Palm Beach County Mortgage Problems Continue
Mortgage foreclosures in Palm Beach County tripled in June compared with the same month a year ago, and they quadrupled in St. Lucie County.
These are painful signs the South Florida housing market slump continues unabated… and continues to spread throughout the region.
In Palm Beach County, 1,087 home owners were foreclosed on in June, up from 355 during June 2006, according to the Palm Beach County clerk’s office.
“Foreclosures are surging due to all the reckless lending we saw during the housing boom,” said real estate analyst Mike Larson of Weiss Research in Jupiter.
“Now, with home prices and home sales slumping, many stretched borrowers are reaching the breaking point.”
In St. Lucie County, where speculators madly gobbled up properties during the five-year boom, Florida mortgage lender groups foreclosed on 355 homeowners in June, compared with 79 in June 2006.
“Many people can tell you they can’t refinance now because their property is worth less than their mortgage is, especially those who bought at the pinnacle of artificial appreciation in 2005,” said analyst Jack McCabe, CEO of McCabe Research and Consulting in Deerfield Beach.
“Others do not meet the more stringent requirements needed to get a [Florida home loan] now.”
Meanwhile, in Martin County, 69 Florida mortgage foreclosures were filed in June, according to the county clerk’s office. Records for June 2006 were not immediately available.
However, previous foreclosure reports from a private source show a steady rise throughout the year in Martin County, like Palm Beach and St. Lucie County.
“I doubt this South Florida mortgage foreclosure wave will crest any time soon,” said Weiss Research’s Larson. “But hopefully later in 2008, or early 2009, the housing market will be in better shape.”
Analysts differ strongly on that timeline.
Jan Hatzius, senior economist for Goldman, Sachs & Co., believes that the amazing rise in Florida home prices since 2000 makes the state “the epicenter of the U.S. housing bust.”
Homes in Florida are 40 percent overvalued, he said.
But economic forecaster Sean Saith, director of the University of Central Florida’s Institute for Economic Competitiveness, says 40 percent is “probably excessive” and that a 10-15 percent home-price decline is the worst-case scenario.
“We’ve got a lot of long-term drivers in place that will support housing,” Saith said, ticking off “baby boomers, 40-year-low mortgage rates, strong personal income and low unemployment.”
Hatzius, again, disagrees — and even predicts that the current housing slump will push Florida into a recession.
Analyst McCabe of McCabe Research believes that Florida mortgage woes will continue to rise “unless we see state or federal intervention to try to help homeowners keep their homes.”
Massachusetts, Pennsylvania and Ohio are among states looking into ways to help homeowners climb out of the debt pit, and there also is interest on Capitol Hill.
Community advocates have taken up the issue, as well.
“If the prospect of soaring foreclosures doesn’t motivate Congress to take firm and deliberate action,” said John Taylor, president of the National Community Reinvestment Coalition, “I don’t know what on this God’s earth will.”
SOURCE: Palm Beach Post
