Florida Governor Charlie Crist has taken back his proposal of suspending foreclosures across the state during the holidays after meeting with Alex Sanchez, the president of the Florida Bankers Association.
Sanchez has apparently explained the position of the banking industry very well because Crist backtracked on the moratorium that he had discussed in several occasions. The Florida foreclosure rate is the third highest in the country. In October this year, the state had 54,324 foreclosure filings, 13 percent higher from the previous month and 80 percent higher from October 2007.
This must be the reason why Crist made his foreclosure moratorium proposal. But evidently, Crist later saw what the foreclosure situation really was from both sides of the problem.
The act of forcing borrowers and their families out of their foreclosed homes during the holidays seems to be a cruel act, but keeping people out from reality and from their responsibilities will worsen the housing situation and the mortgage market and ultimately the economy.
In addition, most mortgage banks have been finding their own ways to help borrowers avoid foreclosure. They know that foreclosing immediately on homeowners who have the potential to restore their finances will boomerang on them. One foreclosed property sold in the depressed market is one source of loss for the banks. So they examine first the records and current financial situations of their borrowers before filing for foreclosures.
What the banks are trying to prevent is the situation where borrowers are allowed to freeload on the money of investors during the holidays and where borrowers will walk out on their loans whatever intervention program is offered to them. Besides, the mortgage banks should not be prevented from minimizing their losses.
Another argument is the need to prop up the housing market. Postponing the foreclosure process until after the holidays will cause one big wave of foreclosures in the first month of 2009, overloading the market with foreclosed homes and depressing home prices.
Leticia Carvalho has been educated in the finer points of the foreclosure market over 5 years.