Florida’s real estate market is about to get messy! That sounds like something the voiceover for a move trailer would say but it is actually happening in real life. We all know that Florida has one of the biggest foreclosure levels in America — which means in the world as well –, but few would have expected the problem to still be getting worse almost 5 years into the crisis.
But getting messy though? Unfortunately yes. We all heard about the dodgy foreclosure practices banks had been caught using in their haste to clear the backlog of mortgages in default. Well now it has been revealed that state attorney generals have told 5 of America’s largest banks that they will face up to $17 billion worth of civil-lawsuits unless a settlement can be found in the matter. According to the Federal Housing Finance Agency prices fell faster in the first quarter of this year than at any time since late 2008, so the last thing we need is banks further tightening the lending purse strings.
The affair has also caused another problem for the market; massive delays in the foreclosure process. According to Realty Trac Nationwide, foreclosures completed (REOs) in the first quarter of 2011 took an average of 400 days from the initial default notice to the REO. This is up from 340 days in the first quarter of 2010 and more than double the average 151 days it took to foreclose in the first quarter of 2007.
“Foreclosure activity decreased on an annual basis for the seventh straight month in April, bringing foreclosure activity to a 40-month low,” said James J. Saccacio, chief executive officer of RealtyTrac. “This slowdown continues to be largely the result of massive delays in processing foreclosures rather than the result of a housing recovery that is lifting people out of foreclosure,” he added.
“The first delay occurs between delinquency and foreclosure, when lenders and services are no longer automatically pushing loans that are more than 90 days delinquent into foreclosure but are waiting longer to allow for loan modifications, short sales and possibly other disposition alternatives. The second delay occurs after foreclosure has started, when lenders are taking much longer than they were just a few years ago to complete the foreclosure process,” Saccacio explained.
According to data from the Mortgage Bankers Association 3.7 million properties are seriously delinquent and have yet to have foreclosure proceedings initiated.
Of course none of these problems are bad news for international property investors; property in Florida is now one of the top choices among buyers from the UK and around the world according to many sources.