South Florida Mortgage Foreclosures Expected to Skyrocket

A deluge of South Florida residents are falling behind on their monthly mortgage payments, raising fears that many of the delinquent property owners will lose their homes to foreclosure this year and next.

“Who knows how bad it’s going to get,” said Richard French, a manager at SunTrust Mortgage and president of the Broward County chapter of the Mortgage Bankers Association.”

“It’s a little scary to think about.”

Escalating home values from 2000-2005 caused buyers to overextend themselves. Many took out short-term, adjustable-rate mortgages and are seeing Florida home loan payments spike as interest rates rise.

Higher property taxes and insurance also are putting homeowners in peril.

• Broward County had 1,168 property owners with late payments in March, a 331 percent increase over the 271 a year ago, according to Realestat.com.
• Meanwhile, Palm Beach County’s late home mortgage payments climbed 288 percent, to 888, from 229 last March.

Late Florida mortgage loan payments in both counties increased in each of the first three months of 2007. The quick rise “bodes ill for actual foreclosures down the road,” said Mike Larson of Weiss Research.

Marc Thomashaw, a vice president for Realestat.com, was more blunt.

“We’re set for an explosion [of foreclosures] to happen between now and the next six months,” he said Monday. Foreclosures in Broward and Palm Beach counties also rose in March, but at a smaller rate than late payments compared with a year ago, according to Realestat.com.

Broward’s foreclosures hit 543 last month, more than double the 247 filed for last March. Palm Beach County saw another 205 foreclosures last month, up 19 percent from 173 a year ago.

Nationwide, the number of homes entering foreclosure in the January-March period doubled from a year earlier, according to Foreclosures.com.

Homeowners with late Florida mortgage payments typically are behind three months or more and have been notified by their lenders that they intend to take back the properties.

In recent years, some of those owners avoided foreclosure through Florida mortgage refinancing or simply selling the homes.

But getting a Florida mortgage refinance isn’t as easy because lenders are tightening credit standards. Last week, for example, Citibank and other lenders sent notices that they’re discontinuing 100 percent financing.

That’s the case for all borrowers who can’t prove two years’ worth of income, said Louis Spagnuolo, a senior Florida mortgage broker in Boca Raton.

What’s more, a slumping South Florida housing market is holding down home prices and thus preventing recent buyers from selling quickly.

“A lot of these escape valves are now shut,” Weiss’ Larson said. “It’s not a pretty sight.”

Refinancing remains an option for people who have lived in their homes for several years because Florida mortgage rates still are relatively low.

“The equity these people accumulated over the past few years is a buffer that gives them some options without having to resort to foreclosure,” Greg McBride of Bankrate.com said. “If they have $50,000 in equity, they have 50,000 reasons to make the payments every month.”

SOURCE: Fort Lauderdale Sun-Sentinel