Tampa Bay Mortgage Default Numbers Conflict Amidst Various Reports
The number of Florida home loans going into default in Tampa is increasing. By how many, though, isn’t clear.
ForeclosuresDaily.com recently began to track foreclosures in the region. Its numbers for both October and November saw increases of between 45 and 53 percent year over year, including a 111 percent spike in the Sarasota housing market and Manatee county in October.
Reasons for Florida foreclosures
Increasing insurance rates, higher property taxes and a host of other problems have taken the blame for the increase in foreclosures. But if a culprit is to be fingered, housing speculation and adjustable rate mortgages are really to blame, say real estate practitioners.
A lot of people were approved for Florida mortgage loans that maybe shouldn’t have necessarily qualified, said Mike Kane, president of ForeclosuresDaily.com.
“With Sarasota and Manatee, there was a big appreciation (in home values), and now that’s slowing down,” Kane said. “Things had been appreciating so fast that no one wanted to think that it was going to slow down and stop. What happened, though, is that it came to a screeching halt. People are stuck with these ARMs, they can’t [Florida mortgage refinance] and take money out because there’s no equity, and that’s what is causing the increase in delinquency.”
More than 40 percent of mortgages are adjustable rate these days; people with those Florida home loans started seeing monthly payments rise over the summer to have an impact now, Kane said.
Different numbers
But the numbers are different at RealtyTrac, the Irvine, Calif.-based foreclosure broker. Its data shows foreclosures as staying mostly even in the Tampa Bay housing market for the first 11 months of 2006 compared to the same time period the year before at around 24,000 filings.
In fact, while RealtyTrac shows an increase between October 2005 and October 2006 of more than 1,000 filings, its November numbers went a different direction from 2,233 in 2005 to 1,415 in 2006.
“We’re coming out of a period where foreclosures were below historical averages that was largely out of the real estate boom we just came out of,” said Rick Sharga, VP of marketing for RealtyTrac. “When there’s a real high appreciation rate on housing and when there are a lot of buyers in the market, it tends to keep the foreclosure rate down. But the housing market has slowed down considerably, and it creates an imbalance of inventory of housing in the market.”
Speculators Fueling Foreclosures
Pinellas County has witnessed foreclosure filing jumps of 74 percent and 53 percent respectively in October and November, according to Kane’s data, showing that even “built-out” counties were not immune to the problems following the rash of speculative purchases over the last two years.
“The three things that I have seen [causing foreclosures] is an increase in insurance, the increase in property tax and the maturing of adjustable rate mortgages,” said Askia Muhammad Aquil, executive director of St. Petersburg Neighborhood Housing Services that offers foreclosure counseling. “People got into ARMs, and it was not necessarily a bad ARM. They just were not prepared for the increase in their mortgage payments along with everything else.”
Aquil said he expects to see more and more people seeking protection from these dangerous Florida home loan products coming through his offices as late as the end of next year, and RealtyTrac’s Sharga said he was in no position to disagree.
“The foreclosure rates will continue to increase into 2007, not at the rate of increase we’ve seen this year, but they will still go up,” he said. “Places where the housing market accelerated too rapidly, like Florida, are probably the first ones to get hit the hardest. There was a lot of speculative buying going on. The seasoned investors know how to play the game, but the novices, they were coming in at the peak of the market in any investment scenario and are at the most risk of getting burned, and they did.”
