Glut of area foreclosures expected to swell

MANATEE — At first glance, case number 2009-CA-11764 is not much different than many others that have been filed in Manatee County Circuit Court this year.

In the suit, filed Nov. 12, a mortgage servicer contends a southern Manatee couple defaulted on their $49,500 loan by not making any payments since June. The servicer, acting on behalf of Fannie Mae, seeks to foreclose on the couple’s unit in the Shadybrook Village condominium complex.

But the case is notable because it was the 5,593rd mortgage foreclosure lawsuit filed in Manatee in 2009 — eclipsing a record high set just last year. The tally has since grown to 5,687 cases as of Friday, and is widely expected to exceed 6,000 when the year is over.

That was no surprise to court officials, foreclosure experts and those in the mortgage industry, who say the trend is unlikely to change anytime soon.

“I wish things were different, but I don’t think it’s going to be much better in 2010,” said Bob Stobaugh, the Gulf Coast Mortgage Bankers Association’s 2009-10 president.

He and others cite many reasons for their pessimism, including high unemployment; growing numbers of delinquent loans; lenders’ inability or unwillingness to modify loan terms; and ineffective mortgage relief programs.

“I hate to be a pessimist, but I also have to acknowledge reality,” Anne Weintraub, a Sarasota real-estate attorney and foreclosure expert, wrote in an e-mail. “It is my opinion that the amount of foreclosures will increase in the new year.”

Crisis enters fourth year

That extends the local mortgage meltdown into its fourth year.

The crisis began in late 2006 as the once-sizzling housing market was rapidly cooling off. Rising defaults among subprime borrowers — those with poor or spotty credit and/or job histories who took out higher-cost loans to buy overpriced homes during the boom — initially drove the flood of foreclosure filings.

Also at fault: speculators and fraudsters who helped drive up prices artificially, only to be caught when the market turned, leaving them unable to flip or rent out homes they had no intention of occupying.

That compounded the housing bust, throwing construction workers and others dependant on one of Manatee’s biggest economic engines out of work. They too began falling behind on their mortgages and spending less.

Less business led to more employees’ hours cut, pay reduced or jobs lost as businesses struggled to survive. Those employees then struggled to pay their mortgages and spent less, causing even more layoffs.

The crisis ripped through the economy, helping drive Manatee’s unemployment rate to post-Depression highs and slicing home values by more than half. Without jobs, homeowners had trouble paying their mortgages. With values sinking, many couldn’t avoid foreclosure by selling their homes because they owed more than what their homes were worth.

“It’s a vicious cycle,” Stobaugh said.