Another New State Effort to Contain Florida Foreclosures

by on States

As Florida foreclosures surged in May after slowing down in April, state officials continue to find ways to address the causes and effects of defaults and repossession.

In addition to unemployment, option ARM loans and low property values, mortgage fraud has been one of the major drivers of lender and government foreclosures in Florida. Therefore, to address this, the state Office of Financial Regulation decided to freeze its mortgage licensing operations for three months starting July 8 and overhaul its background checking system for mortgage brokers, mortgage lenders, correspondent mortgage lenders and mortgage brokerage firms applying for a license or for renewal.

Applications submitted before July 8 will be processed before October 1 while those who defer their applications will have to file after the three-month period. The state office, however, is advising mortgage professionals to apply for licensing or renewal before July 8 so they can continue to operate after October 1.

Community advocates have criticized the state regulation agency for allowing people with criminal histories to obtain licenses for brokering mortgage loans, citing the role of fraudulent mortgages loans in the surge in home auctions for sale throughout the state.

In May, the rate of Florida foreclosures revved up to one foreclosure posting for every 174 homes, up from one filing for every 182 homes in April. Those planning to find foreclosures for sale have a lot to explore as almost 11,000 homes were taken back by banks in May. The REO total accounted for 21.2 percent of all homes that entered foreclosure in May.

In the most recent Home Affordable Modification Program report released by the Treasury Department, there were 41,272 Florida homeowners that obtained permanent mortgage modifications, accounting for 12.1 percent of the 340,459 mortgages nationwide that were permanently modified.

It is hoped that the more than 41,000 Florida homeowners saved by HAMP are able to sustain their modified monthly payments so they can continue to keep their homes from listings of Florida foreclosures.

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