Pesky Foreclosures Threaten Housing Recovery in Florida

by 17 Jan 2013

The Sunshine State is falling out of step with the housing recovery taking place in several regional markets across the country. Although real estate sales and speculative actions are brisk in metro areas such as Miami and Tampa, a sudden spike in foreclosure evictions and repossessions are threatening the housing recovery.

According to recent data released by foreclosure analytics firm RealtyTrac, Florida beat all other states in terms of home repossessions in 2012, and one out of every 32 residential properties in the Sunshine State were undergoing foreclosure proceedings last year. Nearly 84,500 repossessions took place in 2012.

Paying the Piper

Florida is the most likely state to see a glut of foreclosures suddenly come into the market and disrupt the home price recovery. Foreclosure is a judicial proceeding in Florida, and the court dockets move at a glacial pace. Even though Florida is home to a few foreclosure mills, it takes a lot to speed up foreclosures in the Sunshine State. Foreclosure defense is widely practiced in Florida, which explains why some cases have been languishing since 2007.

The backlog of foreclosures is finally catching up to the Florida real estate market. In 2012, more than 16,000 foreclosures were finalized, and the pace is expected to pick up in 2013. Florida seems to be paying the piper now due to its protracted foreclosure proceedings that average more than 850 days, but things are not as bad as they are in New York and New Jersey. Foreclosures take even longer to move forward in those two states.

A Lot of Homes

Once the foreclosure pipelines and court dockets clear up, Florida may experience another housing bonanza. Home builders are getting busy in Southwest Florida, and real estate investment firms are snapping up foreclosures in Miami, Orlando and Tampa. Miami is the best performing metropolitan area in terms of housing, with prices in the Magic City rising by 9,5 percent in 2012, followed by Tampa with 8.2 percent.

Inventories are looking good in Florida, at least for home shoppers and investors. More than 83,000 homes are distributed among the Real Estate Owned (REO) portfolios of banks across the state, an increase of 6.8 percent over the last 12 months. With more than 305,750 homes with upside-down mortgages or in danger of foreclosure, Florida could see its shadow inventory considerably grow in 2013.

COMMENTS

  • by William Matz | 1/18/2013 4:54:11 PM

    The reason for the "glacial" speed now was the discovery that the prior "rocket docket" (where a judge would see hundreds of foreclosure files in a short session) was being massively abused by lenders that were filing forged and fabricated documents. The process was so flawed that lenders could even foreclose on homes on which there were nor mortgages. These abuses led to a moratorium and then much more closely monitored cases. Lenders have no one but themselves and their attorneys/accomplices (e.g. Stern Law Firm).

    Similar situation in NY. A chief judge got so fed up with the false paperwork being filed with the courts that he began requiring affidavits from lender execs and bank attorneys that they had personally reviewed the file and found the grounds for foreclosure.

    And then there are the thousands of foreclosures of active military in violation of the SCRA.

    In all of these the banks claim the fault is administrative mixup. (The San Francisco Recorder found that over 80% of foreclosures had flawed paperwork.) Yet banks seem to have no problem keeping track of billions of credit card transactions.

    The sad thing is that all the lender misconduct will ultimately cost borrowers, as investors will shy away from mortgages due to perceived heightened risk.

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