Florida's leaders are not standing idly by as the housing market continues its downward spiral. Chief Financial Officer Alex Sink said Florida needs to respond to the housing crisis in order to limit the possible impact on the economy. “Our work is just beginning,” she said. “We need to strengthen our state's role in educating consumers, implement greater consumer protections, and help hard-working families keep their homes.”

Governor Charlie Crist created the Florida Home Ownership Promotes the Economy task force to bring together experts in the insurance, banking, and mortgage fields to study the impact of the financial markets on homeowners around the state. Headed by Lt. Gov. Jeff Kottcamp, the task force has made a number of recommendations, including:

?Urge loan services and investors to pursue all workout options and dedicate resources to prevent foreclosures.

?Establish the Home Ownership Preservation Center to provide a centralized location for the distribution of foreclosure prevention information.

?Encourage the creation of programs in schools to increase financial literacy.

?Require mortgage lenders to disclose when borrowers may qualify for a mortgage other than subprime, high-cost, or non-traditional loans.

?Create the HOPE Council and Mortgage Fraud Task Force to provide continued guidance of legislation, regulations, education, and foreclosure prevention efforts.

Boosting the state's effort is a $1.3 million federal grant that will help the state operate 50 counseling agencies to assist homeowners facing a potential foreclosure. The grant is provided by the National Foreclosure Mitigation Counseling Program, which is administered through a competitive application process by NeighborWorks America. Crist said the grant would help the state's outreach programs and inform the public about their mortgage options.

“We know that most homeowners never talk to their mortgage lender, even as they face foreclosure,” said Crist. “By making more counseling and education about foreclosure alternatives available to homeowners, it is our hope that more homeowners will be able to avoid the financial devastation of foreclosure.”

Agents Caught in the Middle

From an agent's perspective, foreclosures are definitely having an effect on the market and their bottomline. That's without even mentioning the impact of foreclosures on banks that must take steps to insure a property that is no longer covered under the previous homeowner.

Tom Enright, president of surplus lines brokerage Enright & Wilson in Hollywood, said that the housing and condominium market is certainly feeling the effects of the downturn in valuations, which is leaving many owners holding properties that are worth far less than when they were purchased. “People definitely bought properties with the expectations that the price would go up and in fact the prices have dropped,” he said. “Now they have mortgages that are in excess of what they can sell the property for and they can't even rent it at a suitable price to cover the mortgage.”

As a result, Enright said that some homeowners and condominium are just “giving the property back to the bank.” This trend is forcing banks to assume a defensive posture. Normally, the cost of a homeowner's premium is included in the owner's mortgage payment. In the case of a foreclosure, however, banks are having to reach into their own pockets to pay the cost of a policy in order to protect their investment.

Florida Association of Insurance Agents Vice President Scott Johnson said that agents are also feeling the effects of foreclosures in the form of policy changes. For example, he said, every time a bank sells a mortgage to another lender or broker the policy must be updated to reflect the new mortgage holder. Such a change can also require agents to provide additional material, including photos of the property and changes in deductibles. In cases where the information is required for an existing policy or a renewal, agents receive no extra commission.

“This is what we are paid to do as part of servicing a policy,” said Johnson, who added that policy renewals require the same amount of work as issuing a new policy. “What we are seeing is inflated activity where the agents are not being paid more money,” he said.

Johnson warned that the pressure of foreclosure is just one more factor that is hurting agents around the state. He said that commissions are down across the board as workers' compensation rates have dropped by more than 50 percent since the 2003 reforms, and auto rates have dropped to their lowest level in decades. Another factor hurting agents is the decision by the legislature to freeze Citizens' Property Insurance Corporation rates while new start-up companies are offering rates at 20 percent to 30 percent below Citizens. Add to that fact the rising cost of gasoline errors and omission coverage, and it spells trouble for agents.

“Small agents are barely keeping their head above water and I imagine some of them won't,” Johnson said.

According to the national tracking firm RealtyTrac, the total number of homeowner foreclosures rose nationally by 75 percent in 2007. At 280,000 foreclosure filings, Florida ranked second among all states, eclipsed only by California's 480,000 filings.

The Sunshine State is home of five of the top 25 metro areas affected by home foreclosures. Leading the way in Florida was Ft. Lauderdale, ranked eigth, with one in every 73 homes receiving some sort of foreclosure filing. Orlando ranked 13th, Miami 14th, and Sarasota-Bradenton 15th. The Tampa-St Petersburg-Clearwater area came in at 21st.

This situation is not expected to improve anytime soon. According to RealtyTrac, in the first quarter of this year, 66,000 Florida homes underwent some form of foreclosure action — a 178 percent increase from last year. “We really don't see any indication that the rate of activity will come down soon,” said RealtyTrac Vice President Rick Sharga.

Crist and Sink Take Notice

Florida's leaders are not standing idly by as the housing market continues its downward spiral. Chief Financial Officer Alex Sink said Florida needs to respond to the housing crisis in order to limit the possible impact on the economy. “Our work is just beginning,” she said. “We need to strengthen our state's role in educating consumers, implement greater consumer protections, and help hard-working families keep their homes.”

Governor Charlie Crist created the Florida Home Ownership Promotes the Economy task force to bring together experts in the insurance, banking, and mortgage fields to study the impact of the financial markets on homeowners around the state. Headed by Lt. Gov. Jeff Kottcamp, the task force has made a number of recommendations, including:

?Urge loan services and investors to pursue all workout options and dedicate resources to prevent foreclosures.

?Establish the Home Ownership Preservation Center to provide a centralized location for the distribution of foreclosure prevention information.

?Encourage the creation of programs in schools to increase financial literacy.

?Require mortgage lenders to disclose when borrowers may qualify for a mortgage other than subprime, high-cost, or non-traditional loans.

?Create the HOPE Council and Mortgage Fraud Task Force to provide continued guidance of legislation, regulations, education, and foreclosure prevention efforts.

Boosting the state's effort is a $1.3 million federal grant that will help the state operate 50 counseling agencies to assist homeowners facing a potential foreclosure. The grant is provided by the National Foreclosure Mitigation Counseling Program, which is administered through a competitive application process by NeighborWorks America. Crist said the grant would help the state's outreach programs and inform the public about their mortgage options.

“We know that most homeowners never talk to their mortgage lender, even as they face foreclosure,” said Crist. “By making more counseling and education about foreclosure alternatives available to homeowners, it is our hope that more homeowners will be able to avoid the financial devastation of foreclosure.”

Agents Caught in the Middle

From an agent's perspective, foreclosures are definitely having an effect on the market and their bottomline. That's without even mentioning the impact of foreclosures on banks that must take steps to insure a property that is no longer covered under the previous homeowner.

Tom Enright, president of surplus lines brokerage Enright & Wilson in Hollywood, said that the housing and condominium market is certainly feeling the effects of the downturn in valuations, which is leaving many owners holding properties that are worth far less than when they were purchased. “People definitely bought properties with the expectations that the price would go up and in fact the prices have dropped,” he said. “Now they have mortgages that are in excess of what they can sell the property for and they can't even rent it at a suitable price to cover the mortgage.”

As a result, Enright said that some homeowners and condominium are just “giving the property back to the bank.” This trend is forcing banks to assume a defensive posture. Normally, the cost of a homeowner's premium is included in the owner's mortgage payment. In the case of a foreclosure, however, banks are having to reach into their own pockets to pay the cost of a policy in order to protect their investment.

Florida Association of Insurance Agents Vice President Scott Johnson said that agents are also feeling the effects of foreclosures in the form of policy changes. For example, he said, every time a bank sells a mortgage to another lender or broker the policy must be updated to reflect the new mortgage holder. Such a change can also require agents to provide additional material, including photos of the property and changes in deductibles. In cases where the information is required for an existing policy or a renewal, agents receive no extra commission.

“This is what we are paid to do as part of servicing a policy,” said Johnson, who added that policy renewals require the same amount of work as issuing a new policy. “What we are seeing is inflated activity where the agents are not being paid more money,” he said.

Johnson warned that the pressure of foreclosure is just one more factor that is hurting agents around the state. He said that commissions are down across the board as workers' compensation rates have dropped by more than 50 percent since the 2003 reforms, and auto rates have dropped to their lowest level in decades. Another factor hurting agents is the decision by the legislature to freeze Citizens' Property Insurance Corporation rates while new start-up companies are offering rates at 20 percent to 30 percent below Citizens. Add to that fact the rising cost of gasoline errors and omission coverage, and it spells trouble for agents.

“Small agents are barely keeping their head above water and I imagine some of them won't,” Johnson said.