Another Florida Bank Foreclosures Crisis Looming

by on States

The languishing economy, rising unemployment and crippling credit crunch are starting to strangle many commercial property owners that it would not be long and bank foreclosures in Florida would start to flood the real estate market again.

Already, the increasing number of commercial property owners who default on their mortgage payments are overburdening banks that have not yet fully recovered from the residential real estate market crisis.

Industry experts said that the current commercial foreclosures in the state are just on its infancy and they are expecting it to grow rapidly in the coming months. Commercial property owners are struggling to survive over declining rents, the credit crisis and empty warehouses and storefronts.

Experts said that the home-grown community banking industry in Florida is heavily laden with commercial real estate mortgage for shopping centers, office buildings, condominiums and hotels.

A market analysis showed that banks in Florida issued double the number of loans to commercial real estate compared with out-of-state banks. As a result, community banks will be forced to endure the worst commercial real estate meltdown.

Meanwhile, early this month, federal regulators took over Corus Bank, one of the biggest lending companies in Florida. The bank received a hard beating from many troubled construction and commercial real estate loans.

Industry experts said that the potential effects of the economic downturn are not only lost jobs or business that happened every time a project fails. Financially-strapped banks could not perform lending. Often, big banks and lenders will hesitate to provide any money to start projects or businesses or refinance loans when they reach maturity.

Economists said that if the current problem in the commercial real estate market could not be resolved, it would be another blow to the banking sector. They pointed out that problems in the commercial real estate market could extend the credit crisis, adding that it would be doubly difficult for borrowers to obtain loans.

A market analysis showed that over 53 centavos per dollar were lent by banks based in Florida to commercial property owners, compared with 24 centavos in every dollar lent by out-of-state banks.

For the first six months of this year, 11.2 percent of all commercial property loans issued by state banks were delinquent.

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