Florida foreclosures up 92 percent
More homeowners in Broward, Palm Beach finding themselves 'upside down'
By Paul Owers
South Florida Sun-Sentinel
9:00 PM EDT, July 10, 2008
Home foreclosures continue to multiply in South Florida and the rest of the nation, and analysts say the crisis likely won't ease until next year at the earliest.
"Between falling home prices and the weak economy, there's little hope for any improvement on the foreclosure front in 2008 and likely into 2009," said Greg McBride, senior financial analyst with Bankrate.com in North Palm Beach.
In Palm Beach County, there were 1,936 people facing foreclosure in June, nearly double the 1,005 during June 2007, according to Realestat.com, a Plantation-based research firm.
Broward had 2,806 homeowners on the verge of foreclosure last month, up from 1,484 a year ago.
Scheduled foreclosure sales also are climbing in both counties. Broward had 2,730 sales last month, nearly a fivefold increase from 593 a year ago. Palm Beach County had 785 sales in June, compared with 153 in June 2007.
Nationally, more than 252,000 properties, or one in 501 U.S. households, entered some stage of foreclosure, according to RealtyTrac Inc. of Irvine, Calif. Bank seizures rose 171 percent, the most since the company began tracking statistics on default notices, warnings of a scheduled sale and repossessions in January 2005.
California had the most total filings for the 18th consecutive month, increasing 77 percent in June from a year earlier to 68,666. Florida was second at 40,351 filings, an increase of 92 percent, and Ohio was third at 13,194, an increase of 11 percent.
Foreclosure activity is the highest since the Great Depression of the 1930s, said Rick Sharga, RealtyTrac's vice president of marketing.
"We'll have 1 million bank-owned properties by the end of the year," Sharga said. "That will represent between one-fourth and one-third of all home sales."
Typically, lenders notify homeowners at least 90 days past due on their mortgage payments that they intend to take back the properties. Many of those distressed borrowers have been able to refinance or make other arrangements to keep their homes, but such deals are hard to negotiate now because too many people are "upside down," owing more than their homes are worth.
"For more and more homeowners who are getting into foreclosure, there is a much higher likelihood that they are ultimately going to lose the properties to the bank," Sharga said.
The foreclosure problem exploded in South Florida and nationwide following the housing boom of 2000 to 2005, when escalating home values caused many buyers to overextend themselves. They took out short-term, adjustable-rate mortgages that now are resetting much higher. The rise in foreclosures is partly why the housing market remains so stagnant.
"Unfortunately, it's a vicious cycle," said Brad Hunter, a West Palm Beach-based housing analyst. "Foreclosures are being triggered by declining home prices, and as the banks take back these properties, they're knocking down the prices, and that causes more people to be upside down."
The softening job market could add to the foreclosure debacle, said Chris Lafakis, an economist for Moody's Economy.com in West Chester, Pa.
"As the unemployment rate rises, a fewer number of people can stay current on their mortgages," Lafakis said. "There's a risk that this could get worse."