Crist considers temporary freeze on mortgage foreclosures over holidays
TALLAHASSEE, Fla. – Nov. 25, 2008 – Gov. Charlie Crist said Monday he is considering a temporary freeze on housing foreclosures in Florida to provide some holiday relief from the housing and financial turmoil that continues to shock the state’s economy.
“I think it would be a good thing to be able to do,” Crist said.
The governor is also warming to the idea of a 50-cents a pack increase in the state cigarette tax – one of several ideas he’s considering to staunch Florida’s growing budget gap, now at $2.1 billion.
He offered no details about the foreclosure freeze, although the Florida Home Builders Association urged him last week to adopt a plan similar to one proposed by California Gov. Arnold Schwarzenegger. That proposal requires lenders to wait 90 days before selling the home of a borrower in default to allow the homeowner to negotiate more affordable terms for the loan.
Second to California
According to data obtained by the Home Builders Association, there are 54,000 homes in foreclosure in Florida, second only to California, and one in five homeowners have mortgages that are “upside down,” with loans exceeding a home’s value.
The biggest resistance to a foreclosure freeze is expected from lenders and mortgage servicing companies.
Crist emphasized he wants to take into consideration Florida bankers’ concerns too: “I want to try to work with the banking industry and do it in a way that is not harmful to them because we want them . . . to continue to loan money, but we want to stop the foreclosures, especially during the holidays.”
His announcement came within hours of a very public plea from the Florida Home Builders Association, which is asking officials in Washington and Tallahassee to stop the banking industry from imposing harsh terms on their loans.
They warn that the struggling industry, already in steep decline because of the mortgage crisis and credit freeze, is being forced into insolvency because banks are demanding builders pay back huge portions of their construction loans.
“Anybody with a construction line of credit is toxic,” said John C. Fowke, a home builder from Valrico, at a Tallahassee press conference. “Our industry is being unraveled by the lending institutions.”
Here’s what they say is happening: Banks that gave loans to builders in better economic times are now reappraising the value of their loans based on dropping home values. Homes in subdivisions with several foreclosures have seen some of the worst drops in values – as much as 30 percent – and banks want builders to make up the difference by demanding large amounts of cash from these builders to restore the original loan-to-value ratio.
But builders say they can’t manage it. “The cash call is forcing builders into insolvency,” said Jay Carlson, president of the Florida Home Builders Association.
75,000 jobs lost
The industry’s troubles have resulted in 75,000 lost jobs in the last year and are driving the state budget deficits, he said.
Home builders say these measures are necessary:
• A halt on banks calling in construction loans.
• Government help – both state and federal – for homeowners to stop the spiraling decline in home ownership and reduce the huge inventory of homes on the market.
• Congressional action to stop banks from taking bailout money on the front end, but closing credit to builders on the back end.
Crist said he was working with the Florida Banker’s Association “to see if there could be a little more flexibility” in how lenders handle construction loans.
“This is something that has to be done now,” Fowke said. “Without results now, the economic crisis that you read about will be a picnic compared to what’s coming.”
The Orlando Foreclosures Expo February 7th and 8th in Orlando
http://www.foreclosuresexpo.com
“I think it would be a good thing to be able to do,” Crist said.
The governor is also warming to the idea of a 50-cents a pack increase in the state cigarette tax – one of several ideas he’s considering to staunch Florida’s growing budget gap, now at $2.1 billion.
He offered no details about the foreclosure freeze, although the Florida Home Builders Association urged him last week to adopt a plan similar to one proposed by California Gov. Arnold Schwarzenegger. That proposal requires lenders to wait 90 days before selling the home of a borrower in default to allow the homeowner to negotiate more affordable terms for the loan.
Second to California
According to data obtained by the Home Builders Association, there are 54,000 homes in foreclosure in Florida, second only to California, and one in five homeowners have mortgages that are “upside down,” with loans exceeding a home’s value.
The biggest resistance to a foreclosure freeze is expected from lenders and mortgage servicing companies.
Crist emphasized he wants to take into consideration Florida bankers’ concerns too: “I want to try to work with the banking industry and do it in a way that is not harmful to them because we want them . . . to continue to loan money, but we want to stop the foreclosures, especially during the holidays.”
His announcement came within hours of a very public plea from the Florida Home Builders Association, which is asking officials in Washington and Tallahassee to stop the banking industry from imposing harsh terms on their loans.
They warn that the struggling industry, already in steep decline because of the mortgage crisis and credit freeze, is being forced into insolvency because banks are demanding builders pay back huge portions of their construction loans.
“Anybody with a construction line of credit is toxic,” said John C. Fowke, a home builder from Valrico, at a Tallahassee press conference. “Our industry is being unraveled by the lending institutions.”
Here’s what they say is happening: Banks that gave loans to builders in better economic times are now reappraising the value of their loans based on dropping home values. Homes in subdivisions with several foreclosures have seen some of the worst drops in values – as much as 30 percent – and banks want builders to make up the difference by demanding large amounts of cash from these builders to restore the original loan-to-value ratio.
But builders say they can’t manage it. “The cash call is forcing builders into insolvency,” said Jay Carlson, president of the Florida Home Builders Association.
75,000 jobs lost
The industry’s troubles have resulted in 75,000 lost jobs in the last year and are driving the state budget deficits, he said.
Home builders say these measures are necessary:
• A halt on banks calling in construction loans.
• Government help – both state and federal – for homeowners to stop the spiraling decline in home ownership and reduce the huge inventory of homes on the market.
• Congressional action to stop banks from taking bailout money on the front end, but closing credit to builders on the back end.
Crist said he was working with the Florida Banker’s Association “to see if there could be a little more flexibility” in how lenders handle construction loans.
“This is something that has to be done now,” Fowke said. “Without results now, the economic crisis that you read about will be a picnic compared to what’s coming.”
The Orlando Foreclosures Expo February 7th and 8th in Orlando
http://www.foreclosuresexpo.com
posted by Totally Florida Staff at
1:39 PM
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