Florida, the U.S. state with the highest percentage of troubled mortgages, may collect almost one-quarter of the national $25 billion foreclosure settlement. For Cheryl Alexander, who had a court halt the forced sale of her home, that’s not enough.
“We’re not sheep that can be led to the slaughter,” said Alexander, a 61-year-old who has been fighting to keep her Cape Coral house for four years. “These are fraudulent bankers and Wall Street gangsters who have to pay for what they’ve done.”
The deal includes 49 states and ends a probe into five U.S. mortgage servicers over abuses stemming from the housing bubble’s collapse. It requires the banks to pay $20 billion in mortgage relief and $5 billion to state and federal governments. The settlement may mean as much as $8.4 billion in benefits for Florida homeowners, said Attorney General Pam Bondi, who helped negotiate the agreement.
While Bondi described the deal yesterday as a historic win, interviews around the Sunshine State revealed anger among homeowners stuck in foreclosure cases that last longer than in any other state, and skepticism from real-estate professionals leery of banks’ promises.
“They say it’s a lot of money, but is it?” said Richard Thompson, a 51-year-old real-estate agent who has sold property in Broward County for 26 years. “You wonder if this is just p.r. or if it’s going to help genuine people stay in their home and help stabilize the market.”
Bondi, a 46-year-old Republican, cautioned against measuring the settlement by how much it improves the housing market. She said homeowners will be helped more than if the states had taken their case to court.
“It’s a great day for the state and for the country,” Bondi said in a telephone interview. “This settlement provides much-needed relief for homeowners now and America needs relief now.”
Florida’s share of the settlement includes $7.6 billion in loan modifications and principal reductions, Bondi said.
Mortgaged homes in the state are underwater by $110 billion, according to CoreLogic Inc., a Santa Ana, California-based real-estate data provider.
Almost a quarter of the state’s homes, 23 percent, have delinquent mortgages or are being foreclosed upon, more than in any other state, according to Lender Processing Services, a Jacksonville analytics company.
Jobs, Not Deals
The deal, struck with Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc., also includes a direct payment of $350 million to Florida, Bondi said. Another $309 million will help refinance loans for those who owe more than their homes are worth.
The settlement included $170 million for Floridians foreclosed on between Jan. 1, 2008, and Dec. 31, 2011, Bondi said. Expected to amount to about $2,000 each, she said, that means 85,000 payments. There have been 444,967 foreclosure sales in Florida in those same four years, according to Lender Processing Services.
Only new jobs will stem the crisis, said a spokesman for Governor Rick Scott, a Republican elected on a promise to reverse the economic slide.
“The housing problem in Florida is our biggest economic challenge, so every bit of homeowner relief helps,” Brian Burgess said. “But the governor knows the best way to fix the housing market is to fix the job market.”
Florida’s December jobless rate was 9.9 percent, while the national average was 8.5 percent. However, the state’s forecast six-month growth rate is the highest since July 2005, according to the Federal Reserve Bank of Philadelphia.
The mere existence of a deal may be more beneficial than any actual benefits, said George Scanlon, chief executive officer of Fidelity National Financial Inc. in Jacksonville, the largest U.S. title insurer.
“It’s debatable whether the principal reduction will help anyone,” said Scanlon. “Most people are going to be underwater more than the credit amount.
“It’s good news only in that it advances something that has been hanging over the market for 18 months now,” he said. “The bankers were very distracted, and having it resolved takes away one more aspect of uncertainty.”
Lenders slowed foreclosures as they negotiated with attorneys general in all 50 states. Florida leads the nation in the time it takes to foreclose, 1,017 days, according to Lender Processing Services.
“A lot of foreclosures were put on hold in Florida because of the settlement,” said Danielle Blake, the Miami Association of Realtors’ vice president for government affairs and housing. “Will those cases move forward or will those homeowners be given another opportunity?”
Outside a grocery near Wellington’s palm-tree-lined Olympia community, Bart Cozad said the agreement would do little. The dozen or so unoccupied homes in his gated neighborhood of about 200 houses are mainly due to “amateur investors who walked,” the 50-year-old attorney said.
For residents who got mortgages from “overeager” banks, interest-rate reductions and principle write-offs won’t be enough to dig out, he said: “You either got money, or you don’t.”
Danielle Vennett, a 33-year-old commercial real-estate adviser, said she hoped the deal helps “responsible” owners like her, who make their payments on time. Her house in the Fieldstone subdivision wasn’t underwater, she said, merely “a little lopsided.”
Modifications are “what we all need to get the economy going, and to be in a position to spend money again,” she said.