South Florida foreclosures fall 58 percent, but signs suggest free-fall could end soon
The number of foreclosures in South Florida fell again in July, but there are signs that banks are beginning to move homes more quickly through the process, according to a report from RealtyTrac.
Foreclosures in the tri-county area dropped 58 percent compared to July 2010, a continuing trend due largely to the foreclosure freeze that began last autumn.
“I think we’re continuing to see in this last couple of months, but definitely in July, that some of the logjam is starting to break up in South Florida,” said Daren Blomquist, a spokesperson for RealtyTrac.
While the numbers are still down from a year ago, he said foreclosure are beginning to come off of what was an artificial low due to the document crisis.
There were a total of 7,302 South Florida properties with foreclosure filings in July. Miami-Dade County led the way with 2,814 such properties.
Blomquist said month-over-month data signals that an end to the freefalling number of foreclosures could be in sight. Miami-Dade saw an 84 percent increase in REO activity, or real estate owned by the bank, compared to June, and Broward County saw a 34 percent increase.
“That indicates that lenders are starting to kind of flush through these delayed foreclosures and complete the foreclosures on them with that REO status, which means they’re actually taking back the properties,” he said. “I think it’s actually a good sign that some of this uncertainty and delays in the market are being cleared up, which is really where we need to be with this.”
While much of the slowdown in foreclosure activity has come from the so-called robo-signing scandal that began at the end of 2010, banks could also have an incentive to slow down the process, Blomquist said.
“I think there is incentive,” he said. “[Banks] are, in a sense, competing with themselves. If they flood the market with too much inventory, they won’t be able to sell the inventory that may cause another dip in home prices, and they won’t be able to sell their inventory as quickly as they might have otherwise.”
In 2008, he said, there was also a change in the mark-to-market accounting rules that meant banks didn’t need to write-down the loss of real estate on their books until they actually sold it.
“That could create an incentive, as well, for them to not just dump their properties all at once, because that would put a hit to their books,” he said.