Area of Concern: Delinquent Florida Home Loans Rise
Former sitcom stars aren’t the only ones with foreclosure problems these days.
Based on a survey by the Mortgage Bankers Association, more and more Sunshine State residents are falling behind on their Floria home loans, as interest rates on adjustable mortgages rise, insurance premiums soar and inflationary pressures such as high gasoline prices take their toll on family budgets.
According to these figures, 3.41 percent of 3.2 million mortgages being serviced in Florida were more than 30 days past due; an increase from 2.89 percent a year ago.
The state’s rise in delinquent Florida mortgage loans when compared to a year ago mirrors national patterns.
The future of late Florida home loan payments
Although the level of delinquencies remains relatively small, some real estate experts fear the problem could worsen in the months ahead - particularly if Florida home loan rates and inflation continue their upward trek.
At the moment, foreclosures remain near historic lows in the state. However, an uptick appears to be taking place, said Stuart Gitlitz, a South Florida attorney who specializes in foreclosures.
”What was a trickle is now becoming a drop,” said Gitlitz.
It’s true. Florida’s foreclosure rate of just .21 percent of loans is well below the national average of .41 percent, according to MBA data.
Moreover, the situation has vastly improved since 2002, when the state was shaking off the post-9/11 recession. For instance, in 2002 the Miami-Dade County Clerk recorded more than 14,500 foreclosure cases. In the first five months of 2006, by comparison, the number was just under 3,000.
Florida home loan problems ahead
One potential problem looming: The soaring popularity of adjustable rate Florida home loans in recent years. A federal study last year found ARMs were roughly one-third of the mortgage market in 2004, up from approximately 15 percent in 2001.
As home values leaped upward, the low initial rates of ARMs - typically considerably below that of fixed-rate loans - made houses more affordable to buyers. But that can come back to haunt consumers when Florida home mortgage loans are adjusted to market levels later.
Fortunastely, Florida homeowners have several factors working in their favor. The labor market remains strong, for instance, with unemployment in Miami at just 3.5 percent and 2.8 percent in Broward. The South Florida housing market benefits from these numbers.
This means homeowners who were having trouble holding on to their home could likely find a buyer on their own before losing it to foreclosure. In general, these circumstances open up avenues for affordable Florida home loans as sellers look to get out from high payments.
”In prior quarters we have indicated a number of factors, including the aging of the loan portfolio, increasing short-term interest rates and high energy prices, which are putting upward pressure on delinquency rates,” said Doug Duncan, chief economist of the Mortgage Bankers Association. “The strong economy and labor markets are offsetting positive factors that were particularly important in the first quarter.”
Ken Thomas, a Miami banking analyst, doesn’t see a housing bubble bursting. Historically, waves of foreclosures can wreak havoc on the nation’s banks. But today the banking system is enjoying prolonged prosperity. On June 24, it will have been two years since the government has had to bail out a failing bank, for example.
The main problem facing those in the state is the abundance of risky Florida home loan. These nontraditional Florida mortgages cause problems down the line.
