Foreclosed Properties Rise in Florida Housing Market
If home ownership is the American dream, the scene that plays out every week in Room 385 of the Broward County Courthouse is the American nightmare.
“Case No. 06-19776,” intoned the auctioneer, a foreclosure clerk named Barbara Pendergrass.
Near the back, Earl Lawrence leafed through his thick black binder and looked up the property, a small townhouse in Tamarac.
His research sheet told the story: Bought for $65,500 in September 2000, a foreclosure judgment for debts totaling $188,000 last December.
“They borrowed themselves right out of a home,” said Lawrence, 46, of Hollywood, a real estate investor who has been coming to the public auctions for 25 years.
The Florida housing market has more foreclosures in the pipeline than any other state - 19,144 in February - according to RealtyTrac, a national firm that tracks the numbers.
Much of the coming misery will be concentrated in South Florida, where homeowners have been socked by high prices, high property taxes, soaring insurance premiums, along with gimmick mortgages that have blown up in their faces.
The crowd of about 50 in the cramped room was mixed with lawyers, Florida mortgage lenders, savvy old pros and curious newcomers eager to pounce on others’ misfortunes.
The auctions are held every Wednesday and Thursday at 11 a.m. Those losing homes usually don’t show up. But their broken dreams are always here. There were no bids on the Tamarac townhouse Thursday, apart from the minimum $100 that the foreclosing bank made to formally seize the property.
The same thing happened with most of the 88 properties up for auction last week.
The real estate market has become so uncertain, and the debts racked up on these properties so high, even the vultures aren’t nibbling.
“Would you buy a property for $420,000 if you could only sell it for $400,000?” said Adnan Kabbara, 55, of Weston, a developer and contractor who has bought homes at auction for four years.
Properties that would have attracted a bidding war a year or two ago, when the real estate market was soaring, now stay with the lenders. The banks sell them through major national real estate firms, more frequently at a loss.
“The party’s over,” said Lawrence.
It’s over for homeowners who used their homes as ATM machines, got maxed out on home equity loans and refinancing, and now have nowhere to turn. It’s over for lenders who gave credit to almost anybody, offering zero-down, adjustable-rate mortgages to risky borrowers. And it’s over for the investors who thought they could make an easy killing on real estate.
You’d think with more foreclosures, there’d be more opportunities for the opportunists. But the auctions have become ultra-conservative, with only a handful of properties triggering bids.
When a property does get action, a high-stakes poker game erupts.
“There’s an enormous amount of competition,” said Lawrence. “There are so many people trying to get the few viable properties, they get bid up to the point of razor-thin margins.”
Click here to read the rest of this Sun-Sentinel article.