Florida lenders, keep foreclosing your mortgages, and you will become Florida landlords. Then you may understand that the values in the Florida real estate market have spiraled downwards, and will likely continue to do so further over the next 4-6 years. Send your own appraiser or realtor out to value the property for yourself. Then maybe you will understand some of the fear and concerns that Florida consumers are currently facing.
Please look at the current actual value of your property, and not just the current unpaid principal balance of your loan. Please also keep in mind that as you continue your foreclosure, you will also continue to add on additional losses on top of your unpaid principal balance couple with the simultaneous depreciation of your property.
The Buffalo News, May 7th, 2007
Freddie Mac Says Typical Foreclosure Costs $60,000 Dollars
According to one of Americas leading mortgage financier Freddie Mac, the typical foreclosure cost is nearly $60,000. And officials at HSBC North America, parent of HSBC Bank USA, HSBC Mortgage Corp. and HSBC Finance Corp., say their average loss on sale at foreclosure is 20 percent to 25 percent of the loan’s value. “We truly believe that foreclosure is the worst alternative for all parties concerned and go to great lengths to avoid foreclosure,” Brendan McDonagh, CEO of Illinois-based HSBC Finance and former chief operating officer of HSBC Bank USA in Buffalo, said in March testimony to Congress. “Financially, it is our worst alternative.”
Please also keep in mind that it is hard to even find buyers right now at the current market price for real estate in Florida. We have found this to be the case for a number of different reasons. First, is that a high percentage of would be Florida home buyers, already did so 3-5 years ago. These same consumers are either in foreclosure, happy with their current situation or can’t afford to get out of it. Second, it is just much harder to get loans right now in Florida. The collapse of the subprime market, coupled with the more stringent requirements of a prime lender, has greatly reduced the number of candidates for buyers. Third, homeowner’s insurance rates have increased by 400-500% in some cases. This drastic increase is largely due to the large mount of property damage caused by the wave of hurricanes that came through Florida in the past few years. Fourth, the taxable values at the real estate property appraiser’s offices may not truly reflect the current actual value of your property, as such values are often based on market conditions and transactions took place 1-3 years ago, even though current appraisals show a drastic reduction in property values. As a result, these higher taxable values have increased your borrower’s current annual tax liability, but have at the same time decreased your loan to value ratio. Many Florida consumers are being forced to try and file appeals on these increased values, but are not always successful. Fifth, Florida’s housing market is overstocked with inventory, and you loaned money on a condo, for right now you may have to forget about selling it altogether. Florida’s condo market is saturated with overstocked inventory. Lastly, we want to say it again here if you missed it earlier, the current actual value of your property has decreased dramatically.
As a result of the foregoing, there are very few qualified buyers who even want to purchase property in Florida right now. What we are seeing is most current potential buyers are investors who are not looking to pay even the current fair market value for your property, because, well, they are looking for an investment like you would. If you want a performing asset again, then stop foreclosing your mortgages. However, if you still absolutely want to be landlords, then by all means, go ahead. In becoming landlords, Florida would like to welcome you to various consumer legislation such as the landlord/tenant act, the federal bankruptcy code and the increased exposure for negligence and premise liability. In becoming landlords, Florida would also like to welcome you to the following:
- Non-Homestead Real Estate Taxes
- Property, Flood and Hurricane Insurance
- Roof Repair
- Air Conditioning Repair
- Cleaning Swimming Pools
- Boarding Up Windows
- Changing Locks
- Replacing Windows
- Fence Repair
- Termite and Pest Control
- Garbage, Sewer and Water
- Pressure Washing
- House Cleaning
- Owners Associations
- Increased Payroll and Labor Costs
- Code Enforcement Liens
- Special Government Assessments