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Foreclosure Moratorium May Be Offered By State

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By CATHERINE DOLINSKI

cdolinski@tampatrib.com

Published: November 26, 2008

TALLAHASSEE - Gov. Charlie Crist says he plans to announce some kind of moratorium on foreclosures early next week to give Florida families relief during the holidays.

That could be a public relations coup for the governor, who has a knack for reading the hearts and minds of voters. But his authority to stall foreclosure actions temporarily - effectively interfering in legal contracts between willing parties - remains unclear, casting doubt on the true impact of his forthcoming initiative.

Asked Tuesday how he will intervene on behalf of homeowners, Crist was characteristically vague about the details. He declined to say whether his plan requires legislative action.

A sweeping moratorium would place more stress on banks, which are already straining from the ongoing crisis on Wall Street. Crist said he wants to work with the banks, noting that he had just met with the Florida Bankers Association.

He is ready, he said, to extend relief only to homesteaders, "instead of some people who are speculating, you know, have several Lexuses in the driveway. You have to be reasonable about this kind of thing, too, and I appreciate that."

His comments drew praise from consumer watchdogs like the Florida Public Interest Research Group, which encouraged lawmakers last spring to approve foreclosure relief for families.

But Randall Holcomb, economics professor at Florida State University, cautioned that, if the state prevents foreclosure on mortgages in default, lenders may be less inclined to lend in the future. "We have to think about both the present and the future."

Alex Sanchez, president of the Bankers Association, said he will be standing alongside Crist when he makes his announcement next week. But Sanchez also said that bankers are already doing what Crist will ask of them.

"If you're an owner, you occupy your home, you show a willingness to enter into a repayment plan and there's no evidence of mortgage fraud, Florida bankers want you to stay in your home and work with you," he said.

"Moratorium," Sanchez said, is too strong a word for the kind of relief he had discussed with the governor so far.

"I don't care what the terminology is; I just want to have compassion for people during a tough time," Crist said.

A few states are already working to slow foreclosures, though such actions have generally involved lawmakers. If Crist tries to stall foreclosures on his own, it would not be the first time he has tested the limits of his power.

Crist declared an election "emergency" last month to extend early voting hours, which drew complaints from some elections officials that he had exceeded his authority. Last summer, the Florida Supreme Court ruled that he had exceeded his authority by implementing an Indian gambling compact without approval from the Legislature.

Stalling foreclosures could score points with voters, said Darryl Paulson, a political scientist at the University of South Florida in St. Petersburg.

But that could backfire, Paulson said, if the governor raises expectations and the results are puny.

Brad Ashwell, director of Florida PIRG, said merely raising the prospect of a moratorium could force more compassion out of lenders.

"The banks have been really resistant," Ashwell said. "This exerts a positive pressure on the banks and the mortgage lenders to help Florida families."

Reporter Catherine Dolinski can be reached at (850) 222-8382.

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