Late Florida Mortgage Payments Still Soaring

Overdue Florida mortgage payments continued to soar over the final three months of 2006, and soared over first fiscal quarter of 2007, the Palm Beach Post reported Tuesday.

The late payments invariably lead to foreclosures, which in Florida set a new record as borrowers with troubled credit fell behind in their payments.

The picture of an ailing Florida housing market - and of shaky borrowers standing on their last legs - was equally dismal as the Mortgage Bankers Association released its quarterly snapshot of state mortgage markets.

New foreclosures jumped to a record high of 0.54 percent. The previous high was 0.50 percent in the second quarter of 2002 as the U.S. economy tried to recover from the 2001 recession, the MBA said.

The survey of 43.5 million first mortgage loans nationally - about 80 percent of all outstanding home loans - drove yet another nail into the coffin of the five-year housing boom and ended any doubt the boom has gone bust.

A once-sizzling housing market in the Sunshine State has given way in recent months to some of the highest foreclosure rates in the nation, leaving Florida mortgage holders in a world of trouble from the Panhandle to ther Keys.

Florida mortgages overdue for 30 days or more in the fourth quarter of 2006 climbed to a record 4.86 percent of all loans tracked - up sharply from the same period in the previous year, when 4.66 percent were delinquent.

“As Florida was rocketing up in values, we had lots of investors that bought homes with the expectation of flipping these homes,” said Jim Sahnger, vice president of Palm Beach Financial Network in Sewall’s Point.

“Many of these people are now over-leveraged or they’re ‘upside down’ - they owe more than their house is now worth.”

The bleak report comes on the eve of the traditional spring home-selling season. Surging Florida home loan defaults and foreclosures could dump as many as 500,000 more properties onto the already bloated inventory of unsold homes, analysts say.

The report echoes a widely discussed report from Lehman Brothers Holdings this week that warned mortgage defaults could rise to $300 billion this year if home prices plunge, and tightened lending standards prevent homeowners threatened with foreclosure from Florida mortgage refinancing.

In Florida, past-due mortgages led inexorably to record new foreclosure filings in the fourth quarter of last year. The percentage of Florida home loans for which foreclosure began more than doubled from the same period in 2005, rising 24 basis points to 0.45 percent from 0.21 percent.

By loan type, subprime mortgages - bad credit Florida mortgage loans for people with no credit history or bad blots on their credit background - performed much worse than prime mortgages, as expected.

During the past five years, subprime loans have more than doubled in share, amounting to nearly 20 percent of all loans in 2006.

The delinquency rate for subprime loans in Florida in the fourth quarter was 12.53 percent, up 139 basis points from the fourth quarter of 2005, the survey showed. The default rate for prime loans in Florida was only 2.69 percent, up from 2.62 percent in fourth quarter 2005.