South Florida owners are losing their homes; foreclosures rates rise nationally.

South Florida owners are losing their homes; foreclosures rates rise nationally.
By Robin Benedick and Andy Reid South Florida Sun-Sentinel.
Posted July 9 2006

The number of foreclosures is ballooning as strapped homeowners can no longer make their mortgage payments or quickly unload properties in a cooling housing market.Among those most at risk: owners who used creative financing to stretch their budgets in the 2000-2005 housing boom. Buyers who took out a five-year adjustable-rate mortgage in 2000 are seeing their house The new payments usually are much higher, and homeowners looking for a way out typically can no longer sell in a few days or weeks, as they could during the height of the market. Today, a large inventory, high prices and rising interest and insurance rates make selling difficult. Those who can't hang on often have their homes taken over by their lender."I'm seeing foreclosures in many areas where they just weren't prevalent before,'' said Rhonda Light, who operates Foreclosure Reporting Service, a Hollywood firm that annually tracks thousands of foreclosures in Broward and Palm Beach counties. "The foreclosures we're seeing now are all over the board and in all different price ranges.''Nationally, foreclosures were up 72 percent in the first quarter of this year compared with the same period last year, according to RealtyTrac, a California firm that monitors the market.The pace of foreclosures in South Florida seems to be accelerating. Almost a third of Florida's 29,636 foreclosures were in South Florida in the first quarter of 2006.In Broward, foreclosures were up in the first quarter over the end of last year by 57 percent. In Palm Beach, they jumped 69 percent, and in Miami-Dade, they were up 17 percent.Overall, South Florida had about 3,000 more foreclosures than at the end of 2005 -- a jump of 40 percent."We're seeing people who have overbought and their rates are going up now and they can't afford their houses,'' said Brad Geisen, president of foreclosure.com, an online foreclosure listing service based in Boca Raton.For some, refinancing mortgages can prevent foreclosure.That worked for Dalia Hartwig of Boynton Beach.Hartwig said she and her husband fell behind on mortgage payments after injuries left them unable to work. When disability payments finally kicked in, they were too far behind to catch up. So they refinanced their loan to avoid the home being auctioned at the courthouse. Now, they can sell the house, pay off their debt and search for a smaller, more affordable house."We got behind on a couple of payments. ... It just got worse instead of getting better," said Hartwig, 53. "Thank God we were able to refinance."Others aren't so fortunate.Molly and Yvette Sealey of Miramar surrendered ownership of their home last year with the hope of being able to buy it back.The mother and daughter had fallen $15,000 behind on their mortgage, and turned to investors to help them keep their 3 1/2-bedroom home of 20 years. They agreed to become tenants, receiving no credit for the equity in their house.Meanwhile, they struggle to pay the rent, which is $1,500 a month. That's $425 more than they paid on the mortgage when they owned the home."This has caused me to cry every day,'' said Molly, 74, a retired nurse. "I wish I had never gotten behind in my mortgage. That was my biggest mistake.''Some struggling homeowners have paid high fees to would-be rescuers, only to find they were scammed. Lawyers, financial counselors and government agencies report an explosion in such complaints as more homeowners find themselves unable to keep up with their payments."We've been warning people that this is coming,'' said Doug Duncan, senior vice president and chief economist at the Mortgage Bankers Association in Washington. He said more than half the loans on the books today are less than three years old, and the peak delinquency period for loans is when they are three to five years old.In Miami, economists and real estate experts fear a glut of new condos hitting the market could cause a wave of foreclosures if investors can't sell their units or make the monthly payments.Eventually, perhaps in two to five years, the tens of thousands of condos being built will sell, perhaps at lower prices, predicts economist Stan Geberer of Hank Fishkind & Associates in Orlando.Stanley Gordon is in the foreclosure business, trying to make money off the homes other people couldn't afford to keep.He shops for bargains at foreclosure auctions held twice a week at the Palm Beach County Courthouse in West Palm Beach. He said he buys about one home a month and either fixes it up for a quick resale or holds onto it as rental property. Investors have to pay the full cost of the home the day they bid on it and risk shouldering the cost of unforeseen repairs.Gordon said he can't help but wonder why the previous owners of the homes he buys did not sell the properties before losing them."That is too emotional to think about," Gordon said. "It is just business.