Southwest Florida Mortgage Foreclosure Surge Triggers More Uncertainty
This just in: A surge in home foreclosures is putting a major damper on an already sluggish Southwest Florida housing market.
The degree to which Florida mortgage woes will temper any recovery in sales, which show signs of rebounding in the Bradenton-Sarasota housing market, is difficult to gauge.
The number of foreclosures in the region spiked during May, and Manatee County was fifth in all Florida in terms of per-capita foreclosures.
However, the number being repossessed by lenders remains relatively small in the region, at about 5 percent of all homes in foreclosure.
The rapid rise and fall in Southwest Florida’s housing market left no one surprised by the foreclosure fallout, but the confluence of problems in the all-important business disturbs some market watchers.
“We knew it was coming,” said Steve Jonsson, president of Bradenton’s Flagship National Bank. “I’m not sure the housing market can get much worse, quite frankly.”
The shaky economy is also hurting home sales.
Insurance and property taxes have soared, gas is falling but remains close to $3 per gallon, and layoffs are hitting the boating industry, home builders and local governments in the region, Jonsson said.
“There’s too much uncertainty out there for potential buyers to make that major decision.”
Florida mortgage lender groups still have plenty of money to lend, but they have tightened standards to require stronger credit and more money down from borrowers, Jonsson said.
“They aren’t doing 95 percent loans like a couple years back,” he said. “If you put 10 percent down, have good credit and a good job, banks are more than willing to make loans.”
Several other Florida mortgage providers, including some of the state’s largest, such as SunTrust and Washington Mutual, declined to be interviewed about the foreclosures, saying it has negative connotations.
Bankers are worried, but are quick to note that homeowners in foreclosure remain only a small portion of their borrowers, said Bret Rock, spokesman for the Florida Bankers Association.
“The overwhelming majority of mortgage holders in Florida pay their mortgages on time and have never had any issues,” he said.
The default rate in the bad credit Florida mortgage segment of the market, which caters to borrowers with poor credit histories, has jumped in recent months as the housing industry has slowed and prices have fallen.
Late payments and new foreclosures on adjustable-rate mortgages made to people with spotty credit histories grew to all-time highs in the first three months of this year.
In Southwest Florida, the foreclosure hot spots remain in North Port and north of the Manatee River - two areas with large swaths of homes and condominiums that attracted investors during the recent housing boom.
Another substantial concentration was in Port Charlotte.
The number of foreclosure actions filed in Manatee County during May rose 164 percent from April. In Sarasota County, foreclosures rose 104 percent, putting it 10th in the the state.
Charlotte County foreclosures rose 74 percent, placing it 16th.
Three other west coast counties - Lee, Hillsborough and Pinellas - were in the top 20 statewide last month.
Southwest Florida has a particularly fierce post-boom hangover. Large numbers of homes are on the market as investors who bought during the boom try to cash out.
“It’s not that people are being kicked to the curb and losing their homes,” said Mark Vitner, economist for Wachovia Corp. “It’s more similar to the folks who were day trading in dot-com stocks and were losing their money.”
With 21,704, Florida mortgage loan foreclosures were second nationally, behind only California’s 39,659. Those two states had more investor activity in the real estate market than any others.
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