Florida community feels ripple effects as paperwork issues stall foreclosures
Monday, October 18, 2010; 12:20 AM
IN FORT MYERS, FLA. The yellow stucco house at 1813 Oakley Ave. has blooming bougainvillea out front, a spacious yard out back and a buyer named Emilio Mamuyac who's smitten with the place and ready to move in. But he can't.
Since early last month, the sale has been postponed three times as the mortgage finance giant Fannie Mae, which seized the home from a delinquent borrower, has faced concerns about whether the foreclosure was properly carried out.
And as this deal and others like it languish, the effects are rippling across this community on Florida's west coast. Mamuyac has to continue paying rent for an apartment six miles down the road. Mamuyac's real estate agent hasn't been able to pocket his commission, nor has the seller's agent. Another home inspector loses out on work.
This transaction is one of thousands in this area abruptly put on hold as lenders and state officials have sought to freeze foreclosures, a reaction to mounting reports of flawed and fraudulent paperwork and improper practices used to seize homes in foreclosure. Contractors who depend on home repairs in Fort Myers sit idle. Appliances and paint that go into fixing up foreclosed homes remain unsold at the nearby Home Depot.
Across the country, major financial companies such as Bank of America, J.P. Morgan Chase and Ally Financial have placed a moratorium on foreclosures in many states and slowed the process in others, saying time is needed to review court documents used in the cases.
While some judges in the Washington region have begun reviewing foreclosure cases for irregularities, there has yet to be the kind of broad moratorium that is starting to upend the real estate market elsewhere.
Few places are feeling the impact more than Florida, where foreclosures and short sales account for more than one out of every three home sales.
Many of these foreclosed properties are vanishing from the real estate listings, rocking the state's housing market. This development is still too recent to be accurately reflected in housing statistics, but Wendell Davis, president of the Florida Association of Realtors, said his members are already feeling the effect and worrying about the toll that a prolonged or stricter moratorium could take.
While Florida remains at the center of the crisis, the state's experience could portend difficulties elsewhere the country, including the Washington region, if the nation's foreclosure process continues to stall.
Home buyer in limbo
The house on Oakley Avenue has two bedrooms with Berber carpet, one bath, a kitchen with white cabinets and a cozy breakfast room. There are built-in bookshelves, an alarm system and a one-car garage with a workbench.
"I just fell in love with it," said Mamuyac, 40. "It's a beautiful home. It's quaint. It's a nice, mellow neighborhood."