South Florida Had 150 Foreclosure Filings Per Day in Q3, Pace Down 42% From Last Year

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According to a new report by Bal Harbour, Florida-based Condo Vultures, lenders filed an average of 150 foreclosure actions per day in the tricounty South Florida region of Miami-Dade, Broward, and Palm Beach counties in the third quarter of 2010.

As significant as that figure is, the current pace represents a 42 percent decrease in foreclosure actions on year-over-year basis compared to the third quarter of 2009 when lenders initiated 259 filings per day in South Florida.

For the year, South Florida foreclosure filings are down 36 percent to an average of 179 filings per day between January and September of 2010. During the same nine month span in 2009, lenders filed an average of 279 foreclosure actions per day, according to the report produced using Clerk of the Court records in Miami-Dade, Broward, and Palm Beach counties.

At the current pace, lenders are projected to file fewer than 65,000 foreclosure actions - or 176 per day - in 2010, which would represent the lowest annual total since 2007 when 33,000 filings, or 90 per day, were initiated. In 2009, lenders filed 98,000 foreclosure actions, or 268 per day, up from nearly 76,000, or 208 per day, in 2008, according to the report.

"New foreclosure filings are slowing dramatically in South Florida," said Peter Zalewski, a principal with Condo Vultures LLC. "Foreclosures actions - the first step in the repossession process - are still a significant problem for the region but the housing epidemic appears to be losing some momentum. The decrease in filings raises a fundamental question of whether fewer borrowers are defaulting on their mortgages or whether lenders are seeking other options besides the foreclosure process to deal with nonperforming residential loans."

"We are leaning toward the latter to explain the decrease in new foreclosure filings in South Florida."

The shear cost of the foreclosure process compared to short selling a property is seen by many industry watchers a key reason for the drop in total filings.

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 attorney 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 Peter Zalewski.

In the end, repossessed properties sell for about the same price as short sales, which are quicker and cheaper to complete.

Short sales now account for about 30 percent of the nearly 69,000 residences currently available for resale in South Florida compared to bank-owned properties that represent about seven percent of the inventory.

Lenders initiated more than 13,500 notices of default, or Lis Pendens, between July and September of this year, a sizeable drop from the same period a year ago when nearly 23,300 actions were submitted, according to the report.

On a county-by-county basis in the third quarter, Broward, where Fort Lauderdale, Hollywood, and Pompano Beach are located, led the region in foreclosure filings with nearly 6,750, or an average of 75 per day. Compare that figure to the third quarter of 2009 when Broward experienced nearly 11,650 foreclosure filings, or 129 per day, in the same 90-day period. This represents a 42 percent decrease in filings.

Palm Beach County, where Boca Raton, Delray Beach, and West Palm Beach are located, ranked second in the region in the third quarter of 2010 based on more than 4,000 foreclosure filings for an average of nearly 45 per day. A year earlier in the third quarter of 2009, Palm Beach County experienced nearly 7,100 foreclosure actions for an average of 79 per day.

Miami-Dade County, where Aventura, Key Biscayne, and Miami Beach are located, ranked last in the region with less than 2,750 new foreclosure filings in the third quarter. That is an average of 31 per day. A year earlier, Miami-Dade experienced nearly 4,600 foreclosure filings for a daily average of 51 in 2009, according to Peter Zalewski.

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