Mortgages

Florida: Still the Top Foreclosure State

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For the third consecutive month, Florida topped the list of states with the highest foreclosure rates, as outlined in RealtyTrac’s July 2013 U.S. Foreclosure Market Report.

One in every 328 housing units in Florida has a foreclosure filing, which is more than three times the national average and a 7% increase from this time last year. For 16 of the past 19 months, Florida has posted annual increases in foreclosure activity, including default notices, scheduled auctions and bank repossessions.

The Foreclosure State’s Dominance

Foreclosures abound from panhandle to peninsula in the Sunshine State: Of the 10 highest foreclosure rates among metropolitan statistical areas with a population of more than 200,000, nine are in Florida. Jacksonville, Fla., is No. 1 with one in every 230 units in foreclosure, followed by No. 2 Miami-Fort Lauderdale-Pompano Beach, No. 3 Port St. Lucie, No. 4 Ocala, No. 5 Palm Bay-Melbourne-Titusville, No. 7 Tampa-St. Petersburg-Clearwater, No. 8 Orlando-Kissimmee, No. 9 Pensacola-Ferry Pass-Brent and No. 10 Sarasota-Bradenton-Venice.

The only non-Florida area in the top 10 is Albuquerque, N.M., at No. 6.

Florida, along with five other states in the top 10, has a judicial foreclosure process.

“Foreclosures have to go through the courts,” said Marla Martin, communications manager for the Florida Association of Realtors. “It’s a longer process.”

What Opened the Floodgates

In June, Florida Governor Rick Scott signed House Bill 87, which expedited the foreclosure process, relieving the backlog of foreclosures held up in the judicial process. It was a victory for mortgage lenders.

“Florida was one of the hardest states to foreclose in for the longest time,” said Eddie Hilliard, branch manager of Integrity Home Loan of Central Florida. “They’re really starting to turn it on and get through these people. … That’s really why the numbers have gone up.”

HB 87 reduced the time frame in which a lender can file a deficiency judgment from five years to one year. Lenders must provide documentation that they have cause to foreclose, and homeowners have between 20 and 60 days to challenge that evidence.

The legislation, though controversial among homeowner advocates, is intended to reduce the state’s average time between the first foreclosure filing and bank repossession, which was 853 days when Scott signed the bill. The national average is 414 days.

Though Jacksonville has the highest metro foreclosure rate, foreclosures, short sales and bank repossessions make up less of the inventory than they did a few years ago, said Melanie Green, communications director for the Northeast Association of Realtors.

“We’re seeing all good news,” Green said. “Lender-mediated sales are going down; everything else is going up.”

Whether or not that will change as this influx of foreclosures hits the market won’t be known for a little while, Green said. But in Jacksonville’s increasingly competitive marketplace, bank-owned properties will sell quickly because of their low prices, Green said.

This could be a good opportunity for consumers looking to buy a home while interest rates are low. Homebuyers should check their credit scores and reports before purchasing, as a few points can impact the mortgage rates and programs for which they qualify.

You can get a free copy of your credit report once a year from each of the three major credit reporting bureaus, and you can check your credit score for free using the Credit Report Card.

Image: iStockphoto

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