Florida Foreclosures: Our dying neighborhoods
Florida, land of foreclosures
2009 was a bad year for Florida real estate -- no doubt about it. Home owners were ousted from their properties at a hitherto unseen rate. "But," said all the experts, "things can only get better."
They didn't. They got worse.
In 2010, Florida foreclosures ran second only to Nevada with 18% of Florida's houses in foreclosure. "We've bottomed out now," said the experts. "It can only move up."
Once again, they were wrong. 25% of all 2011 foreclosures in this country, are in Florida, or 1 in 6 homes.
But what does this mean to us, the Florida residents still holding on?
What is happening here is an unmitigated disaster, economically and socially. And forecasts are that things will get even worse -- though with 1 in 5 homes sales in this area at less than $50,000, and all of us watching as our homes devalue to an unbelievable level, it's hard to believe it can.
But, the true tragedy is in the effect on our quality of life. Our neighborhoods are dying.
A police story
A cruiser from the North Port Police Department swept slowly down the street. I stepped from my front door and waved. I had called them.
Even though I’d already explained to the 911 operator, and to the officer who had called me back why I was calling – in great detail, too – I walked to the black and white parked in my driveway and did so again.
Around two in the afternoon, I had heard a crash and the sound of breaking glass, a lot of glass. The sound seemed to have come from rear of my house, though that might have been because the lanai doors were wide open allowing me to enjoy the balmy winter air.
Shortly, after that, I told them, I’d heard squealing tires and a small-sounding car, engine screaming through the gears, accelerate rapidly and race down our narrow, normally quiet residential street. But what had concerned me even further had been the big, black Dodge Ram truck – curiosity having pulled me to the front door by then -- that had roared off in high-speed pursuit of the car.
Oh look, there it was again! The big powerful vehicle pulled into the driveway of my closest neighbor to the right, a house separated from me by a wooded vacant lot. I trailed along after the two officers who set off to speak to Mr. Black-Dodge-Ram and find out what was going on.
Have I mentioned my incurable curiosity?
“Have you investigated the crashing sound?” the 911 operator had asked me. No, being almost sixty, female and alone, with porous bones and nowhere near as strong as I once was, I had not, but not because I hadn’t wanted to. I have a healthy wariness of physical confrontations with what is sure to be some muscle-bound, brain-dead, violent felon so a frontal approach up the driveway would have been out of the question. I had visions of trying to creep through the underbrush of the vacant lot between us, through that impenetrable tangle, skulking like a TV commando, fighting off biting gnats, chopping through strangler vines, dodging the spikes on the saw palmetto, keeping an eye out for poisonous snakes and hidden doggie-do, trying to get a peek… Uh -- “No ma’am, I did not investigate.”
But now, safe in the protective shadow of these burly officers, and joined by neighbor Ralph from across the street, I was ready to do so.
A big-bellied, husky man stood beside the black truck. He looked a little familiar, but I couldn’t place the who and the where. “This is my house,” he shouted, his chest heaving with angry breathing. “And look at what that m----f---- did to it.”
After several orders from the officers to “calm down” and “just tell us what happened,” the story came out. Mr. Black-Dodge-Ram had a name; we’ll call him Bill and Bill had purchased this house as an investment about a year ago for $38,600. He’d spent another $10,000 putting lipstick on the pig, new paint, an anemic–looking recent palm tree out front and other such cosmetic stuff, and rented it out – to rotten tenants. Not only had they stopped paying rent and thereby lived free for the long months it took Bill to go through the courts and get an eviction order, they had completely trashed the place before leaving. “Wanna see?”
I did. So I followed them in, camera in hand.
Want a three bedroom, two bathroom, concrete constructed home for $38,600?
Ralph stood still on the driveway with a frozen, botoxed look on his face, one that had been there from the moment we’d heard Bill say, “bought for $38,600.” Poor fella. He hadn’t been prepared for that. I already knew; I’d done some research on the situation. Our lovely, Florida style homes on this street which sold for $225,000 to $325,000 in 2006 are now worth maybe $50,000, and then, only if in good shape and well-maintained. Unbelievable?
A few unpleasant facts about the present
Believe it. No matter which neighborhood, even those with pools, on canals and waterways, one out of every five house sales in Port Charlotte this year went for under $50,000.
Like many other homeowners in this area, I’m in an upside-down mortgage, even though I put 50% down in cash at the time I bought the house. I’m sitting at 6.75% interest at a time when interest is now 3.78%, but I can’t refinance. Who’ll take on a mortgage 35-40% higher than the value of the property? No one, that’s who.
According to my lender (once the infamous Countrywide now defunct and purchased by the equally infamous Bank of America) I can only get a modification if I’m behind on my payments and/or can prove in accordance with federal guidelines that I’m in dire risk of losing my home, which I’m not, have never been and will never be. "Or," the bank agent added in all seriousness, apparently oblivious to the irony of the suggestion, "you can refinance." Uh huh. If you can find me a lender willing to loan the $90,000 owed on a property valued on today’s market at $50,000 (+ or -) I’d like to shake his hand. And I have three dozen friends who’d also like to meet him.
The right track? The wrong track? How about both tracks at the same time?
If I withhold payment in order to more easily qualify for modification, a lengthy process, I will also be assessed late fees and risk having my mortgage enter into the foreclosure process. That’s right; the banks make it a policy to process both mortgage modification and foreclosure at the same time – a practice called dual-tracking. The bank advises the homeowner to stop making payment to qualify for modification and begins the delinquency/foreclosure process immediately, which in Florida takes an average of 683 days. This way, the bank wastes no time; once they reject modification, they are ready to foreclose within weeks. Efficient!
This leaves the homeowner with no time or remedy. Many a homeowner in Florida has been handed an eviction order by the sheriff while laboring under the belief he is negotiating in good faith to modify his mortgage to keep his home. Dual tracking seems to be in the grey area of legal ethics, but is common practice in many states, Florida among them.
Meanwhile back at Bill’s place
Bill shook with anger as he led us through the three bedroom, two bathroom house. The barely-one-year-old carpeting was filthy and mottled with stains. The ceramic tile floor in the kitchen was cracked, filthy, and shards were missing. The appliances were missing. As were the cupboards. The walls had been smashed and were covered in black mold (highly toxic.) Doors hung at crazy angles from one bent hinge or were missing completely. The sliding glass door to the lanai was a death trap of sharp jagged edges and glass fragments lay everywhere. (Was this the breaking glass I’d heard?) The bedrooms were littered with abandoned toys, clothes, broken furniture and, according to the stench reaching my nose, a few garbage bags of used diapers. The air handler for the AC was missing.
“They smeared dog poo on the walls,” Bill said, clearly more upset over this than the rest of the vandalism -- for some reason I couldn't fathom. “Look.”
I glanced at Ralph. Neither of us had the heart to tell him we’d never seen or heard any dog at the place.
“How could people live like this?” Bill asked no one and all of us.
They hadn't. The place had been deserted for a couple of months, but Bill hadn't been aware of that, and we hadn't known who owned the place -- in fact, we no longer knew the owners of most of the houses on our street and therefore, paid them no mind, keeping ourselves to ourselves -- so unlike the neighborhood prior to this financial meltdown.
I listened while the police explained why there was nothing they can do for Bill. It was a common problem, and any redress was a civil matter, not a criminal one. They felt for him, but they warned him not to take any personal revenge or it would be Bill they arrested. They left.
Ralph and I took our leave, while poor Bill was on his cell-phone, explaining to his wife what had happened. The last words I heard from him were those wondering where they’d come up with the money to fix-up what had at one time seemed a good investment.
The way we were
This was not the first rental-gone-bad in our neighborhood, though it might be the worst. Hard to judge. You see, six years ago this was a beautiful area, not wealthy, not fancy, just honest working people and their families, living in their own homes and enjoying the fruits of their labors.
I knew all the families around me and they knew me. We kept a collective eye on the children who were free to roam the entire neighborhood, and always greeted each other whenever we met.
We were proud of the Crime-Watch sign on our block, and watched over each others property.
It was a great place to live.
And then came 2008
Bill’s house, the latest to find ruin, had once belonged to a man named John. He and his two sons had owned a pool maintenance company, and their business truck sat proudly in the driveway. A friendly man, John showed up at every barbeque in the area, went out of his way to greet anyone new who moved in and flattered all the ladies. One day I realized I hadn’t seen John in a long time. His truck was still in the drive, but he sat behind locked doors and drawn curtains. Business was slow. John was in trouble and ashamed of that fact. One night, he disappeared. A few weeks later, a “For Sale, Bank Owned” sign was on the front lawn.
It was 2008. John was the first. He’d paid $175,000 for his home in 1991. In 2006, he’d used his home equity to finance his business expansion when his younger son came on board, an idea cheered on by his “financial consultant” who was paid $2,000 by the bank for bringing in a new client, and a further $750 by John for the pleasure of being fleeced by unfavorable terms. It had seemed a good idea at the time. After all the home had been appraised at $355,000, a gain in value John “would be a fool not to cash in on.” Today, he still berates himself for his gullibility.
Four houses down, the second foreclosure took place a few weeks later. Sean, his wife, his son, his aged mother-in-law and five pug dogs were served with an order to vacate. Originally from Boston, and with an accent so thick I found myself always having to ask “What’s that?” whenever we spoke, Sean was a construction worker who had come to Florida in answer to ads pleading for workers in the mid ‘90s and never went back. He had put his wife through nursing school and paid for home care for the mother by borrowing against his home. Why not? It had more than doubled in value. His banker assured him his equity was “cash in the bank.” But by mid 2008 and the sudden and complete halt to construction, Sean hadn’t had steady work in close to a year and the house value had plummeted.
The trickle became a stream, the stream a torrent
These two families started the trickle that became a stream, and eventually a torrent. The site of a moving van in a drive became a weekly occurrence, and we averted our eyes and didn’t wave as they drove off the street for the last time.
Some enterprising idiot had built a brand-new house on spec on the vacant lot kiddie-corner behind mine. It was completed that February. The contractor went bankrupt and the bank took the house over. The bank went bankrupt and the asset was taken up by another bank. That bank was bought out by still another. That house would stand empty for two years before a tenant moved in.
I left Florida for Canada in the early spring of 2009.
By the time I came back to Florida in October, the only original home owners left were Ralph across the street, Renee next door to him (though her husband had done a runner leaving her with four children, so she wasn’t sure how long she could hang on,) Eric next door to me but he was so deep under water he wasn’t sure what would happen, Big Geroy’s Barbeque owners on the corner, the young couple from Ohio who ran a pizza place on the next block – and that was it.
Five occupied homes surrounded by forest and deserted houses in a three block radius. Can you imagine?
Life in the ghost town
I had wanted a nice, quiet neighborhood, but this was like a ghost town. Some mornings, the loudest sound to intrude upon the silence was the rustle of squirrels as they ran about the trees. Soon the signs of neglect could no longer be ignored. Lawns went unmowed; vines crawled up houses; bushes grew wild, up over windows; abandoned furniture moldered in driveways and we worried about what went on in the dark of night in all those empty houses.
More and more families lost their homes and houses stood empty. More and more neighborhoods suffered from high vacancy rates. The county sent out crews to keep as many of lawns mowed as they could, but they couldn’t keep up.
The Great Florida Housing Shuffle
Then in late 2009, the State of Florida had a brainstorm. Why not start a program to rent the empty houses to all the families who had been forced from their homes during the foreclosure frenzy? Brilliant! The banks signed on without a second thought, and sighed in relief they’d found a way to cover the carrying costs of all those moldering, dwindling assets. And so began what had to be one of the stupidest exercises in history.
I dubbed it the Great Florida Housing Shuffle and wrote about it in a hub entitled Six Stupid Things. Imagine you were floating up in the sky watching this as it happened. Family A is evicted from their home, and is offered a good rental at what had once been the home of Family B, who were also evicted due to foreclosure and they were offered a good rental at what had once been the home of Family C, who were also evicted… Did it make sense?
What was accomplished? Simple: millions of home owners were turned into renters, with no attachment or vested interest in the houses they lived in. They did not tend to the landscaping, the paint, the roof repair, nor did they worry too much about the interiors. Neighborhoods, once pretty and well-kept quickly became seedy. Property appraisals dropped even more.
People came and left our neighborhood so fast, the sight of a U-Haul being loaded in the dead of night became commonplace, and they were not people who wanted to know us or be part of our community. The once-friendly, helpful, concerned neighborhood began to act like a big-city block: I see nothing, hear nothing, say nothing.
Owned versus rented (actual houses in the area)
Bad gets worse
The glut of empty houses meant that property values dropped further, which in turn meant that owners had fewer options as to refinancing or negotiating their way out of unfavorable mortgages.
More houses emptied.
Florida Power and Light ignored pleas from local officials asking that minimal power be maintained in empty properties to keep the AC units running through the summer months, at least until the tangle of who owned what, which property had been foreclosed by which bank, and which bank had been taken over by what other bank, and had the mortgage to the property actually been held by the foreclosing party, and if now defunct, had the mortgagee actually transferred the assets during any sale or settlement and… (because, surprise, surprise -- there were illegalities discovered in many foreclosures. Not that it stopped the foreclosure mills from rubber stamping dubious orders.)
Worse gets worse
What a mess! But FPL decided an unpaid bill was an unpaid bill, and one by one, the vacant properties lost power, lost climate control in the hot, humid summer months and began growing mold like the petrie dishes they had become.
The value of the properties dropped even further.
Owned versus rented (actual houses in the area)
Owners sat in homes worth a tenth of their mortgaged value. Many tried working out something with new lenders, only to be told that no one was loaning in Florida these days -- and they are not. Just for curiosity, I phoned a few lenders who advertise all over the place on the internet.
"We aren't financing homes in Florida. It's impossible to get a reliable value on Florida property. Sorry." click.
Now, in 2011, the Great Florida House Shuffle is over, a failed experiment that only resulted in property damage, even lower real estate values and a huge glut of empty, neglected houses on the market.
Wrote one real estate agent describing her own neighborhood in Sarasota:
“Your neighborhood, as well as mine, show the devastating signs of people without jobs, foreclosed or abandoned homes, slum lords purchasing as many properties for near-pennies-a-home to move Title VIII residents in and sock it to the government for thousands of dollars in payable rent to them. It's a travesty. Banks won't negotiate with owners but will accept short sales at even less money than the owner offered. The owner loses; the lender loses, the municipality loses -- we all lose. And still, we, the tax-payers are on the hook for the trillions for the so-called bail out.”
Owned versus rented (actual houses in the area)
We’re dying down here
The devastation to community I’ve seen around me over the past three years is duplicated in almost every neighborhood – even the ritzy ones. Take a drive around any upscale gated community and count the number of "for sale - price reduced" signs. Note the number of houses with boarded/shuttered windows. See the unkempt lawns, the vines growing up the house, the neglected plantings.
Or go to any regular family neighborhood, like mine, and look for the hand-written, desperate, pleading signs: “3 bedroom, 2 baths, $31,500, cash buyer” or “take over my payments.”
Look at the blocks full of empty, abandoned houses – and look to see how many have had their AC units stolen.
25% of all foreclosures in the United States are in Florida. 66% of Florida home owners are in an upside-down mortgage, owing more than their homes are worth – sometimes 3 and 4 times as much. One in four home mortgages are delinquent.
The banks refuse to negotiate with most owners, and yet will agree to short-sales to absentee investors for far less than the owner had offered. Why is that?
And what is the state of Florida doing about it?
Meet “Pink-Slip Rick,” our not-so-esteemed governor
Riding the Tea-Party tide of 2010, Rick Scott bought the governorship of Florida for $85 million dollars (including $73 million of his own family’s money) and vowed he’d put an end to Florida’s financial woes, using every skill learned in his experience running hospitals to do so (even though those experiences included several indictments….) A man so dedicated to his theories, he walked into office with machete in hand, ready to cut, cut, cut.
And he did. He cut everything, everywhere – except for his own office; that he increased. Police departments, fire departments, publicly funded health care for the indigent, youth shelters, programs for children, education and teachers – cut, cut, cut and gone! (Yes, that’s the way to fight high unemployment!) Which is how he earned his nickname.
He entered into a contest with Governor Goodhair (Perry) of Texas to see who could create the most jobs, and declared himself the winner even while Florida’s unemployment rose dramatically to vie with Michigan for the highest in the nation. Never mind those jobs were every bit as ephemeral here in Florida as they were in Texas…
He enjoys the lowest approval rating of any governor in the nation – perhaps in history.
This is a man who actually said that foreclosure was a benefit to those losing their homes, freeing them from the burden of a mortgage.
Yes, that’s right. He said that and two weeks later began a push to remove the judicial process from Florida foreclosure practices. You see, in early 2010, the Florida Bankers Association pushed unsuccessfully to change the state’s law so judges didn’t need to sign off on foreclosures, a process called nonjudicial foreclosure.
The bankers didn’t like having to go to court, answer to judges and give responses to inquiries from all those pesky attorneys representing citizens trying to exercise their homestead rights. For one thing, it takes too long – 683 days is the average (compared to 380 days in non-judicial foreclosure states.)
But now, old Rick is right behind the bankers’ second attempt at removing due process for home owners. Says he,
"That’s too long."
“It’s not good for anybody in the process. It costs money. Either the homeowners lose money or the lenders lose money, and the longer it takes, it slows down what actually happens in the real market. If you can move more quickly, properties can get back on the market, and it will stimulate the economy.”-- interview with the Times/Herald.
Yes, Rick, putting yet more houses on the already glutted market, more quickly will do much to stimulate the economy – to go down! My $40,000 house will soon be worth $25,000, and what will I do, looking at my $90,000 mortgage (which represented only 50% of my home’s value, once upon a time.) Will I, too, like so many others decide it just isn’t worth it and walk away to leave yet one more house empty and abandoned in this neighborhood?
Someone explain to me the governor’s thinking. How will removing the right of due process to home owners in order to oust them from their homes more quickly be of benefit to anyone? Has he no idea of what is happening in our streets?
Apparently not. Good old Rick’s administration thinks they’ve found a new answer: a massive campaign in foreign parts to educate would-be investors on the opportunities available in buying up cheap Florida houses – complete with a state plan to help manage those properties for their alien landlords.
Friends of mine in Canada have been in touch with me after attending some of these seminars – blows me away!The state has money to "manage" properties for foreign investors, but no funds to help residents with homestead rights.
Recently, a number of "deep pockets" from Brazil were treated to a junket to the state, and to my area in particular, provided with Portuguese-speaking real estate agents and chauffeured ‘round the town -- at we, the people's expense.
As to the millions...
Yep – with all that foreign money just waiting to pour into the state’s public coffers – oops, I mean the banks’ coffers -- just crank up the old foreclosure mills, do away with due process and let ‘er rip! (Speaking of foreclosure mills -- have I mentioned the rampant corruption unearthed in that milieu? Something Scott refuses to look at -- hard to see when you're stuck in the banks' pocket, I guess. Scott is quick to point out that his planned stream-lining of Florida's foreclosure process does not exclude the homesteader from applying to the courts -- but doesn't speak of the $2,000 it costs to file in this state.)
As to the millions who’ve lost their homes: well according to the banks they are nothing but greedy minions who bought homes they couldn’t afford. According to the state, their attempts to keep their property are impeding economic recovery. According to the media, they are ne’er-do-wells who should never have been allowed to buy a “McMansion” in the first place, and are probably rip-off artists and lazy to boot -- not to mention better off once they lose their homes and can go "free."
Millions of working people are caught up in a crisis not of their making. At one time, Florida begged these people to come here to build during the boom and they did. Now, the state would prefer to see them go back to wherever they came from (never mind there's no work there either,) leaving what was once their community, their home ravaged and dying.
Millions of home owners have been “liberated from the burden of a mortgage” and turned into renters paying off the mortgages of foreign landlords – who have no interest in us other than a return (quickest possible, please) on their investments.
Millions of Americans have lost their greatest asset, or if still holding on to it, have seen its value plummet to a fraction of what it once was through forces beyond their control, and of no fault of their own. Indeed, as has already been stated, those self-same citizens are on the hook for the “bail-out” bill that was intended to help them, but instead helped those who created the problem in the first place.
Land of the free? Not for our Florida neighborhoods. They are dying. We may still be the home of the brave. We have to be to hang on.
Some worthy quotes from financial journals:
“In Florida, the situation hasn’t changed much: high foreclosure inventory coupled with values that are still well below average combine for a depressed housing market. Plus, Moody’s just announced over the weekend that they expect housing prices in South Florida to hit bottom at some point next fall or even in the first quarter of 2013.” – Financial Trends
“Governor Rick Scott’s proposal to streamline the foreclosure process could help the market in this area, although it is likely that such a proposal will face stiff opposition in the state legislature. In any case, Florida promises to offer a lot of cheap homes and great bargains for homebuyers and investors throughout 2012 as prices near or hit rock bottom.” – Real Estate Weekly
Is there anyone anywhere who may be more interested in the people in the houses rather than the houses themselves?