Foreclosure Filings Jump in South Florida

Foreclosure filings jump in South Florida
Mounting job losses, “underwater” mortgages lead to more foreclosure filings in South Florida

By Paul Owers, Sun Sentinel, April 15, 2010

Foreclosure filings rose last month by 38 percent in Broward County as homeowners struggled with unemployment and "underwater" mortgages, RealtyTrac Inc. said Thursday.

Broward had 6,341 homeowners in some stage of foreclosure in March, up from 4,599 a year ago, according to the Irvine, Calif.-based company that tracks mortgage defaults nationwide. Broward had the eighth-highest foreclosure rate among Florida's 67 counties, with one in every 127 housing units receiving a filing.

Palm Beach County filings in March totaled 3,983, more than double the 1,509 in March 2009. The county had the state's 17th-highest foreclosure rate.

The problem isn't likely to improve soon, as job losses mount and home price declines add to the number of homeowners who owe more than their properties are worth.

"We're going to continue to have a dark cloud hanging over our real estate market for some time," said Greg McBride, senior financial analyst with Bankrate.com in North Palm Beach.

Initial foreclosure filings in both counties were down substantially compared with February, perhaps an early indication that a government-sponsored foreclosure-alternative program started recently is working, RealtyTrac said.

The plan is designed to remove barriers to so-called short sales and promote deeds in lieu of foreclosures, in which homeowners hand back their properties to the banks. The plan took effect April 5, but some lenders were using it earlier this year.

The program is sure to be popular with people who want to get out from under onerous mortgages. But it will drag down home prices, creating more underwater borrowers who may fall into foreclosure, Fort Lauderdale real estate lawyer Shari Olefson said.

"I don't know that this is the answer," she said.

RealtyTrac spokesman Daren Blomquist said it's important to speed up short sales because that will clear the inventory of available homes and ultimately help the housing market recover.

Meanwhile, South Florida remains one of the busiest areas in the nation for loan modifications. A Treasury report on the Making Home Affordable program showed that the Miami-Fort Lauderdale-Pompano Beach metropolitan area accounted for 4.7 percent of loan modification activity under the program.

But those efforts aren't likely to ease the foreclosure crisis, according to the Congressional Oversight Panel, a watchdog agency monitoring the federal government's bailout program.

RealtyTrac compiles default notices, scheduled foreclosure auctions and bank repossessions. Not all homeowners who get notices lose their properties.

Florida had the nation's fourth-highest foreclosure rate in March, with one in every 149 housing units receiving a filing, RealtyTrac said.

In December, the Florida Supreme Court ordered the creation of a statewide mediation program for homeowners and lenders before a property can be sold through foreclosure.

Broward's 17th Judicial Circuit Court has appointed the American Arbitration Association to administer its mediation program starting July 1. Program details for the 15th Judicial Circuit Court in Palm Beach County are not yet clear.

A bill in Florida's Legislature that would allow banks to foreclose without going before a judge appears to have died.

While the state's clogged foreclosure system needs an overhaul, the proposed bill was too radical, said Rod Petrey, president of the Collins Center for Public Policy. The nonprofit group provides mediation services for four state circuit courts.

"With someone's home, where their family is, we ought to move very slowly in taking that away," Petrey said.

Staff writer Harriet Johnson Brackey contributed to this report. Paul Owers can be reached at Powers@SunSentinel.com. Copyright © 2010, South Florida Sun-Sentinel. Provided courtesy of Florida Sun-Sentinel: http://www.sun-sentinel.com