Glut Of Foreclosures Clogs Courts

CBS Evening News: A Look At "Fast-Court" In Florida And An Innovative Program In Philly For Those Facing Losing Their Homes

(CBS)  For homeowners who haven't paid their mortgage in Lee County Florida, the end of the line is a courtroom where a judge whips through more than 400 cases in a single morning, reports CBS News correspondent Kelly Cobiella.

They call it the "rocket docket." Most proceedings go something like this:

Judge John Carlin: "Are you current with your mortgage?"

Homeowner: "No, sir."

Carlin: "Ok, are you living in the property?"

Homeowner: "Yes, sir"

Carlin: "Ok, I've reviewed the file. It is appropriate to grant the summary judgment. I'm going to make you a copy of this. And I'm also going to give you that extra time that we talked about - 60 days until the property is sold. Ok? Thank you for coming in today."

In 18 seconds, the homeowner's day in court is over. The outcome is almost always the same: Pay up or move out within 60 days.

Rachelle Hanleck got a full minute in court. She's a year behind on her mortgage and was hoping for a sympathetic ear.

"I'm a teacher in a migrant community," she said, sobbing. "I am putting back, I am, but all they hear… What did they hear today? Nothing. I was a number."

Lee County is overwhelmed with stories like hers. The civil courts are clogged with a backlog of more than 24,000 foreclosure cases.

'"We need to clean it up," said Charlie Green, the county's civil court clerk. "And that's what we're doing."

Of the 450 cases heard this morning, only 47 homeowners showed. Almost all of the homes will be foreclosed and auctioned off in two months.

As for Rachelle Hanleck, her lender has already told her she can't refinance. She's resigned to moving out and moving on.

The city of Philadelphia is taking a different approach to adjudicating the foreclosure crisis, reports CBS News correspondent Michelle Miller.

In Philly's courtroom 676, every Thursday traditional courthouse rules are set aside in a drastic new approach to reducing foreclosures.

Instead of squaring off, homeowners and lenders try to work out a deal together. Often they have more in common than they think, says Lisa Lee, an attorney who represents mortgage companies.

"Foreclosures are really not what lenders want to do they," Lee said. "They don't want to have properties in their real estate owned inventory. That results in a loss to them."

That's what many borrowers want to hear.

"I'm a single mom and I'm fighting for child support," said homeowner Michelle Homan.

After being disabled on the job, Homan fell behind in her monthly mortgage payments. They nearly doubled within a year.

"We'll get through this," her attorney promised.

The Philadelphia program is the brainchild of Judge Annette Rizzo. She began the project last June.

"The other day I was involved in a discussion and the lender attorney actually took the hand of the borrower and said, 'You know what, its going to be alright, it's going to be alright,'" Rizzo said.

You won't find Rizzo on the bench: She roams the room, often to nudge the process along.

"The judge is making them work with me like it or not," Homan said. "The judge is awesome."

Negotiations don't always work out. But out of 3,600 cases, more than 700 deals have been struck.

"If this wasn't here, I'd be out on the street, me and my two children," Homan said.

Now five cities and the state of New Jersey say they'll duplicate the program to stem the tide to rising foreclosures.

[willbarefoot]

First, I would like to thank Judge Rizzo for the work that she is doing. I am truely proud to see a public official act on thier own and in the best interest of our country. I don't live in in Pennsylvania nor have I benefited from what she is doing. Still, it makes me proud to see an effort being made to help people.

Many have complained about having to bail out the irresponsible borrower. By implication, every borrower who can't repay their loan must be irresponsible. I'm sure that that is just not the case. For the record, I've paid everything I owed for the last 40 years. I'm current on all of my obligations. My employer is sound. I'm not at risk of a layoff.

Many people would say that I'm a responsible borrower and that prudent management and hard work put me where I am today. That would only be part of the story. When I think about my own life I count many undeserved blessings. There are too many times that random events have aided my success. There are too many times that I just lucked out. Too many random events over which I had no control just broke my way.

I want to see my fellow citizens helped. And if it means that I will pay higher taxes down the road then ok, I will. I know that there are lots of good people out there who are down and out through no fault of their own. Now is not the time to turn our back on them. Help good people and they will be forever grateful. They will rebuild their lives and come roaring back.

And I also know, that anyone's luck can change in a heartbeat. Tomorrow, I could be the one who needs help from my country. Those of us who are still doing well should think about the lucky breaks and blessings that we have received and remember that, "for the grace of God, there go I"

[West3160]

Does Redlining ring a bell? 30 some years ago redlining was used by lenders. They literally drew red lines around areas on a map where they would not lend. The majority of these areas were sadly minority areas, due to the high unemployment and poor pride of ownership, it didn't make sense for a lender to loan there. Some socialist groups became involved and stormed government agencies demanding loans for these areas and cited discrimination. The government feeling great pressure succumbed and changed the underwriting rules for mortgages to the detriment of the banking industry and the American economy. Fannie Mae and Freddie Mac were used to insure these loans so that lenders would feel comfortable making them. If you were to be told to lend say a 12 year old $50,000 at 10% for 30 years and the government would guarantee you get your money if the little guy ever stops paying, you've got to be thinking this is like a license to steal. Well the little guys paper route is really too much work by the time he hits high school and is playing sports, you know how that goes, so he stops delivering those papers and stops making his mortgage payment. In steps Uncle Sam, gives you your money, takes back the house, the little guy goes on unemployment or welfare and so starts the beginning of the end. Now the Uncle Sam has created a bailout to help save 4 or 5 million people from foreclosure. Read closely who those 4 or 5 million are. Only Fannie Mae, Freddie Mac and subprime mortgages are being bailed out. I guess the rest of us with conventional 20% down mortgages don't count, we are only the trickle down victims of this idiotic scheme, not the ones who were at the heart of it, so we get nothing. We can't pay because we have now lost our jobs, or can't pay our medical bills. So let's help everyone who probably never should have been able to buy in the first place. By the way, ACORN was very instrumental in this plan and our own Mr. Obama, Chicago attorney, represented the other side in a lawsuit to gain equal rights for some of these borrowers. It's all a bit like welfare in the 60's and 70's, expanding the rolls by such great numbers that it finally bankrupted the City of New York in 1975. Again, socialists were at the bottom of that plan.

[slyder03]

continued
I know where my 401k stands and my sons college funds is at.
The truth is most of us tried to sell the home already , for almost two years I have even as a short sell , so fine you still want a foreclosure , $373,00 is what is owed , I had it listed for over 6 months at $319,000 . I imagine it will auction for $250,000.
prior to having a foreclosure I will file for protection and have a clean start ,within two years I could most likely purchase that similar home for that same $250,000 in a foreclosure porceeding if foreclosures continue to happen at this rate maybe less . so I want to do right here , but I will not pay an extra 6 years to pay off depreciated value when in two years I could receive a fresh start like it or not , we were sold a lemon and most of you that complain most likely didnt purchase your home when your neighbor did , at the same inflated price .
so if you aks me do I have my priorities straight , dang right I do , rich people have been protected for years now on bad investments, in bankruptcy proceedings, most of listened to everyone dont pull your money out leave it in , well I for one dont need someone telling me where to put my money and it sure want be in a depreciating home .
and as far as your money paying for every one , well they / we pay taxes also . and my part probable a lot higher than the average person.

[slyder03]

neighbors , my neighbors really dont want me to let the house go , most of my neighbors purchased their homes in a low prime market , my home was built in 2005 in an existing neighborhood , it raised everyones values . I for one only care about my neighbors I would rather give the home back .in 2005 I laid down 60,000 on a down payment and not only is that gone but some ,so who played by the rules homes arent supposed to depreciate. if a judge crams down the value that has depreciated who looses here , certainly the value will be much lower if auctioned off. we lost not only 80 to 100,000 in equity but three times that in our 401k , what do you care if your neighbor is allowed to owe less on his/her home if not them someone else will , 400,000 plus can continue to pay interest towards the economy or the home crisis can continue as is . if you think your home as depreciated just wait until you have a foreclosure next door. most likely a cramdown will have to paid back just at a 1% interest rate so this will be a good thing for you and your neighbor
In my situation I would love to walk away right now , my home is a bad investment as I said before I dont need anyone to tell me where my priority is ,
continued

[lindaspice]

You know what...Lee county is just a bunch of ***. And Wells Fargo is the biggest cause of the foreclosure crisis! We got 2 months behind and the payments to catch up should have been $2390. When we called them(Wells fargo/Option One) to pay up they told us we owed them $14,897!! For 2 months behind? They CREATED the mortgage crisis by giving no options to people behind. When it went to foreclosure courts in Lee County, we were told the same thing---60 days to work it out. Well, Wells Fargo has an India servicing company that never answered phones, or faxes or emails. So how can you resolve it when you can't talk to someone in the US?? You can't, therefore a crisis was created. When we tried to reach this so called judge, we were told he was busy and woulod call when he had a chance...that never happened. Now I see Wells fargo owns Wachovia Bank? Bought with OUR money I'm sure...and a class action suit would make a smart lawyer VERY rich here.

[dsteeg1]

It is unbelievable to me how people who are not in this situation can pass judgment. I am one of those many people in foreclosure in Lee County. I am not an investor, ignorant, lazy or an abuser of the system. My husband and I both worked at "good jobs" with decent incomes and did not take on a burden that was out of reach when we purchased our home. Due to job loss for each of us (once for myself and twice in twelve months for my husband) because of the economic downfall here, we are unable to make our payments and often have a hard time with normal bills such as electric and gas. I do not ask for a bail out and am very aware that I will lose my home but have the opinion that sometimes in life you are given lemons and you have to figure out how to make lemonade. Please remember when passing judgment that we are not all cheats and are not trying to "scam" the government for our "fair share".

[lb74-2009]

What this story failed to disclose, which is happening in Lee County, Florida, is that these are all old cases that have been in the system for over a year and these people have for the most part been living rent free in these houses for the past year. These are not new cases that the judge is just pushing through the system. If someone has been living in a house for over a year "rent free", what have they done with the money they would have normally sent in. That is why there is really nothing to talk about by the time they get to the judge.

[rudy65432]

Posted by alphaa10000 at 02:20 AM

Well said. I knew that this whole thing was a banking plot and Bush was their accomplice. They planned to be rescued and then take houses suffering foreclosure and make more profit. Their anger at Obama is based on the fact that he will now assist homeowners facing foreclosure and this ruins their evil plans. Seriously, they should all be put into a federal prison for the rest of their lives and made to bust rocks.

[johntate777]

filipdt1 said: Be kind to one another,but don''t make your neighbor pick-up the tab for your problems...

That is NOT what's happening! If half of your neighbor's houses are foreclosed and put back on the market for half their value, what do you think is going to happen to your house? If you paid $150,000 are you going to be happy when the value falls to $75,000? It very possibly already has! You'd best hope the government does help stop the foreclosures because you will be hurt even if you never miss a payment.

[johntate777]

sMT451D said: "And still the government talks about freeing up credit! How can you free up credit when people without jobs are up the their eyeballs in debt!!! What, they''re going to borrow MORE MONEY???"

The credit isn't intended for people. It's intended for businesses. Currently many companies are at a standstill because they can't borrow to keep things moving. Like when a client orders items made from steel from a fabricator. The fabricator needs to borrow short-term to buy the raw steel, because the client won't pay in advance. Without the credit, the manufacturer of the raw steel loses out. The fabricator loses out. The client can't buy the product. So, there are multiple companies that can't do business. George Bush's non-regulatory policies have resulted in a massive mess. The hope is that credit will let companies get things moving along, thereby keeping people employed.

[wheear]

This was one big greed machine. From one end to the other. The lenders clobbered the consumer with the temporary low rates and on the other end were investors waiting to buy foreclosed property for practically nothing. They couldn't wait to get their hands on someones misfortune. In the middle are people, families getting kicked out of their homes. Fed to rental communities with rental payments as high as some mortgages. It had to stop. The only one winning was China who keeps loaning the US money and buying up land. The gig is up.

[smt451d]

And still the government talks about freeing up credit! How can you free up credit when people without jobs are up the their eyeballs in debt!!! What, they're going to borrow MORE MONEY???

[raskal_2]

it is immediate gratification driven greed and this is a new idea. A very costly one indeed.

[tmittelstaed]

All the refinancing in the world isn't going to help people who were laid off in a community with 30% unemployment. A lot of these smaller communities had a few large employers and when those employers laid off, the unemployment rate skyrocketed there - these stories are hidden in the statewide unemployment averages. Sure the people can move to somewhere else and get a job - but who is going to move in and buy their house when there's no jobs there?
You also have to understand that many of these foreclosed homes have been for sale on the market already for a year or more. One of my family members has one of these - it's a second home, bought for speculation. After 2 years listed on the market for their cost - no profit - they gave up and stopped paying the mortgage 8 months ago - they WANT the bank to foreclose. However the bank has refused to even return their calls, much less send a letter of foreclosure.
I know another family who moved, and also couldn't sell their home. They needed to buy a home at the place they moved to. So they took what little equity they had in their first home out in a home equity loan and used that as a down payment on the home in their new location. They are current on the mortgage on the new home and intend on remaining so - and they aren't paying mortgage on their old home - once more, they WANT the bank to foreclose on that one.

[jsd330]

bobbyduck1

You hit the nail on the head. It's pure and simple greed.

[rhs648]

Why not try this? People can refinance to a lower 30 year fixed rate, say 4%. The mortgage company will also reduce your balance to today%u2019s real estate values. If you sign up for this program you will split any house appreciation with the mortgage company.

This immediately helps put more cash in homeowner%u2019s pockets. This helps stop foreclosures. This gives the banks an incentive to work with the borrower.

This does not cost the taxpayer one dime!

Why don%u2019t we try this?



--------------------------------------------------------------------------------

Posted by scott4370

Great idea. It keeps families in their homes, banks don't lose money, investors are protected, and it doesn't cost the taxpayers anything. Perhaps you should be Secretary of the Treasury. You offer a creative solution that makes everone who is sincere about paying for their home a winner.

[scott4370]

Why not try this? People can refinance to a lower 30 year fixed rate, say 4%. The mortgage company will also reduce your balance to today%u2019s real estate values. If you sign up for this program you will split any house appreciation with the mortgage company.

This immediately helps put more cash in homeowner%u2019s pockets. This helps stop foreclosures. This gives the banks an incentive to work with the borrower.

This does not cost the taxpayer one dime!

Why don%u2019t we try this?

[bobbyduck1]

Enough with the blame game already! Lenders don't need more properties they can't sell for half of what they repossessed for and owners need to keep their homes.

Surely there is incentive to work this stuff out....regardless of "who caused it". We all did, actually. Anyone watching the submarining mortgage rates and skyrocketing property values could see this coming.

Lenders could remortgage at market value and owners could then pay at a sensible fixed interest rate and everyone would win, compared to what's happening. I just don't see what's in the way of that happening except for greed.

[vcofreason]

Wow, agencies actually working with people, trying to help them, finding a way to keep families in their home, being kind to each other...surely this can't be America?

I am not facing foreclosure but I know I would make a lousy bank manager. Saying, "it's just business" well, that just doesn't cut it for me. These are human beings involved; families...

[rudy6543]

Deregulation of the financial institutions may have been a bipartisan job, but it was Bush who made sure to protect the lenders and their predatory practices.