Foreclosure Starts Spike in South Florida in July
Anyone who remembers the wave of foreclosures that crashed over Florida a decade ago must be disturbed by a new study from Attom Data Solutions. The study shows that foreclosure starts spiked in South Florida for July, well over the levels of a year prior. In fact, the foreclosure rate for Florida was higher than almost every other state in the nation.
A 35% Increase in Florida
As reported by the Miami Herald, data showed that in July 2018 1 in every 1,180 housing units in Florida was subject to a lis pendens, which is filed by a bank to warn the public about a foreclosure due to late payment. This represented a 35% increase over the number of lis pendens filed in July 2017. In fact, the rate of foreclosure starts in the Miami-Fort Lauderdale-West Palm Beach area increased for the third consecutive month. In May, the rate increased 4% and in June 35%.
Another researcher noted that the rise in foreclosures was happening primarily in working-class neighborhoods, such as Opa-locka, Pompano Beach, Homestead, and the City of Miami. However, the study contained some good news for wary investors or anyone simply worried about the economy. The rate of foreclosures in the entire United States was actually down 0.5%, which represented the lowest level since 2006.
Reasons for the Increase
According to Attom Data Solutions, the cause of the increase is not likely financial distress. The economy is humming in Florida, as in the rest of the nation. Instead, the spike in foreclosures was likely caused by last year’s hurricane season.
After Hurricane Irma, many banks granted borrowers a forbearance period for several months, but these grace periods are probably all coming to an end this summer, thus contributing to the spike in the number of lis pendens banks have filed.
Nevertheless, the spike in foreclosures in other markets is probably not due to the hurricane season. For example, Austin and Forth Worth also saw dramatic rises in foreclosure starts.
Cause for Concern?
As experts warn, foreclosures are usually the very first sign of financial distress that can ripple throughout the economy. Economists will be closely watching the economy in the coming months to see if there are other signs of economic weakness.
One sign is the large number of homes that are underwater—currently around 10%. A home is underwater when the mortgage is larger than the equity of the home, typically a sign that home values are receding after years of gains. Of course, this underwater rate is an improvement over 2012, when about 46% of homes in Florida were underwater.
Whether the rise in foreclosures is a sign of an impending recession in unclear. What is clear, however, is that the South Florida housing market has undergone a cooling down period after overheating for the past several years.
Speak to a Miami Foreclosure Defense Lawyer
If you have received a notice of lis pendens, or if you are behind on your mortgage, you should discuss your options with an experienced foreclosure defense lawyer in Miami. At Jacobs Legal, our team has years of experience fighting foreclosures and negotiating modifications. To learn more about how we can help, please contact us to schedule your free initial consultation.