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Fla. homeowners want solutions, not bickering

GOP rivals have few answers on foreclosure crisis

David L. Ryan/Globe Staff

Miriam Cruz and her husband, Jose, modified their mortgage but had to add 10 years to it.

ST. CLOUD, Fla. - Gone are the “For Sale’’ signs that sprouted like weeds in yard after yard along the streets of Magnolia Green, one of the scores of subdivisions that rose in recent years in Florida’s once-booming Osceola County.

Realtors no longer put them out, for fear of giving the impression of a blighted neighborhood. In homes that remain occupied, owners such as Jose Cruz lament lost jobs, lost hope, and lost confidence that Republicans are willing to offer a solution.

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Instead, the candidates seeking votes in Tuesday’s presidential primary have mostly resorted to bickering about ethics and finger-pointing over the housing crisis, both on the stump and under direct questioning in televised debates.

“They need to answer this: What are they going to do for all the people losing their homes?’’ said Cruz, a part-time administrative aide who struggles to pay a mortgage on a home now worth less than half its $309,000 price six years ago. “They haven’t said anything.’’

If there is a poster child for the excesses of the US housing boom and bust, Florida is it. The state’s home prices have plunged 50 percent from their peak five or six years ago. Nearly half of Florida homeowners are underwater on their mortgages. Foreclosures and bankruptcies have soared.

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Chief rivals Mitt Romney and Newt Gingrich do not appear to offer much comfort to people in this plight. The candidates share the same general solution: Get government out of the process and let the free market work. When the topic is broached on the trail, each candidate uses it as an opening to ridicule the other’s ties to government’s role in the housing sector.

As the politics intensify, thousands of homeowners face the threat of foreclosure. The pain is felt all along the Interstate 4 corridor, a politically powerful belt that runs from Tampa on the Gulf of Mexico to Daytona Beach on the Atlantic Ocean. The experience of St. Cloud, an Orlando suburb not far from Disney World, is typical.

‘What are they going to do for all the people losing their homes?’

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More than 730 homes in St. Cloud were listed last year as so-called “short sales,’’ involving homeowners who hope to quickly unload property they can no longer afford, even at a substantial loss. Another 422 homes were repossessed by lenders.

Even those numbers do not reveal the full extent of the housing turmoil: Hundreds of other homes along the I-4 corridor, including many in Osceola County, are part of a shadow inventory of foreclosed homes that banks are withholding from the market.

Florida’s housing has shown little sign of recovering as the nation begins to shrug off the effects of recession. Unemployment remains higher than the rest of the nation, which is exerting a drag on home prices.

“We saw a tremendous surge in prices and a tremendous collapse,’’ said Sean Snaith, a University of Central Florida economist who has closely monitored the recession’s impact. “The amount of wealth in home equity that has been destroyed is really staggering.’’

President Obama, speaking Tuesday in his State of the Union speech, proposed a plan to make it easier for US homeowners to refinance their mortgages at lower rates. He said homeowners could save $3,000 a year through refinancing.

The Republican candidates for president have not offered such specific ideas. They would rely on tax-cutting and deficit reduction in an attempt to increase overall economic growth.

Romney’s candidacy is built on the premise that his highly successful career as a private equity executive best qualifies him to lead an economic turnaround. But when the former Massachusetts governor held a roundtable in Tampa with business people and homeowners to discuss housing, he offered no concrete solutions to help save people’s homes. His 59-point economic plan is silent on ways to jump-start the housing market.

In an interview with the Las Vegas Review Journal editorial board in October, he gave a market-driven approach to the crisis.

“Don’t try to stop the foreclosure process,’’ Romney told the newspaper. “Let it run its course and hit the bottom.’’

Romney and Gingrich have also blamed Obama, particularly his backing of the regimen of new financial regulations known as the Dodd-Frank overhaul.

“A host of Obama administration policies, and especially Dodd-Frank, have caused credit to dry up and made a bad thing worse,’’ a Romney spokeswoman said yesterday. “The only real solution to the housing crisis is to get the economy growing again at a healthy rate.’’

At a debate Monday, Gingrich pronounced: “If you repealed Dodd-Frank tomorrow morning, you would start to see the economy improve overnight.’’

Yet when offered the chance to outline their housing plans at a debate Thursday, Romney and Gingrich instead hurled oft-repeated accusations. Romney hammered Gingrich for working as a consultant for government-backed mortgage company Freddie Mac, and Gingrich criticized Romney for holding investments in Fannie Mae and Freddie Mac.

Republicans in Florida are pleading for a more substantive discussion.

“I don’t see any proposals from any of the candidates that would help the housing climate and the real estate industry,’’ said Cliff Clover, a real estate agent who calls himself a disgruntled Republican. “Let’s take the politics out of it.’’

Osceola County Commissioner Frank Attkisson, a former state representative, talks a lot about the weak housing market around Orlando. The county waived a $20,000 impact fee for residential construction, hoping to attract more builders. The move has had almost zero effect.

To get the economy turned around, Attkisson said, he believes a radical change is needed in the tax code. Herman Cain stimulated a great debate with his 9-9-9 flat-tax plan, he said. But with Romney and Gingrich, Attkisson is not hearing calls for the sort of dramatic change he seeks on the housing issue. He remained undecided five days before the Florida primary.

“I’m in a pickle. On the economic side, I’m just not hearing it,’’ he said. “They’re saying, ‘Let’s tweak the system.’ But they are not talking about real reform.’’

Even those who have worked out agreements with banks to stay in their homes fear the future. Cruz and his wife, Miriam, modified their Bank of America mortgage. The bank cut payments from $1,500 a month to $868, but the couple had to agree to extend their mortgage from 30 years to 40 years and agree to a $30,000 end-of-loan payment, also known as a balloon payment.

“Now we’re stuck, like everybody else,’’ said Cruz, 59. He and his wife, now unemployed, used to earn nearly $100,000 a year but now survive on $22,000. “None of this makes sense. The banks are getting all the help [from the government]. They should be helping us save our house, not lose our house.’’

Their lament is shared by neighbors on Cedar Hammock Road. Those to the left sold their home when they could not keep up with payments.

The Cruzes’ other next-door neighbor, Mary Dachille, 82, wiped out most of her savings when she bought her home in cash. She has thought about selling her home, but she would be taking a loss she cannot afford.

The housing industry drives the region’s economy and needs to be a top priority in economic recovery plans, said Jose Alvarez, an real estate agent, in nearby Kissimmee.

“We could have gotten out of this mess earlier if we did something sooner,’’ said Alvarez, a Republican. “It doesn’t matter if the approach is Republican or Democratic. Let’s find a true solution to this and get to work on it.’’

Rowland can be reached at crowland@globe.com. Calvan can be reached at bobby.calvan@globe.com.
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