News About Properties

Around Tampa Bay, foreclosure means never having to leave [Central Florida]

When his lender started to foreclose in 2003, Jeffrey De­Mauro appealed for time to resolve his financial problems.

“I sincerely want to work this situation out and get back on track and save my home,'’ De­Mauro wrote to Pinellas County court officials. “I have two children and do not want to be put out of our house and on the street.'’

The DeMauros are still in foreclosure. But by declaring bankruptcy 11 times, they have managed to hang on to their house and to continue living there — seven years after they made their last regular mortgage payment.

Though an extreme example, the couple’s story is an increasingly common one among distressed Tampa Bay homeowners. Hundreds, perhaps thousands, are staying in their houses long after defaulting because they declare bankruptcy, challenge the foreclosure or simply sit back as their cases grind through an overloaded court system.

Mortgage, tax bills ultimately come back to haunt walkaways

While foreclosures and loan modifications have made it tough for overwhelmed banks to go after walkaway borrowers, there’s evidence they are starting to crack down.

Lenders are hiring collection agencies. They also are getting deficiency judgments — court orders that allow banks to collect on mortgage balances. Once an order is in place, lenders can garnish wages, tap bank accounts, seize tax refunds and put liens on other assets to satisfy the debt. These judgments also show up on credit reports.

If the lender sells the home after a foreclosure for less than what is owed on the loan, the bank can come after the borrower for the deficiency balance.

Many states give mortgage holders as long as five years to seek a deficiency judgment. If a judgment is granted, the bank gets up to 20 years to collect and the option to renew for another 20 years if the debt isn’t paid. In Michigan, lenders have six years from the date the last payment was due — or 36 years on a 30-year mortgage, said Southfield real estate attorney John E. Jacobs.

Weak insurers put Floridians at risk

Millions of Floridians now bet their homes on property insurers that teeter on the edge of financial failure, a Herald-Tribune investigation has found.

These companies look nothing like the Allstates and State Farms that insure the rest of America — legacy carriers that command bankrolls the size of small nations.

Instead, because State Farm and Allstate are fleeing Florida, a growing number of homeowners get their insurance from tiny, untested companies that have a few million dollars in the bank but insure billions worth of property they could never hope to rebuild on their own.

No one knows what will happen when the next big storm strikes Florida shores. But the signs are not promising.

Refinancing fails to hit potential

The refinancing wave that swept the nation when mortgage rates hit historic lows last year is petering out, leaving behind millions of homeowners who could not qualify for the best rates.

Half of the nation’s borrowers have mortgages with rates above 6 percent, even though the average rate on 30-year, fixed-rate mortgages has been about 5 percent for most of the past year, according to research firm First American CoreLogic. More refinancing activity would have helped not only household budgets, but also the national economy, because homeowners might have spent some of the extra cash they pocketed, giving the recovery an added lift.

Many borrowers who tried to refinance have found they’re stuck because the value of their homes has tumbled and their equity has melted away. Others have been shut out because lenders tightened their requirements, demanding stellar credit and low debt. It’s especially frustrating for many now that interest rates are expected to rise.

Home-loan aid altered

Facing mounting criticism about the effectiveness of the government’s foreclosure prevention efforts, the Obama administration announced Thursday that it will tighten the documentation requirements for borrowers applying for its marquee mortgage relief program.

Starting June 1, borrowers must prove they qualify for the mortgage help upfront, providing two pay stubs and other paperwork, before their payments can be lowered.

The change attempts to prevent a repeat of the current backlog of borrowers who received mortgage relief after a phone conversation with their lender but didn’t satisfy the government’s documentation requirements within three months.

More than 300,000 borrowers were at risk of losing their aid under the Making Home Affordable program by the end of January because they had not submitted required paperwork. But lenders were given new flexibility Thursday to make these loan modifications permanent despite the lack of documentation, Treasury officials said.

Banks take losses on short sales

Drew Schlosser tried for two years to sell his three-bedroom Punta Gorda waterfront condominium for less than he owed on its two mortgages. The deal only went through last month when Wells Fargo & Co. agreed to take a $165,000 loss on the loans.

Even after he had an offer of $155,000 for the property, it took five months for the San Francisco-based lender to approve the purchase, a so-called short sale, in which the bank accepts less than the balance owed on a property. Schlosser said earlier offers had fallen through as bidders lost faith the bank would take less than the $320,000 in two mortgages.

“It was just kind of a mess,'’ said Schlosser, 31, a market research company director living in Estero. “You really have to get buyers who are patient.'’