Posted on 06/27/2006 6:46:10 AM PDT by Fawn
Florida foreclosure filings jumped by 6 percent from April to May, according to a study by RealtyTrac Inc., an online data concern. That's one new filing for every 821 Florida households.
By contrast, national foreclosure filings rose by less than 2 percent, averaging about one new filing for every 1,247 U.S. households.
The numbers for St. Lucie County were even more grim. One of every 719 households there was the subject of a foreclosure filing in May, reported Irvine, Calif.-based RealtyTrac. And in Palm Beach County last month, RealtyTrac found, one of every 561 households faced a new foreclosure action — almost double the national average.
"Unfortunately, this is not a blip," said Jack McCabe, president of McCabe Research and Consulting in Delray Beach, which months ago warned of coming foreclosure problems. "It is going to be a trend for quite a period of time."
The uptick in foreclosure activity is linked in part to the popularity of "exotic" mortgages. Given the area's white-hot housing prices, it has been the unconventional loans, including no-interest and flexible interest-rate mortgages offering optional monthly payments, that allowed buyers to squeeze into modest homes with inflated price tags.
As the flexible interest rates of such loans reset, though, payments and overall debt can balloon.
"You just can't have a median income of $58,000 to $60,000 and live in a $400,000 house," said David Levin, a Delray Beach real estate consultant. "It just doesn't work. You don't need a Ph.D. to understand that $2 will not allow you to afford $3."
But, he added, "people wanted to believe."
By McCabe's estimates, more than one of every two mortgages inked in 2005 had an adjustable interest rate. The Post's review of mortgage defaults in Palm Beach, Martin and St. Lucie counties from Jan. 1, 2005, to March 31 of this year found that roughly half of the more than 2,100 troubled borrowers had loans with adjustable rates.
Yet, many believe defaults linked to adjustable rates are only the beginning. Interest rates on more than $1 trillion in such mortgages will be adjusted in the next 18 months.
"Many can go up as much as 2 percent in the first adjustment," McCabe said.
Adding to the financial burden are two unexpectedly big bills facing Florida homeowners: Mortgage rates are resetting upward just as post-hurricane rate hikes in home insurance are pummeling property owners. And Florida Power & Light Co. bills have grown an average of 19 percent since January.
Not every area has been hard-hit. Martin County, for instance, recorded just one foreclosure-related filing for every 2,112 households.
But with 8,898 properties entering some stage of foreclosure last month, Florida earned the unsought distinction of recording the second-highest number of mortgage defaults of any state in the country, trailing only Texas. In rate of growth of foreclosures from April to May, Florida is one of the top 10 states nationwide.
Even the relatively positive national figures are tinged with a sobering footnote: The rate of increase in foreclosures across the country may have slowed to 2 percent from April to May, reports RealtyTrac, but it is still 28 percent higher than May of last year.
The lenders who allowed such should bear a good chunk of responsibility.
It's not that big of a surprise.
Here in the panhandle, the cost of houses skyrockted after Ivan, but wages stayed the same. I know prior to Ivan, me an the Mrs. were looking at buying, but immediately afterwards, we couldn't afford it. The things are just now getting to a price where we can start thinking about buying again.
Maybe if enough of these foreclosed houses go on the market, the prices will fall even further.....
PB County is awash in "For Sale" signs. There is a glut of overpriced, overvalued homes here. The bill is coming due for the naive who jumped on the real estate wagon while cluless of the future risks. Live and learn.
No...
Foreclosures are up across the country. That pop we will be hearing this year will be the housing bubble.
Stupid liberals, living beyond their means.
So they went from 1 in every 870 homes to 1 in every 821 homes. Yup, we're doomed!
I don't think it will be a pop, more like a steady leak. But in the end the results will be the same. Just slower.
I read somewhere that 25% of the existing mortgages are underwater, underlining the bubble mentality of the last decade.
In Mass it is about 1 in 350.
Like I said, we're doomed.
(Denny Crane: "Every one should carry a gun strapped to their waist. We need more - not less guns.")
Skyrockets.
That steady leak will feel like a BIG POP to the person losing his home.
Why not? Are you in the lending industry? Do you think they told the borrowers the pickle they could soon be in? I'm not saying the borrowers don't bear the responsibility either but lenders, who wouldn't sign up for these loans themselves, should be looked at and not walk away without account. If you disagree, fine. Let's have the debate. It would be helpful if you would articulate your position other than just the word "no." Perhaps you can convince me.
The people who bid up prices to astronomical levels when they couldn't afford them hurt other people who would like to purchase a home, but cannot also afford the astronomical prices. They end up pricing others out of the market with their own foolishness, and deserve what they get when they can't afford to make their payments.
Yes it will. They will have to go back to living within their means. Home equity went through the roof here as prices jumped, and a lot of people refied to the max on their existing homes as well. I refied as well to put in a swimming pool and cabana, but went from a 30yr to a 15yr. But the interest I refied at was fixed at 2% less than my old 30yr mtg. was. So my actual out of pocket cost was only about $200 a month, while knocking off 5 years on the 20 I still owed. A win win for me.
If you declare bankruptcy in Florida your house can't be taken from you. These foreclosures will hit the "house flippers" who artificially drove up the price, making housing unaffordable to begin with. They gambled and lost.
Ooops.
Many state and local governments would probably be bankrupt if private sector standards of solvency were applied. That said, their crises will significantly up the cost of home home ownership with continued skyrocketing property taxes in many locales.
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