Foreclosure-gate has slowed down foreclosure rates as lenders go back to straighten out their paperwork. This has hurt the budget of Florida’s courts:
TALLAHASSEE, Fla. — Gov. Rick Scott on Tuesday approved part of a plan to keep Florida’s courts operating in the face of a $72.3 million deficit expected in the current budget year due to a drop in mortgage foreclosure filing fees.
Scott’s budget director, Jerry McDaniel, notified Supreme Court Chief Justice Charles Canady that the governor has agreed to his request to temporarily shift $14 million earmarked for mediation arbitration and court education within the system’s budget to pay for day-to-day operating expenses.
. . .
The shortfall is the result of a temporary and unexpected but sharp decline in foreclosure filing fees that help support the court system, Canady wrote in a letter to Scott and legislative budget leaders last week.
Lenders have cut back on new cases due to a pattern of missing documents, erroneous filings and other problems. State economists expect the filings to increase again in the next budget year.
Just how big a drop has Florida experienced?
Foreclosure fees are higher than those for most other types of filings and had been expected to cover more than half of the court system’s $462 million budget.
Florida had been averaging about 30,000 new foreclosure cases every month but the filings began dropping in late 2010 and only 8,205 were filed in February, the fewest in more than four years.
I couldn’t help but wonder what that meant in dollars and cents. Florida has been the land of the “Rocket Docket”, where a foreclosure hearing could last only fifteen to twenty seconds.
I couldn’t find if the foreclosure fees are the same for all counties in Florida, or if they have increased in the past couple of years. I did however, find this list of 2009 foreclosure fees from Hendry County:
Wow. If we assume that the $50K to $250K range is average for foreclosures, at 20 seconds a pop, that represents almost $163,000/hr! Additionally, if we use that $905 fee as an average, a drop from 30,000 foreclosures/month to 8,205 means that fees would drop from $27,150,000 to $7,425,525. Ouch.
Undoubtedly not all foreclosure hearings happen in under 20 seconds, and I had to make too many assumptions to really calculate what the take has been by the courts. We can see however, that the courts have used foreclosure hearings as a money generator. Depending on foreclosure fees for more than half of the budget doesn’t seem like a good long term plan– there’s bound to be a point where foreclosures permanently taper off.
After the lenders fix their robo-signing mistakes, foreclosures should rise and the courts should see more revenue. They are however, going to have to find another long-term fix. This can’t go on forever.