Federal Government May Aid Florida's Foreclosure Problem
excerpted in part from an article by Michael Pollick, © Sarasota Herald Tribune, October 30, 2008
Posted Otober 31, 2008
U.S. government agencies are wroking together on a new plan that could help 3 million homeowners avoid foreclosures. Negotiations could still fall apart, but federal government agencies are contemplating
using $50 billion of the recently-passed federal bailout plan to guarantee about $500 billion of residential home mortgages. Florida, because of its enormous reliance on the real estate industry, could benefit greatly under this plan since the housing
meltdown has had a major negiative effect on the state's economy.
Under the plan, the government would agree to absorb half of the losses on home loans if the mortgage company agrees to lower the borrowers'
monthly payments for at least 5 years. Details f how the plan would work are still being negotiated but this is the cetnral concept of the plan at this point.
In other recent developments, more than $540 million in federal funds, including $47.2 million for Central Florida, is coming to Florida, earmarked to purchase foreclosed homes at a discount.
“Florida has felt the sting of our nation’s housing market challenges, and these funds will provide a welcome boost to our state’s economy by helping Florida families stay in their homes,” said Gov. Charlie Crist.
Governor Crist credited Florida’s Congressional delegation with securing the support from the U.S. Department of Housing and Urban Development’s Community Development Block Grants under the Housing and Economic
Recovery Act of 2008 passed by Congress earlier this year. The funds will provide emergency assistance to state and local governments to acquire and redevelop foreclosed properties that might otherwise become sources of abandonment and blight within their communities.
But the Sarasota real estate market still needs much more help. There were 1,437 foreclosures in Sarasota County in September, up 39% from the previous month according to data released last week
by RealtyTrac Inc. Meanwhile, Florida's foreclosure rate rose 9% in September compared with August, leap-frogging Arizona and California
to the No. 2 spot. Worse, new foreclosure proceedings were started on 47,956 Florida properties, an increase of 44%.
"Anything we can do to get foreclosure numbers down will quicken the stabilization of the market," said Ritch Workman, president of the 2100-member Florida Association of Mortgage Brokers.
"It's not something that is going to increase volume for originators, but it does buy some consumers time, and probably will help to repair some credit," said Workman, who runs his
own mortgage brokerage in Melbourne.
The new federal government program now being negotiated would be run by the Federal Deposit Insurance Corp (FDIC).
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