Foreclosure News

Foreclosure Defense

The big banks are back in the foreclosure business. After a year of fewer foreclosures, as bankers reeled from revelations that they were falsifying documents in foreclosure cases, the latest monthly numbers suggest banks are starting to repossess houses again.

In October, foreclosure actions rose 44 percent from the month before in Charlotte County, 20 percent in Sarasota County, 37 percent for Florida and 7 percent for the country as a whole, according to data from RealtyTrac, an Irvine, Calif., market research firm. Only Manatee County bucked the state and national trend. Its foreclosure actions fell 25 percent from September.

The overall rise in foreclosures was welcomed by real estate agents who have been frustrated by what they view as artificial supply shortages in the face of strong investor demand. But if foreclosure filings keep increasing in the coming months — as expected — it could drive home prices down again and may make it even more difficult for non-distressed owners to sell.

"It's supply and demand," said Dennis Black, a Port Charlotte real estate consultant. "If you increase the supply, prices will go down unless more buyers appear." But regardless of what happens to prices, Black is among those who are relieved that banks are putting their processing problems behind them and are back to cleaning up the foreclosure mess.

"There are a tremendous number of unprocessed properties sitting on the sidelines and supplies are not going to slow down any time soon," Black said. "But until we sell off this inventory and get building again, this state is not going to see a broader economic recovery."

What could make the situation worse before it gets better, experts say, is an increasing number of underwater homeowners don't see the point of struggling any longer. "People are worn out and the stigma tied to foreclosure is gone," Shari Olefson, an attorney with Fowler White and author of "Foreclosure Nation: Mortgaging the American Dream." "At cocktails they are no longer embarrassed if they have stopped paying, they are embarrassed if they are still paying. And they are being empowered by the Occupy Wall Street movement."

For the time being, real estate agents are glad fresh supplies of foreclosures are coming on the market. "I got 15 new ones in September and 11 last month," said Drew Peterson, a foreclosure specialist with Re/Max Alliance Group. "Those were pretty strong months compared to the summer when I only picked eight or nine each month."

Peterson added that he expects the flow to increase during the last two months of the year and into "the season" when buying activity is strongest. "I've noticed most of the ones I'm getting are ones where the attorneys have been recently reassigned," Peterson said. "GMAC loans have been coming through in much higher numbers, and on almost everyone, the David Stern law firm has been replaced by a new firm."

Court records show that the 10 largest lenders in Sarasota and Manatee counties filed 591 early-stage, or lis pendens, actions in October — a 32 percent increase from the 447 filed in September. Bank of America — the owner of Countrywide — led the way with 170 early-stage filings, compared with 118 the month before.

At the same time, short sales — in which banks permit owners to sell properties for less than they owe on their mortgages — also are on the upswing, according to Adam Robinson, a Sarasota real estate agent who runs Sarasota-Foreclosures.com.

"Short sales in Sarasota County are up 62 percent from October 2010 — from 108 to 174," Robinson wrote in an email message. "Charlotte County Short sales increased 66 percent from 37 to 61, and even Manatee saw a 21 percent increase from 87 to 105." Robinson said banks have ramped up short sales because of the problems the were having getting their foreclosure paperwork in order and have managed to streamline the process.

Across the country, 230,678 foreclosure actions were filed in October, a 7 percent increase from the previous month, but still down nearly 31 percent from October 2011. Nevada, California, Arizona and Florida posted the top state foreclosure rates.

One in every 180 Nevada housing units had a foreclosure filing during October — more than three times the national average. California came in second with one out of every 243 housing units. Arizona was third with one out every 259 and Florida was fourth with one out of every 268.