West Coast of Florida Foreclosures Blast Off Like a Moonshot

West Coast of Florida Foreclosures and Inventory Blast Off Like a Moonshot

The latest news coming from all counties in Florida about the Housing Crash is not good, despite the efforts of local NAR affiliates trying to convince buyers "There's never been a better time to buy a home!"

My new friend, Cayo Dave, a Key West blogger recently took the local NAR ad to task which had many inaccuracies in its claims "It's a great time to buy a home."

Dave's story is fleshed out with excellent charts and graphs which show you the real truth about inventory, pricing, etc from a National stand point.

Today, I thought I would add to Dave's work by taking a trip to the West Coast of Florida into three counties which are not covered as much as Hillsborough's Tampa/St. Pete, Naples, or Miam Dade/Broward Counties.

In the future, I will bring you more stories about housing all over Florida and show you how bad the Housing Crash is becoming on a state level.

Before I post some of the news, I thought it would help to have a state map of counties and big towns posted at the beginning of this blog.






Road Trip to Mannatee, Sarasota and Lee Counties

Our first stop, Mannatee County, is just above Sarasota and just below Tampa/St. Pete's Hillsborough County. Located on the West Coast of Florida, Mannatee County had some of the most affordable housing on the West Coast for commuters who worked in Tampa or Sarasota.

Then we will drop down to Lee County which is below Sarasota.

According to a recent Bradenton Herald Newspaper article titled "Foreclosures Through the Roof in Mannatee", the Housing Crash has reached an area which was once thought Bubble free:

Among many items we read:

A 45-year-old Bayshore Gardens house.

A brand-new, 4,100-square-foot house in Twin Rivers.

Two River Plantation houses just a few blocks apart.

A Holmes Beach house fronting the Gulf of Mexico.

Different houses in different locations with different owners, all with one thing in common: They officially fell into foreclosure Monday, continuing a record-setting surge.

Lenders have filed 573 foreclosure actions in Manatee County Circuit Court through the first four months of 2007, including a record 156 in April alone, according to the Manatee County Clerk of Court's Office. At that pace, the county's annual foreclosure-filing record - 901, set in 2002 - could fall as early as mid-July.

"We used to get, like, five (foreclosures) a day; Now it's sometimes as many as 15 a day," Very Reyna, a court clerk who handles foreclosure actions as they are filed, said Tuesday.

"It's set monthly records already this year, so a record year, I wouldn't be surprised if that happens."

While Manatee's 97 percent spike in foreclosure activity is high, it's even worse elsewhere in Florida, according to Foreclosures.com data.

The number of Lee County homes in foreclosure as of Monday is nearly 1,900 percent higher than at the same time last year, and the numbers in six other counties - including Sarasota - have more than quadrupled, the company said. Statewide, the number of homes in foreclosure rose to more than 49,000 as of Monday.

"It's bad, it really is, and I think it's going to get worse," said Ryan Snyder, of Snyder Law Group, which specializes in real estate law and works with local banks and at-risk homeowners.

What Caused the Florida Boom in Housing?

Anyone who followed Housing during the recently deceased Buyer's Panic, knows that EZ Credit and Hybrid Loans fueled the greatest run up in Florida Real Estate prices since the Great Florida Real Estate Crash of 1928.

Like Kindergartners drunk on a sugar high playing musical chairs, you had thousands and ten thousands of home buyers who can't find a place to sit when the crazy Housing Bubble music stopped.

And stop it did.

Experts said the Florida housing market's boom and subsequent bust is behind the surge in foreclosures.

During the boom, housing prices artificially skyrocketed as investors and first-time homebuyers flooded the market. To entice them, lenders relaxed their lending standards and issued more-risky and unconventional loans such as interest-only and adjustable-rate mortgages.

When the market dramatically cooled off, many investors couldn't sell houses for what hey had paid for them. Those who took adjustable-rate mortgages began facing substantially higher monthly payments as the initial low interest rates were reset to market rate, sometimes jumping from 1 percent to as high as 8.5 percent.

"It was these specialty kinds of loans that did the most harm," Snyder said.

"Even the experienced banks were taking loans that, in hindsight, they know they shouldn't have. The bottom line is almost everyone is partially guilty. Everybody rode the wave of real estate."

Like the article says, " . . . almost everyone is guilty."

Yes, the blame can be laid at the feet of Realtors, homebuyers, appraisers, lenders, homebuilders, developers and everyone else who was on fire with greed during the Housing Bubble.

Notice too, that the article points out how some loans went from 1% to 8.5% overnight. To the inexperienced and ignorant homebuyer not good with math, that little 7.5% rise in an adjustable rate would mean payments which are 750% higher!

Now I don't know of anyone with an ARM which has suffered a 750% rise in their rates, nor have I ever read about anyone suffering this incredible rate increase.

But I do know this: there are hundreds of people in the Florida Keys who will be seeing their ARMs finally kick in and double their mortgage payments overnight. And everytime one of these hybrid loans kicks into the ARM portion, you can bet 1 out of 2 . . . at the very least . . . will end up in Foreclosure.

I say this because here's how most people thought they would deal with their home purchase should it turn against them: "We'll just sell the house and get back what we put into it."



The Thrill is Gone, The Buyers are Sitting on the Sidelines, Refinancing is Harder to Find. What is a Poor Homeowner Facing Foreclosure to Do?

Those days of finding a buyer standing on your doorstep are long gone. So what does a homeowner facing Foreclosure do? The options sure are bleak according to people interviewed for this Brandenton Herald article:

Ritch Workman, president-elect of the Florida Association of Mortgage Brokers, said the foreclosure spike likely would not have happened had the boom not fizzled so quickly.

"In the past, you could either sell the house before it went into foreclosure or you could refinance," Workman said. "But when you have a decline in values and a slow resale market, you can't sell or refinance as easily. When those two avenues are closed or narrowed, you're going to have an increase in foreclosures."

The surge in foreclosures hasn't prompted any proposed remedies in the Florida Legislature, and none is expected as this year's session is scheduled to end Friday.

But a bill awaiting Gov. Charlie Crist's signature that would require more financial disclosure to adjustable-rate mortgage borrowers is a good step forward, said Ritch Workman, president-elect of the Florida Association of Mortgage Brokers.

That bill was a reaction to the collapse of numerous sub-prime lenders who specialized in riskier loans.

"We as an industry have to make sure consumers know what they're getting into," he said. "Education is key."

Both Snyder and Workman said lenders have been willing to work with homeowners facing foreclosure and shouldn't be seen as the bad guy.

Snyder encourages those having problems making payments to talk to their mortgage company before they get too far behind.

"Be proactive. Pick up the phone and let them know," he said. "Believe it or not, some of those people behind the phones have the power to extend payment periods or work out a different plan with the homeowner."

In some cases, though, Snyder said he tells clients to go through foreclosure to limit their financial losses.

As for the future, market-watchers have varying opinions about whether the foreclosure surge will continue.

Snyder said he thinks it will as home prices continue falling and inventory grows.

"I don't know how people are surviving," he said. "Some homeowners are finding themselves in properties that are appraised at $100,000 to $200,000 less than what they owe on
it."