The number of new foreclosure cases involving property in South Florida leveled off last year, according to a market report.
Default Research, a data collection firm based near Pittsburgh, Penn., found that the initiation of foreclosure cases in South Florida decreased last year after soaring for two years.
“What we deal with is the initial foreclosure proceedings, which is the lis pendens,” or notices that litigation is pending, said Serdar Bankaci, CEO of Default Research. “We basically track properties that are initially being foreclosed upon.”
Default Research found a 13.6 percent decline last year in the number of foreclosure cases initiated by mortgage lenders in Miami-Dade, Broward and Palm Beach counties last year, following comparable year-over-year increases of 195 percent in 2008 and 177 percent in 2007.
“For years, we kept seeing 100 percent increases, or even higher, and last year, we didn’t have that. So that’s definitely a good sign,” Bankaci said. His firm tracks “how many people are entering foreclosure, versus how many houses are being sold at auction, so it’s a more forward indicator” of the pace of foreclosure activity.
But because so many South Florida foreclosure cases already are underway, “I don’t think the actual number of people losing their homes has peaked,” Bankaci said. In a Florida foreclosure, “it takes at least seven to nine months to go from the lis pendens stage to an actual sale.”
Peter Zalewski, a principal at Bal Harbour-based Condo Vultures, expects mortgage lenders to repossess at least 33,000 properties in South Florida this year, up from an estimated 30,000 last year.
He said more owner-occupants than investors are coming out on the losing end of South Florida residential foreclosure cases.
“Since ’09, they have tended to be real people losing their primary residence, as opposed to ’07 and ’08, when it was primarily speculators,” he said.
Zalewski also said his expectation of increased foreclosure sales could prove too pessimistic, citing “some optimism that the number of formal repossessions is going to go down” if other approaches to mortgage-default resolution become more common.
If mortgage lenders make greater use of alternatives to foreclosure, such as short sales and loan modifications, the pace of foreclosure activity in South Florida may ease.
“I believe that we’ll see fewer foreclosures” this year than last year “because I see more [loan] workouts taking place,” said Michael Cannon, executive director of Integra Realty Resources in Miami.
He cited official encouragement from the Obama administration to address the problem.
“There is a mandate from the feds to do more workouts with people,” Cannon said, “and that is happening on an increasing level.”