Bank Homes for Sale in Florida, Georgia Trimmed by 2 Banks

by Simon Lindsay on States

The number of bank homes for sale in Florida and in Georgia in 2009 was cut down by two major regional banks operating in these two states.

Atlanta-based SunTrust Banks and North Carolina-based BB&T Corp. reduced the number of mortgage defaults and foreclosures by restructuring a big portion of their loans in 2009.

According to BB&T, its total debt restructuring reached $500 million in the last quarter of 2009, a significant increase from $140 in the previous quarter.

SunTrust, meanwhile, reported a total restructuring of $2.55 billion in the fourth quarter, an increase of 26 percent from the third quarter.

Both banks reported that mortgage properties in Florida represent their biggest unpaid mortgage loans. Majority of restructured BB&T loans involved commercial mortgages while 97 percent of restructured SunTrust mortgages were done for residential borrowers.

BB&T reported that 88 percent of borrowers with restructured debts have been paying interest while SunTrust reported 70 percent.

Despite income declines and losses, both banks reported financial results in the fourth quarter that exceeded expectations by analysts interviewed by Bloomberg. Both their debt restructuring efforts played a significant role in reducing distressed house numbers and in slowing down the entry of bank homes for sale into the market during the last quarter.

The net income of BB&T dropped to $194 million or to 27 cents per share, a drop of 37 percent from the previous quarter. SunTrust, on the other hand, reported a loss of 64 cents per share or a total of $248.1 million, narrowing its previous quarter’s loss of $347.6 million.

Burned by record numbers of residential and commercial loans, banks are now extremely stringent in their lending activities. But legislators in Georgia believe that bankers and brokers need to be regulated further.

The Georgia General Assembly is now debating on additional legislation against risky lending, which has led to a lot of fixer upper homes in the state. According to Mortgage Bankers Association analysts, Georgia had the third highest default rate in the third quarter. During this quarter, one in every eight holder of mortgage loans was in default by more than one month.

Georgia legislators will also debate a bill aimed at slowing down the process of foreclosure in the state, which is the fastest in the country.

The Florida Supreme Court, meanwhile, stepped up efforts to cut down the number of bank homes for sale across the state starting last year. It launched a mediation program under which lenders must work out payment options with distressed borrowers before pursuing foreclosures on them.

disclaimer