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Expanded Program Could Help Reduce Foreclosed Houses in Florida
May 19th, 2009 by 
Joseph Smith
Southwest Florida distressed homeowners are given a small measure of hope with the Obama Administration’s announcement of the enhanced $75 billion foreclosed houses prevention program.
Real estate market experts believed that the enhanced version of the Making Home Affordable program would help alleviate Southwest Florida’s troubled homeowners’ anxieties over the thought that they could lose their properties to foreclosure.
The enhanced version of the program focuses on the use of short sale as a means to avoid foreclosed houses. Short selling means the sale of distressed properties at a price that is worth less than the total debt owed by borrowers to their lenders.
The original version of the program offered incentives only to lenders who successfully modified terms of the loans of troubled borrowers. The enhanced version offers as much as $1,000 incentives to lending institutions who allow short selling and about $1,500 to borrowers for relocation costs.
Florida Gulf Bank’s senior vice president Doug Thrasher explained that the aim of the program’s enhanced version is to provide more incentives to encourage lenders and troubled homeowners to find ways to avoid foreclosures. However, short selling may help troubled borrowers avoid foreclosures but it would not protect their credit scores from damage.
Aside from short selling, the enhanced program also encourages the deed in lieu of foreclosure option which means homeowners transfer their properties’ title to lenders. However, some real estate experts are questioning how the new incentive program would make it feasible for homeowners to transfer ownership of their properties to lenders when many borrowers in Southwest Florida have first and second loans with different lenders.
Statewide, the number of foreclosure filings in Florida increased by 36 percent in the first quarter of this year, affecting almost 119,220 properties. These figures represented a 12 percent slide from the last quarter of 2008 but it also meant a 36 percent jumped from the first quarter the previous year.
Meanwhile, Florida’s foreclosure rate ranked fourth nationwide in the first quarter of this year. For the first quarter, Lee County in Southwest Florida registered the highest foreclosure rate in the state during the period, with one per 26 homeowners receiving filings and putting their properties in danger of turning into foreclosed houses.
