affidavits on cases they clearly havent reviewed are holding up the process.
Weve got wasted capacity with the stays, with the final transfer. Ive got 3,000 cases on stay. What are we going to do with those? The congressional oversight report, to be perfectly frank with you, is apocalyptic. Theyre talking about shoving an elephant through a keyhole and nobody is talking about making the keyhole any bigger, Judge Bailey said.
The problem is making sure the process is fast, but fair.
Attorney James Kowalski Jr. said that most of his clients found themselves in foreclosure proceedings while current on their mortgage or after being told to stop payment by the mortgage servicer in order to be eligible for federal programs. His clients day in court, however, only adds to the backlog in the justice system.
The only mechanism that is working for the most part are the courts, Kowalski said.
Circuit and county courts received an appropriation of $6 million last year to add judges to the foreclosure cases, to try to clear the backlog. Given the states likely $3.5 billion deficit this year, those funds may not be available.
Reach Gray Rohrer at grohrer@sunshinestatenews.com or at (850) 727-0859.
