South Florida Bank Repos up over 200% in Q3, 17,200 Properties Taken Back

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Before Bank of America and several other large banks put the breaks on nationwide foreclosure filings this past week, bank repossessions had already more than doubled in the tricounty South Florida region in the third quarter of 2010 as lenders took ownership to nearly 17,200 properties.

The number of properties in Miami-Dade, Broward, and Palm Beach counties that were repossessed between July and September of 2010 is more than twice as many on a year-over-year basis as the nearly 8,250 properties that were taken back in the third quarter of 2009.

"Bank repossessions - also known as REOs - are skyrocketing in South Florida in 2010," said Peter Zalewski, a principal with Condo Vultures LLC. "Lenders have taken back just about as many properties in the third quarter of 2010 as were repossessed in the third quarters of 2009, 2008, and 2007 combined. The repossessions are finally starting to flow after several months and years of delays in the court process.

"It is still uncertain what effect the announcement by several large lenders about freezing foreclosure proceedings due to administrative irregularities will have on bank repossessions in South Florida going forward. " 
 
Lenders repossessed 7,100 South Florida properties in the third quarter of 2008 and an additional 3,000 in the third quarter of 2007, according to the report compiled using Clerk of the Court records in Miami-Dade, Broward, and Palm Beach counties.

Since 2007, lenders have repossessed more than 108,000 properties in South Florida compared to filing nearly 256,000 foreclosure notices - also known as Lis Pendens -  in the tricounty region. This translates into 42 percent of all South Florida foreclosure filings resulting in a bank repossession, according to Condo Vultures.
 
Despite the spike in repossessions, bank-owned properties still represent only about seven percent of the 69,000 residences on the resale market in the tricounty South Florida region through Oct. 11, said Zalewski.

South Florida's residential inventory has increased on a weekly basis for 15 of the last 19 weeks, representing a six percent jump in available product since May 31. Still, the overall resale inventory is down more than 36 percent from November 2008 when there were nearly 108,000 residences available in South Florida.

Another key reason the number of bank repossessions has increased rapidly this year is the implementation of a new online auction technology being used by the South Florida circuit courts to clear the backlog. The online auction technology now allows hundreds of properties to be auctioned off more efficiently, industry watchers said.

Before the online auction software was adopted independently in the first quarter of this year, each of three South Florida counties fulfilled the last step in the foreclosure process by holding courthouse auctions as many as five days a week in attempt to clear the backlog of properties. The problem was, only so many auctions could be held each day despite the best efforts by the court officials.

With the new improved online auction process, lenders are taking title to properties from defaulted borrowers at a much quicker pace but still not as fast as before the South Florida real estate crash, industry watchers said.

At the start of the housing crash in 2007, lenders estimated the typical foreclosure would take about six months to repossess a property at a cost of about $40,000 in the loss of debt service, damage, court courts, and attorneys' fees.

By 2009 as the foreclosure filings were spiking, the process extended out to an average of 18 months with an estimated cost of at least $100,000 per repossession, according to the Condo Vultures report.

On a county-by-county basis in the third quarter of 2010, Miami-Dade County outpaced Broward County by less than 1,100 properties, according to the report.

In Miami-Dade County, where Aventura, Coral Gables, and Sunny Isles Beach are located, banks repossessed more than 7,500 properties in the third quarter of 2010, up 140 percent from the more than 3,100 repossessions in the same period in 2009.

For the year 2010, lenders have repossessed more than 18,500 properties in Miami-Dade.
 
In Broward County, where Fort Lauderdale, Hallandale Beach, and Plantation are located, lenders repossessed more than 6,400 properties in the third quarter of 2010, up 59 percent from the more than 4,000 repossessions during the same period in 2009.

In the first nine months of this year, lenders have repossessed more than 15,600 properties in Broward.

In Palm Beach County, where Boca Raton, Boynton Beach, and West Palm Beach are located, lenders have repossessed more than 3,250 properties in the third quarter of 2010 compared to less than 1,100 in 2009.

Since January, lenders have repossessed nearly 7,350 properties in Palm Beach County.

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