Some Orlando-area homes stuck for years in foreclosure limbo

Article Courtesy of The Orlando Sentinel

By Mary Shanklin

Published March 26, 2012

A few blocks from West Colonial Drive in Orlando is a weathered, split-level house that has been in foreclosure since 2007. The longtime owner has lived there for nearly five years without making a payment.

It's not the only Central Florida house that has idled in foreclosure longer than some kindergartners have been alive. Scattered across Metro Orlando, where 15 percent of all mortgaged homes have received a foreclosure notice in recent years, are more than 20 houses that have fallen through the cracks of local courts and mortgage companies for almost half a decade, according to records provided to the Orlando Sentinel by the real-estate-research company RealtyTrac Inc.

As these long-term foreclosures flounder between the homeowners and the banks that hold the mortgages, front-lawn weeds grow taller, lenders lose revenue, neighbors' property values decline, and courts get further backlogged. The homeowners live rent-free but end up with credit records so ruined that few landlords will risk renting to them should they be evicted from their properties.

Jamie Felsing's house in Pine Hills is one of those in foreclosure longer than almost any other in the four-county metro area, and his experience is emblematic of why the local housing market has been in distress for so long and broken on so many levels.

In the living room of his home, Felsing's family photos hang on wallpapered walls. A gold-framed, black-and-white photo shows him, his longtime girlfriend and their daughter in period costumes.

"We put a lot of time and love and money into this house," said the 34-year-old Felsing, who has spent almost a third of his adult life fighting the foreclosure of his home. "I hate getting up in the morning. I feel like there is going to be a sheriff knocking on the door with an eviction notice."

Felsing lost his retail-technology job in 2007, when the unemployment rate was about 4 percent less than half what it is now. By that time, Florida's once-fiery real-estate market had already started to crumple like a burnt marshmallow. Still, few people then had ever heard of a "short sale." And the federal government had not rolled out its current menu of mortgage-bailout programs.

The two lenders that foreclosed on Felsing's house had hired the South Florida legal team of Ben-Ezra & Katz, which later shut down but is still under investigation by the state because of allegations it used doctored court documents to process some foreclosures. Felsing also went through a series of bankruptcies, further dragging out the process.

Leaning back in a stuffed chair in his living room, he recently recounted the groups he has turned to through the years in vain to help him save his house, including SunTrust Mortgage Inc., the government-affiliated Hope Now program and the local KEL law firm.

The business that most helped him stave off an eviction was, in his words, a "fly-by-night" operation that charged him $500 to file foreclosure-stalling bankruptcy notices, even though he had already been through a bankruptcy.

$66K in fees on $40K home

When Felsing bought his three-bedroom house in unincorporated Orange County a decade ago for $88,300, he was 24 years old, had worked since he was 14 and had near-perfect credit. He refinanced with a second mortgage along the way, borrowing against the value of the 1972 house to pay off debt, tile the floors and renovate the kitchen with new cabinets and an eat-in area.

Though he started his slide into the abyss of foreclosure after losing his job selling mobile devices and other technology products, Felsing officially entered foreclosure in December 2007. The former retail salesman said it had started with him missing two months of SunTrust mortgage payments; he had offered to make partial payments, but the lender wouldn't settle for that.

"I tried to send them a payment," he said. "But they wanted everything."

A SunTrust spokesman said the Atlanta-based bank could not speak about client accounts.

"There often are exceptional and extenuating circumstances beyond our control that can result in a protracted resolution process," spokesman Hugh Suhr said.

SunTrust advised Felsing to get debt counseling through the government-affiliated Hope Now program, but that was a dead end.

"They told me within 30 seconds on the phone that I didn't qualify," said Felsing, who now works in telephone sales.

With repeated foreclosure notices stuffing his mailbox, Felsing turned to bankruptcy court in hopes of restructuring and renegotiating his debt. But SunTrust and Bank of America charged more than $66,000 in lawyer fees on the foreclosure and the first of four bankruptcies related to the split-level house, now valued at $40,000. The lenders eventually added so much in late payments, penalties and fees to Felsing's mortgage debt that his $748 monthly payment nearly doubled to $1,400.