Florida has more federally backed home loans that have gone unpaid for a year or longer than the total number of late government loans in every state except California.
A report by the Federal Housing Finance Agency found that by the end of 2011, about 166,000 Florida mortgages backed by Fannie Mae or Freddie Mac were in arrears on payments for a year or more.
That’s by far the largest pool of prolonged delinquencies nationally, with Illinois carrying the second-highest share of year-old unpaid loans at 42,000. It’s also higher than every state’s total delinquency rate except California, which had 174,000 mortgages late on payments.
Florida’s total number of late loans from the two government-sponsored entities was 292,000, highest in the country.
Real estate experts weren’t surprised by the agency’s findings, noting Florida’s 368,000-case backlog in the courts and banks’ hesitancy to push foreclosures in judicial states while they were negotiating the $25 billion settlement with the nation’s attorneys general.
But they said it is a reminder of the magnitude of the housing crisis in Florida. The report, released last week, also found that the average foreclosure on a Fannie Mae or Freddie Mac loan in Florida takes 890 days – more than two years – to process.
“We’ve had trouble as a country coming to a balance between borrower rights and making sure all options are explored before throwing people out of their homes,” said Guy Cecala, publisher of the trade publication Inside Mortgage Finance. “But I don’t think anyone believes the solution is to let people live mortgage-free in their homes for a year or more.”
Fannie Mae has about 1.2 million loans in Florida, while Freddie Mac has about 750,000.
During 2010 and 2011, nearly 165,000 federally backed loans statewide were modified to make monthly payments easier for the homeowner, according to the agency report. That was in addition to 56,558 short sales that were offered during the same period.
Still, real estate consultant Jack McCabe, chief executive of McCabe Research and Consulting in Deerfield Beach, said the Federal Housing Finance Agency needs to consider cutting mortgage balances to make a significant difference in turning around delinquency rates.
Although recently embraced by the nation’s major banks as part of the attorneys general settlement, the agency has so far rejected reducing principal amounts.
“I think we’re seeing banks become more proactive, and we need to see the FHFA grasp the fact that this is the best strategy given these tumultuous times,” McCabe said. “We can’t continue to go sideways.”