Foreclosure rate in Florida leads the nation

January 17, 2013 | South Florida Sun-Sentinel

Florida posted the nation’s highest foreclosure rate in 2012, but the crisis that began six years ago appears to be winding down “comfortably past the peak,” the RealtyTrac listing firm says.

One in 32 homes across the Sunshine State received a foreclosure filing last year. In Broward and Palm Beach counties, one in 31 properties was in some stage of foreclosure.

After five years at No. 1, Nevada dropped to second on the list of highest foreclosure rates, at one in 37 homes. California and Utah, in the top five in 2011, fell off last year.

Foreclosures in Florida increased last year as lenders resumed filings that had stalled in 2011 amid concerns over paperwork errors. While distressed h

omes remain an issue and will for some time, RealtyTrac and others say the worst is over.
“I feel like we have definitely moved beyond more problems or more surprises in the marketplace,” said Scott Agran, head of Lang Realty in Boca Raton.

A look back and a look ahead at the foreclosure quagmire:

Impact on homeowners
During the housing boom of 2000 to 2005, speculators bought homes and “flipped” them for more money, sometimes in a matter of days, pushing prices up and helping create a bubble.
Some borrowers took out interest-only and other risky loans because that was the only way they could afford to buy. But the mortgage rates would reset, causing monthly payments to spike.
Lenders eventually began to reduce interest rates and extend the loan terms to make payments more affordable. Other borrowers unloaded the homes for less than they were worth or got banks to forgive the remaining debt.

More than 91,000 homes have been repossessed since 2007 by lenders in Broward and Palm Beach counties, according to RealtyTrac.

Ripple effect
The avalanche of foreclosures heaped more responsibility on cities and police agencies. Code enforcement officers started cutting lawns while sheriff’s offices had to find time for more evictions.
The crisis also spawned a wave of business opportunities — from companies cleaning out foreclosed homes to those auctioning them online.

In 2007, Plantation-based Realauction.com was among the first to take advantage of a revision in state law that allowed counties to auction foreclosed homes online. The company created a prototype software that 30 of Florida’s 67 counties, including Broward, now use.

“This allows the properties to be put back on the market faster and helps the market recover sooner,” said Lloyd McClendon, president of Realauction.

Moving forward
Buyers and real estate agents are waiting for more foreclosed homes to hit the market, but so far banks have been slow to release them for fear of hurting prices.

Last week, the newly created Consumer Financial Protection Bureau announced mortgage lending guidelines that eliminate many of the loans that helped cause the foreclosure problem in the first place. What’s more, borrowers will struggle to qualify if their debts exceed 43 percent of their gross monthly incomes.

Some say the new rules will help prevent another bust, but others fear they will ensure that home mortgages remain out of reach for many Americans.

Longtime South Florida housing analyst Lewis Goodkin said lenders need to loosen the purse strings, while homeowners would be wise to remember that houses aren’t stocks that can be traded on a whim.
“Too many people were betting instead of buying,” Goodkin said. “Housing turned too much into an investment vehicle instead of shelter.”