South Florida Mortgage Lenders Harass Troubled Borrowers

The fear of foreclosure has South Florida mortgage holders on edge.

Thousands of homeowners in Broward and Palm Beach counties can’t make their monthly mortgage payments and are getting sternly worded letters from lenders who threaten to seize their properties and resell them, likely at a loss.

As the Florida housing market meltdown continues, analysts predict a surge in foreclosures this year and next that will add to the glut of homes already for sale and further depress property values that have declined since last summer.

“It has the potential to get very ugly,” said David Levin, a housing consultant in Palm Beach County.

Jayne King, of Delray Beach, battled cancer, diabetes and other illnesses during the past few years. Last year, she and her husband fell behind on the monthly payments on their adjustable-rate Florida mortgage, as she was trying to make a dent in her hospital bills and he was out of work after two car accidents only weeks apart.

They filed for bankruptcy, promising to repay as much of their debts as possible. A lawyer worked out a plan with their lender that allowed them to keep their house. “I’m just one of many people caught up in this whole cycle,” said King, 55, a retired teacher and native Floridian.

Across the region, unexpected medical bills, rising homeowner insurance, property taxes and other costs of living have plenty of lower- and middle-income consumers on the verge of losing their homes. But experts mostly blame the trouble on unconventional home loans made to risky borrowers hoping to get into houses and condominiums that shot up in value during the housing boom from 2000 to 2005.

The number of people facing foreclosure has been building since January.

In April, the number of consumers behind on their Florida mortgage loan payments in Broward County ballooned to 1,135, compared with 248 a year ago, according to Realestat.com, a Plantation research firm. The number of people with late payments also rose sharply in Palm Beach County, from 174 to 814.

Actual foreclosures increased in both counties but at a much smaller clip. Homeowners with late house payments typically are at least three months behind and have been notified that their lenders intend to foreclose. People who secured adjustable loans found out that they couldn’t afford the monthly payments once Florida mortgage rates rose.

Some of those owners avoided foreclosure by selling the homes or refinancing. When the housing boom last year turned into a bust, it caused a glut of properties to sit on the market, and strapped homeowners couldn’t count on fast sales to bail themselves out of trouble.

Refinancing isn’t as easy now because home values are flat or dropping and lenders are tightening credit standards as more borrowers with weak credit default on Florida home loans.

“A lot of these people, God bless them, weren’t qualified to go into home ownership,” said Lewis Goodkin, a Miami-based housing analyst

SOURCE: The Sun-Sentinel