Mediation of Florida Residential Mortgage Foreclosures is taking effect. In some Florida Counties, such as Pinellas and Pasco, mandatory Mediation is already in effect for Homesteads, i.e., where the Homeowner lives in the home. See Editorial, "New Foreclosure Mediation Program is Win-Win For Homeowners, Taxpayers" (St. Petersburg Times Online, Friday, July 2, 2010).
As Lenders increasingly take possession of more and more Foreclosed Properties which simply cannot be sold, nor sold at anything like the vanished balance of the Foreclosed Mortgage, the price seems to be rising for so-called "strategic defaults," or defaults planned by the Borrower who owes more on the Mortgage than the Property is worth. Mediators in Residential Mortgage Foreclosure cases in any State or other jurisdiction will want to have available perhaps a list of resources for uninformed Borrowers who may think that they do not face any downside risk other than impairing their Credit. The price now includes not only impaired Credit, but "[t]he lender could sue you for the balances you owe.... You may want to talk to an attorney familiar with debtor protection in you state (a bankruptcy attorney might be a good choice) to get an assessment of your risk." Liz Pulliam Weston, "What Landlords Risk by Abandoning Mortgages" (latimes.com, Sunday, July 4, 2010). See also Adam Geller, Associated Press copyrighted story, "Finding Gold in Them Thar Foreclosures" (Washington Post Online, Sunday, July 4, 2010).
"Homeowners in volatile boom-and-bust states such as California and Florida have been especially prone to walk away from deeply negative equity situations." Kenneth R. Harney, "Lenders' Focus Turns to Strategic Defaults" (latimes.com, Sunday, July 4, 2010). This linked report mentions a couple of results of a study funded by the Federal Reserve Board that we already knew, but here they are:
1. Strategic defaults have geographic implications, meaning that there apparently tend to be a greater number of strategic defaults in places like "California and Arizona, where state law limits lenders' ability to collect post-foreclosure deficiencies on principal residence mortgages," unlike other states "such as Florida and Nevada, where lenders face fewer restrictions." Id. It is not reported how this finding squares with the fact that Florida has one of the greatest numbers of strategic defaults, but there you are.
The highly paid Fed researchers conclude from this that "'borrowers may factor into the costs of default the potential legal liabilities resulting from a foreclosure.'" Id. [Emphasis added.] In other words, Borrowers contemplating not paying off a Mortgage balance that is far greater than a house is worth, may know that they live in a State that affords them certain protections if the Lenders come after them for more than the house. Duh!
2. "The Fed researchers [also] concluded that the depth of borrowers' negative equity positions is an important tripwire to their decision to send back the keys." Id. "The more people owe, the more they are likely to walk away," is not a revelation. Let alone one to pay Taxpayer money for.
Mediators in Residential Mortgage Foreclosures will be sure to want to know these things for a good and productive Mediation.
P.S.
Residential Mortgage Foreclosure lawsuits have apparently had little or no effect on luxury vacation housing projects, however. "Walt Disney Co. this morning [June 23, 2010] officially unveils its plans to begin building luxury vacation homes on its land near its Orlando theme parks." Robert Trigaux, Venture Blog on St. Petersburg Times web site, post of June 23, 2010 entitled, "High Risk (Or Insanity) Lurking in Orlando's Luxury and Stratospheric Housing Markets?"
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