Florida is in the headlines once again. However, this time it’s not because of a hurricane or any other natural disaster. This time, Florida has made headlines for its high rate of foreclosures. According to a study report conducted by Attom Data Solutions, the foreclosure rates are the highest in Florida compared to the last few years.
The rates are higher than most of the states. Only Maryland, Delaware, and New Jersey had higher foreclosure rates.
What are the reasons for the rate spike?
The reasons are still unknown. It might be, ironically, due to growing real estate values. Home values have been increasing steadily over the last five to six years. Now homeowners are taking equity loans and second mortgages. Such additional borrowing can easily boost the rate of foreclosure.
In fact, analysts warn that the increasing foreclosure rates could impact higher-priced homes as well as the foreclosures start to put downward pressure on over-all pricing.
Interestingly, the Attom study says that the foreclosure number in Miami-Fort Lauderdale-West Palm Beach increased by 29% in July. South Florida now once again holds the dubious honor of being in the top three positions of geographical areas that face the highest foreclosure rates this summer. The other two areas are Houston and Los Angeles.
South Florida continues to show more elevated rates of foreclosure than the rest of the nation. South Florida has been burdened with an increase in mortgage default rates since Hurricane Irma devastated portions of the State last year. That explains why Miami posted one of the highest spikes in foreclosure starts across in large metro areas, logging a 29 percent increase.
Mortgage lenders gave many homeowners an abatement or a reprieve after last year’s Hurricane Irma and many folks got used to not paying their mortgage for a few months and then frankly decided to continue to not pay as opposed to catching up.
Senior Vice President and analyst at Attom, Daren Blomquist says that ups and downs are normal in foreclosure. He also said the hurricane might contribute to the increasing rate. He also believes that the rising rates in the foreclosure in other cities such as the San Diego, Fort Wayne, and Austin might have some deeper implications.
What are the implications of increased foreclosure rate?
Increased foreclosure rates can cause distress in the housing market. It can decrease the value of homes and can cause problems for the house owners. It can result in more underwater homes.
As supported by Attom’s 2018 second-quarter report, 1 in 10 properties in the United States with a mortgage remain underwater. This is going to trouble homeowners as foreclosures drive down overall housing values. However, this condition is certainly better than 2012. In the second quarter of 2012, 29% of homes in the USA and 49% of homes in Florida were seriously underwater.
Of course, increased interest rates are pushing homeowner’s payments up as adjustable rate mortgages are reset, leaving many people in a bind what to do. Sell the house, or hunker down, default and then either enter into some kind of loss mitigation or foreclosure defense.
But this increased foreclosure rate can impact both the housing market and most people. When folks are struggling with stagnant wages and income inequality, the increased rate will only make the situations more troublesome. The impact, unfortunately, will be disproportionately felt on moderate income communities within our tri-county area.
How to deal with increasing foreclosure rates
It is difficult for everyone to fully understand how the economy impacts foreclosure rates. You can always consult with us as your Fort Lauderdale Foreclosure Defense to find out the reasons for the increased rates and its implications.
In the interim let us just be thankful that we are not going through a foreclosure crisis like we did a decade ago.
From the Trenches,
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2500 Weston Rd #404,
Fort Lauderdale, FL 33331