Article Courtesy of The Orlando
Sentinel
By Mary Shanklin
Published October 12, 2012
For the first time since
2005,
Florida
led the nation for foreclosures, according to a report by a real-estate
research group that tracks home sales across the country.
During the past year,
foreclosures dropped 13 percent nationally but increased by more than that
amount in
Florida
. The state had one foreclosure legal filing for every 117 houses during
the third quarter — the highest rate in the country and double the rate
for the entire nation, according to a third-quarter report by RealtyTrac.
Metro Orlando
closely reflected the rest of the state: Foreclosure actions increased 14
percent during the third quarter from a year earlier. RealtyTrac analysts
think growing pools of foreclosures typically place downward price
pressure on overall housing in an area.
Florida
's top foreclosure ranking could be bad news at a time when the state's
housing market has been headed toward recovery. Prices in the core
Orlando
market, for instance, have increased from $108,000 in January to $120,550
in August, according to the Orlando Regional Realtor Association.
A combination of factors,
including homeowner associations foreclosing on homes and hedge funds
snapping up properties, appear to be contributing to the run-up in
numbers.
Florida
has more homeowner associations than most states, and hedge funds have
targeted it, along with the other foreclosure-heavy states.
Florida
usually ranks in the top five for foreclosures, with
Arizona
and
California
typically in the top two spots.
Orlando
real-estate agent Janet Scott said homeowner associations have
increasingly opted to take advantage of state laws that allow them to
foreclose on condominiums and houses when owners fail to pay association
fees.
"When people let their
homeowner-associations fees become delinquent, that's what's causing
foreclosure rates to go up because the associations get tired, and they
foreclose on these people," said Scott, an agent with Keller Williams
Classic Realty. "But it's still a can of worms."
When homeowner associations
take ownership of a home, they typically try to fix up the property and
find a tenant. However, they often only have the properties briefly before
the banks take them back.
Central Florida
had a higher rate of foreclosures than the state did overall, with 8,896
actions filed during the third quarter, which is one for every 106 houses.
Orange
County
had the highest rate within the four-county metro area and
Lake
County
the lowest. Even though the foreclosures had increased from a year earlier
in Metro Orlando, they lessened somewhat from the second quarter to the
third.
Some real-estate experts
have noted that
Central Florida
's rising foreclosure rate comes at a time when the region should not have
problems absorbing the extra properties because it has an unusually low
amount of homes listed on the market. The core
Orlando
market has about three months of inventory; six months is considered
normal.
Another factor that appears
to be driving up foreclosures during the past year is that hedge funds
have increasingly started buying up the properties at auction, giving
banks more incentive to push the properties through the legal system
rather than trying to market them as short sales.
American Homes 4 Rent is an
example of a fund that has purchased hundreds of foreclosures in
Orange
County
during the past year, and other groups have started picking up auctioned
properties and renting them out. Another group, THR Florida LLC, has been
buying courthouse foreclosures in
Orange
, Seminole and Volusia counties.
Many attribute
Florida
's backlog to the fact that it is one of 26 states where foreclosures are
processed through the court system. Filings have increased in slightly
more than half of the country's judicial-foreclosure states. Two
judicial-foreclosure states that have turned around their foreclosures
inventory are
Massachusetts
and
Wisconsin
.
Altamonte Springs
lawyer David Borack said the local court systems have less staffing than
they did in the past to handle the caseload.
"It's no secret the
court systems are overburdened with cases, and they're cutting back left
and right on the remaining staff," he said.
And finally, Borack added,
homeowners have tired of trying to get banks to modify their mortgages.
More owners are deciding to stop paying for a house worth half what it was
when they bought it near the peak of the market in 2007, he said.
"To
me it's very simple," he said. "People are realizing there are
other alternatives. And they say: 'What are the banks going to do to me
— kick me out of my house?' "
|