Monday, March 05, 2007

Central Florida Foreclosures Increasing

Three years after Central Florida's housing market turned red hot -- prompting families and investors to buy, buy, buy -- thousands of people are in danger of losing their homes because they can't make their monthly payments.

The number of mortgage foreclosures is soaring this year. Foreclosures had been increasing -- first steadily, then sharply -- for months during the past year.

But in January, lenders filed 1,787 foreclosure suits in Central Florida, more than twice the number compared with a year earlier, according to research by the Orlando Sentinel.

And early results for February are even worse: In the first two weeks of the month, the number of suits climbed 63 percent compared with all of February 2006.

"Clearly, we are in a cooling of what once was a red-hot housing market," said Sean Snaith, a professor of economics and director of the Institute for Economic Competitiveness at the University of Central Florida.

The pace of foreclosures is what sets Central Florida apart -- although the same thing is happening across the state and, more modestly, across the nation.

And the worst may be yet to come, according to some experts. That's because there are so many adjustable-rate mortgages on the verge of pushing up monthly payments.

What's going on?

Many homeowners simply took on more debt than they could manage.

Some, to get the house of their dreams, signed mortgages with adjustable interest rates that are moving upward. Or they took on loans with balloon payments they could not make. Many high-risk borrowers had no choice but to accept higher interest rates. Rising insurance and tax bills have only added to the pressures.

The bottom line: Many homeowners can no longer afford their house payments. They've missed a few months, and now their mortgage company is suing, asking a judge to order the property auctioned off to the highest bidder to satisfy the debt.

Until recently, homeowners could often sell their way out of problems. Home prices were rising, and the market was full of buyers, especially speculators.

But prices have stagnated. Homes in Orange and Seminole counties now sit unsold an average of 90 days -- three times what it took to sell a residence a year and a half ago. And many speculators who helped buoy the market have disappeared. Courtesy of Orlando Sentinel 3/4/07.