Florida Foreclosures for Sale, Underwater Loans Still High

by Peter Vernon on States

The number of Florida foreclosures for sale in the residential sector is still high because of the high number of underwater borrowers defaulting on their loans.

According to a research firm, almost 50 percent of the 4.5 million mortgage loans in Florida were underwater, putting the state second in a ranking of states based on percentage of underwater mortgages. In the July-September quarter, another 180,178 mortgages became underwater.

Additionally, three major South Florida housing markets were among the 50 U.S. markets with the highest percentage of underwater mortgages in the third quarter. Miami, Fort Lauderdale and West Palm Beach ranked 23rd, 31st and 41st, respectively, in the ranking.

Of the nearly 545,000 mortgage loans in Miami, 249,491 mortgages were underwater. Another 268,050 mortgages were nearing negative equity.

In Fort Lauderdale, 237,728 mortgage loans out of more than 458,000 loans were underwater, in addition to more than 253,000 loans approaching negative equity.

Out of the more than 348,000 mortgage loans in West Palm Beach, more than 151,000 were underwater and another 253,395 loans nearing negative equity.

With underwater mortgage loans in Florida and California accounting for 42 percent or 4.4 million of all underwater loans in the country in the third quarter, Florida foreclosures for sale continue to be in record numbers despite a slowdown in the pace foreclosures in the state.

Across the country, 23 percent or almost 10.7 million of all households with mortgage loans were underwater as of the July-September quarter. Another 23 million loans were nearing negative equity.

Based on a report from the Mortgage Bankers Association, 25 percent of all mortgage loans in Florida were in default by at least 30 days or in foreclosure as of September.

Of the 3.4 million mortgage loans in Florida that were serviced in the July-September period, 12 percent were in default. Of these defaulting loans, four percent were in default by 30 days, two percent were delinquent by 60 days and six percent were in default by three months or more.

According to the bankers, the default rate did not include mortgage loans that were already in foreclosure. Among the states, Florida ranked fifth in mortgage default rates and second in foreclosure actions started.

Florida, California, Nevada and Arizona accounted for 43 percent of total foreclosure actions started in the July-September quarter.