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There is a lot of hoopla in the media these days about the housing crisis – and here in Florida, there’s a lot of talk about a turnaround, people forecasting that the worst is over and the housing industry is rebounding.  From a foreclosure defense perspective, that sounds nice but it may be overly optimistic: and wise Florida home owners, particularly those with underwater mortgages or facing foreclosures, need to consider things very carefully right now.

Experts Forecasting  Florida Home Owners Are In This Foreclosure Fight  For Years,  Maybe to 2015

For example, the chief investment officer of Aristar Funding Group here in Florida has been quoted in the media as warning about the numbers we’re seeing on the infamous “shadow inventory” of homes held by the banks after they’ve taken back the properties.  (For more on shadow inventories, read our prior posts for details here.)

J.T. Smith opines that we here in Florida will not see the bottom of the housing market decline until around a year after the rest of the United States has started to recover: and Mr. Smith doesn’t see Florida having that turnaround until 2015.  That’s right:  2015.

Over a year ago (in July 2011), the Chief Executive Officer of RealtyTrac, James Saccacio, was forecasting to the media that while banks were sitting on properties that were on their books (REO, or “real estate owned”), lenders were also holding back on foreclosing on homes: which means for lots of loans, they were just sitting there in limbo: the process for them had not even begun yet.  According to Mr.  Saccacio, “[t]his casts an ominous shadow over the housing market where recovery is unlikely to happen until the current and forthcoming inventory of distressed properties can be whittled down to a manageable number.”

Which means that last summer, Florida along with the rest of the country had lots of banks with lots of homes on their books (the “shadow inventory” of REO homes) because they had completed the foreclosure process on these homes but hadn’t sold them to get them off their books.  The banks had to pay for their upkeep, etc.  At the same time, Florida lenders also had lots of mortgages that could be foreclosed upon but they weren’t moving forward on those lawsuits because of various reasons: these are lots and lots and lots of homes that don’t get counted in the “shadow inventory” because they’re just sitting there.  The process hasn’t begun for them yet.

Larry Tolchinsky’s Tip:

These reports that the worst is over for the Florida housing industry may be very, very wrong.  After all, there are big  (BIG) problems out there that are still in the process of being solved.  Smart Florida home owners that are working on ways to avoid foreclosure or to deal with an underwater mortgage need to plan carefully and consider all these reports with a grain of salt.  Consider:

One problem in Florida that contributes to this big mess is the bottle-necked court system: the unprecedented number of foreclosure lawsuits crashed into the Florida court system without warning which the judiciary is still trying to sort out.   There are hundreds of foreclosure lawsuits in the pipeline and it’s taking years, literally, for these cases to make it through the system.

Another problem here in Florida is all this fraud.  Title issues for property are real concerns for title insurance companies, buyers, and others who need to know that there really is good title involved in these casesLawyers have been sanctioned and suits dismissed for fraudulent paperwork filed with a judge.  It’s shocking – and it’s epidemic.

A third problem: the lenders aren’t all the same.  The big banks (those that were involved in the AG Settlement) may act one way, and the smaller local credit union, another.  Home owners may face big delays and other concerns if they have borrowed money from a bank like Wells Fargo or Bank of America — but it may be another situation all together if their home loan comes from a South Florida regional bank or credit union.  These local lenders often are more organized, more structured — and more ready to go for things like a default judgment — than the bigger banks are right now.  There’s no one size fits all in figuring out a defense to foreclosure or an approach on a short sale negotiation in Florida these days.

Bottom line?  Times are tough.  Don’t believe everything you read. Think about your situation as unique and deserving of special care because it is unique.   The law is in flux, too: so know what law applies to you now and what law may apply to you soon (e.g., the Pino case).   Florida lawyers should be understanding of your case as well as your financial circumstances: don’t procrastinate – you may be happily surprised at the flexible fees and things Florida foreclosure law firms are offering these days.   Our law firm has flexible options and so do many of our fellow foreclosure defense firms around the state who are compassionate toward their clientele.  Be wise and savvy and proactive: it’s not over yet.

Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at, or (954) 458-8655.

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