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23% of Florida home loans past due or in foreclosure in second quarter

WASHINGTON – Aug. 21, 2009 – As home prices fell and the job picture worsened, the percentage of Florida home loans either past due or in foreclosure hit 23 percent in the second quarter, outpacing any other state in the nation.The figure represents 807,000 loans, a staggering sum of the roughly 3.5 million mortgages outstanding in Florida.“Florida deserves special mention as the worst state in the country,” said Jay Brinkmann, chief economist of the Mortgage Bankers Association that released the numbers Thursday. “Nevada is a close second, but everyone else is far behind.”Florida, along with California, Arizona and Nevada – states that saw some of the headiest home price increases during the boom – represented 44 percent of the total number of loans in foreclosure nationally.Twelve percent of all Florida loans were in some stage of the foreclosure process as of June 30, with 10.8 percent past due by a month or more.Nationwide, 4.3 percent were in foreclosure and 9.2 percent were 30 or more days delinquent.Barring loan modifications that would help homeowners stay in their properties, the high number of foreclosures will likely result in more homes being put on the market for resale by lenders, potentially contributing to further price declines.Florida’s mortgage hardships swept across all loan categories, with so-called prime borrowers, or those with good credit, showing the biggest increases in delinquencies. This indicates job losses and falling home prices are taking a toll on a new set of homeowners.Between the first and second quarter, the percentage increase in delinquencies and foreclosures among borrowers with fixed loans even outpaced borrowers with subprime loans – or those sold to borrowers with spotty credit histories and staggering default rates.Delinquencies and foreclosures among prime borrowers rose from 10.7 percent to 12.42 percent in the second quarter.Among subprime loans, 52 percent of roughly 536,000 subprime loans tracked by the MBA were past due or in foreclosure in the second quarter, up from 51 percent in the previous three-month period.Delinquencies among prime-fixed borrowers are key because they reflect problems with the underlying economy rather than problems arising from the structure or underwriting of loans.“This is further confirmation of what we have been saying and expecting for the last year or more,” that these problems are being driven by fundamental issues in the economy, Brinkmann said.Falling real estate values often lead borrowers to walk away from their homes rather than continue to pay off loans worth far more than the properties. Until the employment picture improves – sometime in the middle of next year, Brinkmann predicted – delinquencies will continue to rise.Foreclosures should start tapering off about six months after that as the foreclosures cases are worked through the system and the homes are taken back by lenders or sold at auction.
Copyright © 2009 The Miami Herald, Monica Hatcher. Distributed by McClatchy-Tribune Information Services.