By Drew Harwell, Times Staff Writer |
“Although the $25 billion national mortgage settlement’s goal is to keep people in their homes, big banks are doing much better at ushering Florida homeowners out, as a new report shows short sales dwarfing other forms of relief as lenders’ atonement of choice.
Under the settlement, five of the nation’s biggest banks must grant billions in relief through measures like refinancing mortgages and reducing loan amounts, letting homeowners dodge foreclosure while making payments they could afford.
Yet in the settlement’s first months, banks have plunked away at their required relief mostly by approving short sales, in which a home is sold for less than the owner owes, according to a report Monday from settlement monitor Joseph Smith.
Between March and September, banks approved $2.2 billion in Florida short sales, or about 60 percent of the state’s $3.6 billion in relief, the report shows.
Short sales totaled $1 billion more in Florida than principal forgiveness for first and second mortgages, deficiency waivers and refinancing — combined. And many of those short sales would have happened anyway.
“They’re getting credit for doing what they were already doing, and what the market was dictating,” St. Petersburg foreclosure attorney Matt Weidner said. “They’re still throwing people out onto the street that could be making a mortgage payment.”
Short sales are cheaper and easier for banks than foreclosures — there are no carrying costs, and buyers come to them — but more damaging to homeowners than reducing the mortgage principal, which housing advocates call the most effective tool for homeowners in distress.”