Foreclosure-Ridden Florida Listens for Republican Housing Plans
Mitt Romney came to Palm Beach, Florida, two weeks ago for a fundraiser at the 27,500-square-foot house of Miami Dolphins owner Stephen Ross. Ten miles away, Peter Willis hadn’t paid his mortgage for six months.
The retired travel agent, 82, wants the bank to reduce the principal on the yellow stucco ranch in West Palm Beach, across the Intracoastal Waterway from the resort city. Instead, he expects foreclosure.
“There are no other options,” Willis said.
Republican presidential candidates campaigning in Florida before its Jan. 31 primary are seeking votes in the state with the highest rate of home loans that are delinquent or in foreclosure. Yet Romney, Newt Gingrich, Rick Santorum and Ron Paul have said little about what they might offer voters like Willis.
Nor has President Barack Obama’s mortgage-relief program done much to stop the freefall. In Tampa, where the Republican candidates debated this week, home prices dropped 23.4 percent during the past three years, according to an S&P/Case-Shiller index. That’s more than twice the 11.3 percent average of the 20 largest metropolitan areas.
Money and Votes
Florida has 29 of the 270 electoral votes needed to win the White House, and the average victory margin there in the past three races has been 2.6 percentage points.
Housing is “a huge component of the race here in Florida,” Eric Fehrnstrom, a Romney adviser, told reporters Jan. 24 in Tampa.
Of mortgaged homes, 23 percent are delinquent or being foreclosed upon, according to Lender Processing Services, a Jacksonville analytics company. And the crisis promises to persist: The state leads the nation in the time it takes to foreclose, an average 1,017 days, according to the company.
The Republican candidates have offered few solutions. None of their economic plans include mortgage relief, plans for clearing the foreclosure backlog or tougher fraud protections.
Wary of Washington
“Voters, down here, are extremely leery of politicians pushing Washington cures for our housing troubles,” said Randy Nielsen, a West Palm Beach Republican consultant not working for a presidential candidate.
Romney, a former Massachusetts governor and private-equity executive, and Gingrich, a former House of Representatives speaker, said during the Tampa debate they would repeal the Dodd-Frank Act. Opponents argue the 2010 overhaul of financial regulations slowed the recovery with restrictions on lenders.
“If they would repeal it tomorrow morning, you would have a better housing market the next day,” Gingrich said.
Romney said at an appearance before the debate that the real-estate bubble was tragic and “a detour from America’s history.”
The candidate last year told the Las Vegas Review-Journal in Nevada, one of three states that outstrip Florida’s rate of foreclosures, that he wouldn’t stop them.
“Let it run its course and hit the bottom,” Romney said in an interview published Oct. 17. “Allow investors to buy homes, put renters in them, fix the homes up and let it turn around and come back up.”
Freedom for Banks
The candidate said during the Tampa debate that he’d consider helping banks work with homeowners.
“You’re going to have to help people see if they can’t get more flexibility,” Romney said. “Right now, with Dodd-Frank, we made it harder for banks to renegotiate mortgages.”
Santorum’s tax plan would let people deduct losses from a home sale.
Currently, “You have to pay gains, depending on the amount, but you can’t deduct the losses,” Santorum, a former Pennsylvania senator, said in the Tampa debate. Changing that would “allow people the freedom to to be able to go out and get out from underneath these houses.”
Paul, a congressman from Lake Jackson, Texas, said he would let the market correct itself.
“The best thing you can do is get out of the way, because you want the prices to come down so that people will start buying them again, but politicians can’t allow that to happen,” he said.
Meanwhile, time is running short for homeowners such as Elizabeth Horta.
The 45-year-old mother of two sat on her husband’s lap in a Miami-Dade County courtroom this month awaiting foreclosure documents that showed she and her family would have 90 days until the bank sold their house in Homestead.
‘Where has Obama been?’’ Horta said. “He hasn’t helped me.”
Obama in recent months has promoted changes to the Home Affordable Refinance Program. Introduced in 2009, it was initially limited to mortgages no greater than 125 percent of the property value. Now, home value isn’t a qualification.
The changes have helped support the market, said George P. Scanlon, 54, chief executive officer of Fidelity National Financial Inc. (FNF), the largest U.S. title insurer. The state’s forecasted six-month growth rate is the highest since July 2005, according to the Federal Reserve Bank of Philadelphia.
The Jacksonville-based company, which benefited from Obama’s mortgage program, gained 1.7 percent to close at $18.15 in New York Stock Exchange composite trading yesterday, the highest in almost three years.
“Things are moving forward,” said Scanlon, who supports Romney. “You can only hope the political process doesn’t stymie that.”
In his State of the Union this week, Obama proposed helping homeowners refinance to take advantage of low interest rates. He didn’t provide details, except to say that it would be paid for by “a small fee on the largest financial institutions.”
The White House has also been monitoring a potential $25 billion settlement between state attorneys general, including Florida’s, and the five largest mortgage servicers: Bank of America Corp., JPMorgan Chase & Co. (JPM), Citigroup Inc. (C), Wells Fargo & Co. (WFC) and Ally Financial Inc. (ALLY)
The settlement, triggered by disclosures that the companies were using faulty documents in seizing homes, would fund principal writedowns for homeowners and provide refinancing, a person familiar with the matter told Bloomberg News.
“Unemployment is still too high, and a lot of people are still hurting and the housing market is still weak,” Obama said Jan. 20 at a fundraiser in New York. “In that environment, this is going to be a tough race, regardless of who they nominate.”
The settlement may help win support of homeowners like Willis, who blames banks for the housing mess.
“Who is so much of fool to pay a huge amount of money every month for a house that is only worth half as much?” Willis said. “The bank caused this problem and brought it on themselves. And now they’re going to have to eat it.”
At Romney’s predebate campaign appearance in Tampa, he met with eight residents who work in the housing market or have been affected by declines.
“It doesn’t have to be like this,” Romney told them. “It can get better. It will get better. I can’t tell you how quickly it’s going to get better.”
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