Castrataro Helps Coordinate Strategic Foreclosure Recue Effort

Sunday, August 15th, 2010

Broward Daily Business Review, Copyright 2008 ALM Properties, Inc. All rights reserved.

January 24, 2008

HOUSING RESCUE PLAN

LEGAL AID WORKS WITH BROWARD GOVERNMENTS TO FORM NETWORK TO HELP HOMEOWNERS KEEP THEIR HOUSES, Polyana da Costa

Public and private officials are cobbling together a rescue plan for Broward County homeowners who are facing foreclosure in record numbers. The plan is still in its infancy but supporters expect the County Commission to discuss it -; and hopefully endorse the idea -; early next month.

Like many homeowners elsewhere in South Florida and across the nation, Broward residents -; many with adjustable-rate mortgages -; are struggling with rising loan payments and the prospects of an economic downturn. About 23,500 foreclosure actions were filed in Broward County in 2007, compared to 9,000 in 2006 and 6,000 in 2005, according to the county's clerk's office.

The Legal Aid Service of Broward County has proposed a coordinated effort involving the county and Broward municipalities, as well as other public and private organizations. Broward County commissioners are to discuss an initiative Feb. 5.

County Mayor Lois Wexler said the initiative "was still being researched" and declined additional comment, but her staff confirmed Wexler intends to have the item on the agenda for the commission's Feb. 5 meeting. Supporters hope that if commissioners are supportive that an ordinance can be drafted and brought before the commission soon.

George Castrataro, supervising attorney for Legal Aid, said the plan has been in the works since December when organizers met with Wexler. Officials in about 20 cities in Broward County have pledged their support, Castrataro said. The proposed network would provide financial counseling, and legal and financial assistance, he said. The group would also seek to negotiate refinancing and loan modification deals with lenders and seek cooperation from "essential financial stakeholders" including investors and real estate agents. "Many officials, including Mayor Wexler and County Commissioner Ken Keetchl have been very supportive of the initiative," Castrataro said.

Keetchl could not be reached before deadline Wednesday.

The Federal Reserve on Tuesday slashed the federal funds rate to 3.5 percent, but mortgage rates are largely independent of that action and any effect won't be felt for months. That makes the rescue effort all the more urgent.

About one in every 38 homes in Broward County was under foreclosure in 2007, according to research by the Legal Aid Service of Broward. Fort Lauderdale ranks fourth among the 100 largest metropolitan areas in the U.S. in foreclosures, according to most recent quarterly data from RealtyTrac. One in every 48 homes in the Fort Lauderdale area was under foreclosure during the third quarter of 2007, according to RealtyTrac. But the numbers are more alarming if analyzed closer.

RealtyTrac said it uses county household figures to calculate Fort Lauderdale area foreclosure rates and that it does not track figures specifically for the city of Fort Lauderdale.

In the city, the foreclosure rate is much worse, Castrataro said. According to his research, at the end of 2007 about one home in 26 faced foreclosure in the city of Fort Lauderdale.

A call to Fort Lauderdale Mayor Jim Naugle was not returned.

Legal Aid estimates the rise in foreclosures is costing Broward County as much as$180 million a year, based on the delayed payment of property taxes and the estimated $130 million cost of social services targeting people who have lost their homes.

Legal Aid's message to the elected officials: It pays to spend a little money on foreclosure prevention rather than dealing with the aftermath of foreclosure. It's a message that Castrataro says got Wexler's and Keetchl's attention.

But while many local officials support the creation of a network, some say funding would be limited.  "It's a serious issue, and I would support it," said Margaret Bates, Lauderhill's vice mayor. "We can work with the other agencies to provide education and guidance to what they can do, to negotiate with lenders, but we have no finances we can give because our budget is constrained." Bates said other local officials have similar concerns. "We are concerned about it but our hands are tied in terms of money."

Castrataro said some money now pegged for housing and social services programs could be diverted to the homeowner assistance initiative if no additional funding becomes available. If the county doesn't act to limit foreclosures, the impact could be even more serious if thousands of county residents lose their homes to foreclosure and become homeless, Castrataro warned. "We've seen cases where the Broward Housing Authority gave out a $20,000 grant to replace a roof in a house that a couple months later was foreclosed on and taken by the bank" he said.

Other U.S. cities and counties are grappling with a similar onslaught of foreclosures. In Detroit, where one of every 33 households is in foreclosure, according to Realty Trac's third quarter statistics, nonprofit and private groups have rallied to provide financial counseling and grants to families out of foreclosure.

The Broward County Housing Authority has received more than 500 calls a week since June from people facing foreclosure, according to Phyllis Brown, the authority's supervisor of housing counseling. The agency has a modest $200,000 annual budget to provide grants of up to $10,000 to rescue homeowners in foreclosure. That budget, which is funded by the state, has not increased in at least 10 years, Brown said. Brown said because of the authority's limited staff, homeowners now facing foreclosure won't be able to see a counselor until late April. By then, a house could be on the brink of being taken over by a lender. "Grant money wouldn't help if we can't even take the calls we're getting," she said.

That's where the new network would come in, pooling together resources and coordinating efforts of groups ranging from Legal Aid and the Broward Clerk of Courts to city and county housing agencies. "If a network is formed it would be good to have other places we can refer people to. Besides grants, we work with other tools and many times we are able to counsel homeowners and negotiate with lenders to get them into a repayment program, but we can't get to everybody."

Brown said the county already offers a onetime mortgage payment assistance program for people in special circumstances, like illness or job loss. Supporters of the network hope this program may be expanded.

But no matter how much assistance they get, some people simply can't afford to stay in their homes, Castrataro said. In those cases, the proposed network could help the homeowner work with real estate agents to expedite the sale of the house and help them find an affordable residence, he said.

Many people made uneducated decisions and got locked into home loans they couldn't afford, Brown said. "I hear crazy stories," Brown said. "The other day I got a call from an 80-year-old woman with a $2,700 mortgage payment on a $600 [monthly] income."  Still, homes can be saved in many cases, but homeowners need the legal help and counseling to navigate the foreclosure process. Many people facing foreclosure lack the resources and sophistication to deal with the legal and financial issues involved in foreclosure.

"People often abandon their houses because they don't know what to do when they receive a foreclosure notice," Castrataro said. Castrataro recently helped a Broward County law enforcement officer whose house was to be sold at a foreclosure auction the next day. Castrataro said he helped the officer file for bankruptcy and stay in the house.

"Too many people are suffering," said Deerfield Beach Commissioner Sylvia Poitier, who also supports the initiative. "A lot of the people that bought homes were first-time home buyers and had no idea what it really cost to own a home in Broward County."

Oakland Park Mayor Larry Gierer said many local agencies have stepped up and started providing workshops and counseling to people on how to deal with foreclosures.  A network to bring the agencies together would be more effective, he said.  "It would have to involve education and financial assistance," he said of the proposed initiative. "The financial assistance could come from lending institutions willing to work with the homeowners."

Lenders are willing to work with homeowners in foreclosure as long as they have the endorsement of a local agency said Jackie Tufts, executive director of New Vision Community Development Corp., a local nonprofit development company. "Normally the bank will listen to us because we put them on a specific plan to meet the needs of the bank, but we have to make sure it is within the homeowner's budget," said Tufts, who does one-on-one counseling sessions at New Visions' Fort Lauderdale office.

Howard Forman, Broward County's clerk of courts, is a first-hand witness to the huge volume of foreclosures filed daily in the county. "It's a national catastrophe," Forman said. "It's more prevalent in areas that are growing, like Broward County and the rest of South Florida." Forman, who recently hired six people to deal with the tide of foreclosures filed in Broward courts, said his office is moving to educate homeowners on the foreclosure process.  "We are doing what we can on our own," he said. "I do think we have to work together. We have put out pamphlets and take numerous calls everyday. People are calling and they have lots of questions."

While there are numerous organizations working with housing, community, development and social services, Broward County lacks a well-coordinated strategic comprehensive plan, Castrataro said. "Foreclosures affect everyone," Castrataro said. "It affects homes prices, the local economy, the county, cities and all the other financial stake-holders. It's in everyone's interest to prevent it."

Polyana da Costa can be reached at (561) 820-2065.