Fort Lauderdale Bank Foreclosures from Failed Negotiations

by Simon Lindsay on Foreclosure Crisis

Fort Lauderdale bank foreclosures are still growing despite the decline of foreclosure filings in other places largely because of the high number of delinquent Fort Lauderdale unable to obtain favorable modification agreements with their lenders.

Based on data released by the Treasury Department, only 16 percent of distressed homeowners nationwide who applied and qualified for loan modifications in September obtained favorable loan modifications. As of the last week of September, 3.1 million homeowners are seriously delinquent on their home loans.

According to Terri Schmitz, a home loan broker working with the Fort Lauderdale unit of AmeriFirst Funding, more than 3 out of every 4 homeowners who took out home loans in recent months need to restructure their loans because of job loss, reduced work hours and other financial difficulties.

But lenders in South Florida have been rejecting a lot of loan modification applications, according to distressed homeowners in the area. Wells Fargo, which acquired mortgage lender Wachovia in 2008, said it hired 12,000 new employees to help troubled homeowners. But according to reports, none of these newly hired employees were assigned to South Florida, which is among the most foreclosure-battered areas in the U.S.

Based on a nationwide foreclosure report for the first two quarters of this year, the metro area covered by Fort Lauderdale, Miami and Pompano Beach, had more than 85,300 foreclosure filings, representing nearly 4 percent of all residential units in the area. Many of these delinquent properties eventually entered listings of Fort Lauderdale bank foreclosures.

With a foreclosure ratio of one out of every 28 households, the metro area that includes Fort Lauderdale ranked 14th compared to the foreclosure rates of 202 other major metro areas.

Compared to the first two quarters of 2008, Fort Lauderdale’s foreclosure rate in the first two quarters of this year soared by nearly 41 percent.

According to Inside Mortgage Finance publisher Guy Cecala, one of the major reasons lenders reject loan modification applications is that they do not believe the process works. They cite the data released by the Office of the Comptroller of the Currency which indicate that many borrowers with modified loans redefault within months of loan modifications.

Additionally, Ertha Brathwaite, head of the Aventura unit of the Chase Homeownership Center, said that many homeowners expect to get loan modifications even if the values of their homes have gone down sharply. She explained that banks are also looking at ways to cut their losses.