South Florida, state lead US in foreclosures

Article Courtesy of The Sun Sentinel

By Paul Owers

Published January 17, 2014


South Florida and the state led the nation in foreclosure activity last year, topping the rankings as lenders and judges moved aggressively to reduce the backlog of cases from the housing crash.

The tri-county region posted the highest foreclosure rate among 209 metro areas, with one in 25 homes in some stage of repossession, according to RealtyTrac Inc. Florida led all states with a foreclosure rate of one in 33 homes.

"While it doesn't sound good to be No. 1 for foreclosures, it is a good sign that the state is dealing with the distress and not just kicking the can down the road," said Daren Blomquist, a spokesman for RealtyTrac, an Irvine, Calif.-based listing firm.

More good news is on the horizon. New filings are on the decline, according to RealtyTrac data. That's an indication the crisis is slowly easing up, analysts say.

RealtyTrac monitors public records for three types of filings: new cases, scheduled auctions and bank repossessions.

In Broward County, properties scheduled for auctions jumped by 72 percent (15,384 from 8,953) compared with 2012. Over the same period, new foreclosure filings dropped countywide by 11 percent (10,874 from 12,238). In the county, 29,345 homes were in some phase of foreclosure in 2013.

In Palm Beach County, properties scheduled for auctions jumped by 55 percent (9,716 from 6,262) compared with 2012. Over the same period, new foreclosure filings dropped countywide by 23 percent (8,636 from 11,235). In the county, 21,469 were in some phase of foreclosure in 2013. 

In scheduling an auction, a judge has ruled in favor of the lender and is allowing the home to be repossessed or sold to a third party. Traditionally, banks have taken back the properties, but many investors now are outbidding lenders at the auctions.

Blomquist said he expects Florida to continue working its way through the foreclosure quagmire this year with an increase in bank repossessions and third-party sales at auctions.

The foreclosure crisis began in 2006, and Florida was among the hardest-hit states. Many homeowners took out adjustable-rate mortgages to buy homes but fell behind on the payments when the interest rates increased and prices plummeted. Homes lost more than half their value in the county over a six-year before starting to rebound in 2012.

"The banks themselves became too lax in their underwriting," said Ken Thomas, a banking analyst in Miami. "And you have to blame the consumer, too. Sometimes things are just too good to be true."

Florida started 2013 with more than 372,000 open foreclosure cases, but that number is down to about 263,000 as of the end of November, according to the latest data from the state courts administrator for the Florida Supreme Court.

A new law designed to speed up foreclosure filings took effect July 1, and the state spent more than $6 million hiring retired judges to cut through the backlog of cases.

"Florida's gotten better at resolving its foreclosure mess, but we still have a long way to go," said Jack McCabe, a housing analyst in Deerfield Beach. "But I don't think it's going to be looked at as a negative drag on market prices going forward because there are still a lot of buyers out there willing to snap up these properties."

While RealtyTrac and others say the foreclosure crisis is winding down, South Florida foreclosure defense lawyer Tom Ice argues there are more foreclosures still to be filed.

He said the new state law requires banks to have all their paperwork in order, which serves as a deterrent to filing cases. He added that banks also are reluctant to start the process because they no longer have control over how quickly the cases will be resolved.

Ice and other lawyers said Florida courts are insisting on fast resolutions sometimes catching homeowners and even banks flat-footed.

"It's trial or bust," Ice said.

Despite the move to reduce case backlogs, it still takes an average of 944 days to foreclose a home in Florida, up from 853 days a year ago, RealtyTrac said.

The 944 days is the third-longest timeline in the country, behind New York (1,029) and New Jersey (999).