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Tallahassee, FL – Last month, one in every 148 homes in Florida received a foreclosure notice. That's according to Realty Trac. Its latest report says the state's foreclosure rate is up 12 percent from earlier this year, placing it among the top three in the nation. Lynn Hatter reports this news comes as Florida investigates allegations of faulty paperwork by big banks and smaller firms.
Several big banks are under investigation for using robo-signers- bank officials who okayed court documents without reading them. That's thrown hundreds of thousands of foreclosures into doubt, and has led Bank of America, GMAC, JP Morgan Chase, Litton Loan Servicing and PNC Financial group to halt foreclosures in several states, including Florida. It's the latest in a string of alleged fraud cases to hit the state. This week, Attorney General Bill McCollum requested meetings with all the lenders.
"This is a culmination of a huge blow to our state in terms of foreclosures and mortgages between scams and law firms that are engaged in practices they shouldn't have been engaged with," McCollum said. "And as I understand it, realtors are telling us at least that title insurers are backing away from title insurance in. At least one title insurer I know has said we're e no longer writing title insurance in Florida right now and that will put a lot more pressure on the ability of any of these properties to move."
Florida has joined in a national probe to determine whether the banks filed false documents and signatures to illegally foreclose on homeowners. Marla Martin with the Florida Association of Realtors says there's no real way to know how widespread the problem is.
"Many of the bigger banks are looking into their processes and saying there aren't any problems," said Martin. "They're continuing to look at it but are saying everything that they can find with outside audits is showing say there are no problems. There's no major database that shows what kind of sales might be, in the future, a part of this."
The banks have started whole or partial moratoriums on foreclosures, but some politicians say those freezes should be national. South Florida Congresswoman Debbie Wasserman Schultz said earlier in the week on FOX news that a national freeze would help homeowners negotiate with banks and possibly save their homes.
"I think we need a combination of a freeze potentially and also we need to sit down with the banking industry and talk to them about on ways we can help them be able to work those mortgages out," said Wasserman Schultz, "because it's absolutely imperative that we keep those people in their homes."
The Obama administration says a national freeze on foreclosures could hurt the still-struggling housing market. Attorney General Bill McCollum has said it would be counterproductive and add even more cases to the state's overcrowded and under-staffed court system. But the big banks aren't the only ones being looked at. In August, the Attorney General's office began an investigation into four South Florida law firms, one which filed more than 70,000 foreclosure cases last year.
"On the foreclosure mill front, one of them, well, several of them have tried to quash the subpoenas. We got a ruling from one court case down in Palm Beach county saying we can't do this and we asked for a rehearing on it because we believe we should and can, that law firms are accountable under unfair and deceptive trade laws for falsifying the kinds of documents that you're talking about."
McCollum says there are 74 mortgage rescue cases under scrutiny, resulting in 18 civil lawsuits and 40 criminal cases filed by the state prosecutor's office. The latest numbers from the foreclosure watch group Realty Trac show the state's foreclosure rate rising in the third quarter of 2010 with 157-thousand properties receiving notices between July and September.