Florida’s Foreclosure Crisis Is Far From Over

In the first half of 2012, the national foreclosure rate dropped by 11 percent. Unfortunately, Florida was not so lucky. RealtyTrac’s 2012 mid-year report shows that Florida’s foreclosure rate actually increased in all but two of the state’s major metropolitan areas. Among the worst hit, Orlando foreclosures were up by 44 percent, the Tampa/St. Petersburg area saw a 47 percent jump while Tallahassee and the Melbourne/Titusville area each rose more than 130 percent.

Florida still has over one million distressed sales just waiting to come on the market. The state’s foreclosure inventory is nearly seven times the size of its traditional listings. While the Miami, Fort Myers and Fort Lauderdale markets showed some promise with recent price increases, some speculate that foreign buyers with favorable exchange rates caused a “mini-bubble” that has since popped.

Florida Foreclosure Litigation

In May 2012, the Florida Supreme Court heard oral arguments in Roman Pino v. Bank of New York Mellon. The case, which could potentially undo hundreds of thousands of Florida foreclosures, addresses the aftermath of the so-called “robo-signing” scandal. In 2010, major banks were caught having low-wage workers sign legal documents without verifying their accuracy. Those documents were used to initiate countless improper foreclosures. The signers themselves were engaging in other fraudulent practices with regard to the mortgage documents at the behest of their employers.

In Roman Pino’s case, the Bank of New York Mellon voluntarily dismissed a foreclosure action against him when his attorney discovered the fraud. However, the bank filed a second foreclosure action just three months after the dismissal-this time with valid documents. His attorney filed suit, arguing that the bank should not be allowed to dismiss a suit brought by using fraudulent documents and then file again almost immediately.

While Pino and the bank have since settled, the Florida Supreme Court heard arguments on the issue of voluntary dismissal of a foreclosure proceeding with a subsequent refiling. An opinion is not expected for months, but as Mr. Pino’s attorney argued, this is a matter of “great public importance.” Not only could it undo hundreds of thousands of foreclosures in Florida, it could set off a chain reaction in 26 other states that require a lawsuit to initiate foreclosure.

Remedies for Struggling Homeowners

For homeowners struggling to make payments, there are several options available to avoid foreclosure. The most important step is to contact the lender at the first sign of trouble. Most lenders also want to avoid foreclosure and may be able to help the borrower keep the home through reinstatement, forbearance, a repayment plan or a loan modification. Even if keeping the home isn’t an option, foreclosure is sometimes avoidable through refinancing, a short sale or a deed-in-lieu of foreclosure.

If you are struggling to pay your mortgage, contact an experienced debt management attorney who can help you navigate the process of avoiding foreclosure.