South Florida Mortgage Problems Soar, Hurt Minorities

Beneath the picture of domestic calm in a Bunche Park neighborhood of Miami Gardens, the small neighborhood is being ravaged by foreclosures.

Amid a weakening South Florida housing market, foreclosures are mounting with staggering speed.

Florida mortgage foreclosures have tripled in Miami-Dade County and more than doubled in Broward County from this time last year.

Since January, lenders have started to take over nearly 9,000 properties in Miami-Dade and close to 8,000 in Broward County, with thousands more home mortgage foreclosures pending from 2006.

Florida is still slightly below the national average for the percentage of mortgage loans in foreclosure.

But that’s changing fast - Florida mortgage defaults outpaced all but Nevada in new foreclosures from January-March.

The surge in Florida mortgage loan woes is due, in part, to speculators now saddled with souring investments, but also to borrowers who got high-priced loans during the boom.

Among the hardest hit are the residents of low-income, largely minority areas like Bunche Park, where Michelle Mincey’s home was scheduled for auction May 31.

Mincey, 50, says her parents struggled to keep up after another property they owned burned to the ground several years ago.

Now the household of eight, including five children, is waiting for eviction. Mincey doesn’t know where they will move.

In Bunche Park, signs tacked on lamp posts offer reverse mortgages to the elderly and foreclosure rescue services to others. Piles of furnishings litter the streets, evidence of evictions.

This ZIP Code, 33054, has one of the highest Florida mortgage delinquency rate in South Florida. The main reason lies in subprime loans.

Earlier this decade, financial institutions eagerly loosened their lending standards and gave many millions in bad credit Florida mortgage loans to borrowers with less than stellar payment histories.

Florida homeowners are shouldering about a tenth of the nation’s overall debt in that department - more than any other state except California, according to data from First American Loan Performance.

Roughly 23 percent of Florida home loan holdings in Miami-Dade County are subprime, and 18 percent in Broward. In areas such as Miami Gardens, home to Bunche Park, it’s more like 66 percent.

Many subprime loans start with a teaser rate, which lenders raise up over time. Others allow no doc loans or stated income loans, with no real verification.

Interest rates are often 3-6 percent points higher than usual, making such home loans more expensive for borrowers and among the most profitable for lenders.

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