Real estate recovery hopes fizzle with rise of mortgages in default

Real estate recovery hopes fizzle with rise of mortgages in default

Foreclosure filings across South Florida continue to rise, as hopes for a housing recovery have fizzled.

The number of people behind on their mortgage payments in July almost tripled in Broward County from a year ago, from 517 to 1,430, according to Plantation-based Realestat.com. In Palm Beach County, the number nearly quadrupled from 298 to 1,063.

While actual foreclosure sales aren’t increasing as fast, experts say lenders, court clerks and lawyers are having a hard time keeping up with all the filings. They expect a significant surge by the end of the year as more adjustable-rate mortgages come due.

“Everybody’s inundated and overwhelmed,” said David Dweck, founder of the Boca Real Estate Investment Club. “Sales are taking longer to get to the courthouse steps.”

Circuit Court Judge Jeffrey Colbath handles all foreclosures in Palm Beach County. He devotes a day and a half a week to the 7,000 cases in his division but says he might have to set aside even more time in the months ahead.

“There are a lot of different stories that lead people into my world,” Colbath said Friday. “The worst of it has not come yet.”

Last month, Broward’s foreclosure sales increased 70 percent from a year ago, from 224 to 381. Such sales were flat in Palm Beach County, with 183 in July compared with 187 a year ago.

Deerfield Beach foreclosure lawyer Brian Rosaler said he’s working seven days a week, often into the night, to keep up with all the filings.

“In Broward, they can’t get the cases clocked in fast enough,” he said. “All of us involved in this, we’re working our tails off.”

Experts mostly blame the trouble on adjustable-rate mortgages made to borrowers who bought houses and condominiums that shot up in value during the housing boom from 2000 to 2005. People who secured those risky loans found out that they couldn’t afford the monthly payments once interest rates rose.

Increases in property taxes and insurance rates throughout the region also have made it difficult to pay the monthly mortgage.

“A lot of people got into more house than they could afford,” said Lewis Goodkin, a Miami-based housing analyst.

People with late mortgage payments that result in foreclosure filings are behind by at least 90 days and have been notified by their lenders that they intend to take back the homes.

Some of those owners avoid foreclosure by selling the properties themselves or working out deals with their lenders. But that’s becoming harder to do as the housing slump lingers and borrowers face increasingly tight credit standards.

Concerns about problems facing subprime lenders have rocked Wall Street this year. The companies, which make loans to people with poor credit, were accused of fueling the housing boom.

Dozens of lenders nationwide have closed as borrowers default on loans. Just this week, American Home Mortgage Investment Corp. of Melville, N.Y., announced plans to shut down, becoming the second-largest residential lender to fail this year after Irvine, Calif.-based New Century Financial Corp.Many foreclosed homes will go back on the market, adding to the glut of properties. Palm Beach and Broward counties have roughly triple the number of homes for sale now compared with two years ago, according to the Miami-based Keyes Co.

As a result, some experts who had predicted a housing rebound this year now insist it won’t happen until later in 2008 or even 2009.

“In October, more adjustable-rate mortgages are coming due,” said Marc Thomashaw, a vice president of Realestat.com. “I expect much higher foreclosure numbers early next year because of that.”

Paul Owers can be reached at powers (at) sun-sentinel (dot) com or 561-243-6529.

By Paul Owers, South Florida Sun-Sentinel

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