Florida Leads the Nation In Foreclosures
It was recently reported that there were 111,000 single family homes foreclosed in Florida last year. This number represents over 1/6 of the homes foreclosed nationally during that time span. The large number of foreclosures is big news for Florida, a state that traditionally has one of the slowest foreclosure timeframes in the country. The slow foreclosure process in Florida led legislators to pass a law that is expected to decrease the amount of time that a foreclosure remains in the court system. Accordingly, the recent report on the number of foreclosed homes last year is great news for proponents of the new law.
While many are rejoicing at the Florida real estate rebound, it is important to note that we still have a long way to go. In fact, over 7% of homes in the state of Florida are still in the process of foreclosure. Additionally, another 12% of the homes in Florida are in some form of pre-foreclosure. That means that almost 1/5 of the Florida housing market is in some form of foreclosure. A little premature to rejoice, don’t you think?
The speedy foreclosure law may ultimately speed up a recovery, as the law essentially calls for “cleaner” foreclosure files. Under the new law, lenders are required to present a set of more comprehensive documents to the Court, and Borrowers are tasked with finding issues with the filings up front, rather than late in the process. The law places the initial burden on the bank to prove they are entitled to a foreclosure and then shifts the burden to the homeowner to prove they should not be foreclosed.
These techniques may ultimately mean faster foreclosure judgments, but it does not necessarily correlate with more homes sold. The banks have not been in any hurry to release their foreclosed homes for fear of saturating the housing market. The low inventory in Florida has led to a spike in prices and ultimately more money in the bank’s pocket. It truly becomes an issue of supply and demand for the bank in the long run.
As we sit back and watch the effect of the new foreclosure law, the only thing that is sure is that banks will likely continue to turn to short sales as a viable option for properties in default. The short sale allows the bank to recover a fair price for the property and does not require them to keep the property on their books. Ultimately, it is a win-win for the bank. Therefore, options such as the short sale will remain viable for years to come.
If you are underwater on your home, or are facing foreclosure give us a call to discuss your options.