Florida Leads Nation in Foreclosure Activity

Florida is once again leading the nation in foreclosure activity.

A new report concludes that the Sunshine State has about 28,000 properties in some form of foreclosure, accounting for 27 percent of the U.S. total. With one new filing for every 254 households, the Florida foreclosure rate is more than four times the national average.

Foreclosure activity in the third quarter of 2006 has risen by 14 percent compared to the second quarter of the year. It was 39 percent higher than the same period last year.

Five states – Florida, California, Michigan, Texas and Colorado — now account for an estimated 66 percent of September’s foreclosure activity. California, the nation’s most populous state, had the second highest total of defaults, followed by Texas (the second most-populous) and Colorado.

“Florida and the western states are known for their predominance of negative amortization loans in which mortgage holders pay only interest, not equity, on their properties,” stated Tom Adams, president and chief executive officer of Bargain Network, which conducted the study, in a release.

Experts anticipate, however, that foreclosures will stabilize and continue to be an attractive investment vehicle. The flip side of this situation is that when a cooling economy and slower housing market force some people who purchased real estate using subprime Florida home loans to default on those loans in the months ahead, investment opportunities will arise.

Forecasters recently estimated that more than $200 billion in adjustable rate mortgages will “reset” at higher rates in 2006 and more than $1 trillion will reset in 2007. With all the Florida home mortgages subject to these rate increases, our state could find itself at the forefront of this disturbing trend.

This situation, compounded by the expected slowing of the economy and the housing market, which includes a growing inventory of unsold homes, along with some so highly priced that even exotic Florida mortgage options won’t be enough to get buyers in the door, may edge more homeowners into the foreclosure process.