South Florida Could See 200,000 Foreclosures in First Quarter of 2013
While the real estate market as a whole has improved tremendously in South Florida, foreclosures are still a real issue and will continue to be during the first quarter of 2013. Should the region keep up with the current pace, South Florida could exceed 200,000 foreclosure-related repossessions in the first quarter.
In 2012, lenders repossessed or used the state court system to force the foreclosure of approximately 1% more properties than the previous year. To reverse that pace and return to pre-recession levels, the number of repossessions would need to drop by 350% to below 10,000 – about how many properties were seized in 2007.
Despite the spike in South Florida foreclosure actions, the 2012 total number of filings initiated in the region dropped compared to the same 12-month period in previous years. More than 57,600 actions were filed in 2010 and nearly 98,300 actions were filed in 2009. In previous years in South Florida, lenders repossessed nearly 30,500 properties in 2009, about 26,250 properties in 2008, and less than 10,100 properties in 2007, according to government records.
One unanswered question is whether or not lenders will continue to focus on alternative solutions to foreclosures such as loan modifications or short sales. Many lenders are operating under the recently negotiated National Mortgage Settlement Agreement tightening their latitude when it comes to enforcing the foreclosure process for borrowers who are in default.
In South Florida, distressed properties, which include bank-owned units and short sales, account for close to 14% of the nearly 19,400 condos and townhouses on the resale market. About 1,100 bank-owned South Florida condo and townhome units are currently on the resale market with a median asking price of approximately $85 per square foot in the Tri-County area.
“In the last six years, foreclosure filings in South Florida increased rapidly between 2007 and 2009 before decreasing dramatically in 2010 and 2011 in response to the ‘robo-signer’ controversy. The year 2012 proved to be another year of increased foreclosure filing activity.”
The “robo-signer’ controversy was administrative irregularities that first surfaced in late 2010. It created a foreclosure freeze with many lenders slowing the number of defaults being initiated against borrowers in South Florida between October and December 2010, according to the report.
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