Pipeline

Docket Demise

Don't hold your breath in Florida foreclosure court.

The special "rocket dockets" established by the state last year to help slog through the backlog of foreclosure filings will be gone as of July 1, potentially paralyzing the already overloaded court system with an influx of cases and delays.

Already there are signs of disruptions.

In one case in Palm Beach County, a court order was issued May 12 canceling a calendar call on July 22.

The order said that, "because of the lack of funding by the Florida Legislature, judges are unavailable to preside over foreclosure trials beginning July 1, 2011."

A calendar call is when trials and other proceedings are scheduled.

Last July, the Florida Legislature allocated roughly $6 million to the state's trial courts to help speed up the foreclosure process by establishing special foreclosure-only courts that were overseen by retired judges.

Though that funding was meant to last for only a year, there remained a chance it could be renewed, Craig Waters, spokesman for the Florida Supreme Court, said Wednesday.

"The idea was that one-year funding would help the courts clear most of the backlog," he said. "Obviously due to circumstances that nobody foresaw, that really didn't happen."

Waters added, "The Legislature was aware of the situation, but obviously the state is in fiscal straits so the program expires at the time it was originally intended to expire."

There was evidence that the special foreclosure courts had been working.

According to a study by the Office of the State Courts Administrator, the backlog of foreclosure cases dropped by more than 65,000 from July 1, 2010, when the program started, to Sept. 30.

For foreclosures completed during the first quarter in Florida, it took an average of 619 days to work through the process, up from 470 days in the first quarter of last year, and nearly four times the average of 169 days it took in the first quarter of 2007, according to a recent report from RealtyTrac.

Hazy Appraisals

The vast majority of state disciplinary actions against appraisers are not being reported to the federal appraisal subcommittee, which maintains a national registry of state certified and licensed appraisers.

Though the subcommittee collects information on suspensions, voluntary surrenders and revocations of appraisal licenses, many state appraiser regulatory agencies issue reprimands, admonishments and fines that go unreported, said Joan Trice, the president of Allterra Group LLC in Salisbury, Md., which publishes the newsletter Appraisal Buzz.

After finding that many disciplinary actions are not recorded in any national database, Trice, a 24-year veteran of the business, created Clearbox LLC, which collects credentials from appraisers, aggregates state actions and conducts public record searches of bad acts by appraisers.

"If a lender knew they were letting sex offenders and convicted felons inside their customers' homes, the lawsuits would be staggering," Trice said. "We've identified murderers, sex offenders and violent criminals."

Trice said she recently uncovered an appraiser who was installing cameras in homeowners' bedrooms.

Federal interagency guidelines require that banks and appraisal management companies perform due diligence of their appraiser panels.

Though Clearbox has collected data from 30 states, some states have refused to assist largely because the data is in a paper format that requires manual entry into a database.

"Some of these states literally have the data in a shoe box so it takes some time to aggregate it," Trice said.

Whale of a Sale

Moody's is predicting that home sales will reach 6.5 million units by yearend, making it far more optimistic than even the National Association of Realtors' upbeat assessment of the housing market.

Celia Chen, senior director at Moody's Analytics, said in a report this month that the combination of accelerating job gains and housing affordability will help new- and existing-home sales "hit a pace of 6.5 million annualized units by yearend."

Though the increase "appears sharp" when compared with the first quarter's pace of 5.4 million units, it is still far below the peak sales of 2005 and about on par with 2002 sales, Chen said.

Moody's expects 7 million home sales in 2012, by far the most aggressive prediction yet for housing.

NAR has been the most aggressive in forecasting a housing rebound.

It said existing-home sales rose 8.3% in the first quarter compared with a year earlier, which equates to an annual sales pace of 5.14 million units.

Chen acknowledged that the housing market still faces considerable headwinds, including tight mortgage underwriting standards that will constrain demand.

Home prices will "barely appreciate" by the end of 2012, she said.

The biggest problem is the backlog of 3.6 million homes that are either 120 days or more delinquent or in the process of foreclosure, Chen said.