Foreclosures in 2010? More of the same

MANATEE — Experts say the new year likely will bring little relief to Florida’s foreclosure crisis, which set another local record high in 2009.

A variety of factors, from rising unemployment to falling home values, will keep Florida residential foreclosure filings at elevated levels in 2010, the experts said. But they also expect the pace of filings to taper off later in the year, as efforts to alleviate the crisis take deeper root.

“Foreclosure numbers will be a little higher” in 2010, said Shari Olefson, a Fort Lauderdale real estate attorney and author of “Foreclosure Nation: Mortgaging the American Dream.” “It won’t increase that much, but it will get worse before it slowly gets better.”

Lenders and mortgage servicers filed 6,390 foreclosure suits in Manatee County Circuit Court as of 5 p.m. Thursday, according to a Manatee County Clerk of Court database. The final figure likely will be higher as last-minute filings are entered into the database next week, but it already has shattered the previous record of 5,592 filings, set in 2008.

Court officials estimate there are more than 456,000 foreclosure cases pending throughout Florida. The state has among the country’s highest foreclosure rates, with one in eight Florida homeowners in foreclosure proceedings in the third quarter, the Mortgage Bankers Association said.

Just as many were at least 30 days behind on their mortgages but not yet in foreclosure, the group said. That’s a bad sign, because rising delinquencies typically result in more foreclosures, experts said.

But other factors also are worrisome, they said:

n Unemployment remains high: The jobless rate was 12.9 percent in Manatee and 11.5 percent in Florida in November, according to state figures. Job loss is among the biggest reasons why people fall behind on their payments.

n Home values continue to fall: The median sales price of existing single-family homes sold in November was 12 percent lower than a year earlier, the Florida Association of Realtors recently reported. Lower values make it tougher for distressed homeowners to refinance or sell their home to avoid foreclosure.

n Tight credit: More stringent lending standards are making it harder for borrowers to qualify for a mortgage, thus reducing the pool of potential buyers for homes facing foreclosure.

n Interest rates: Mortgage rates, which have hovered around 5 percent for much of 2009, are widely expected to begin rising in 2010 — thus making it more expensive to buy a home.

Then there are fears that banks will unleash a “shadow inventory” of foreclosed homes on the market, potentially driving down home prices even more. Amherst Securities Group LP, an Austin, Texas, financial services provider to institutional investors in the mortgage sector, projects that inventory stands at 7 million U.S. homes.

And the pressure on the release valve is building, Olefson said.

“The system, it’s sort of like in a bottleneck,” she said. “I compare it to the lines at Disney World: It’s crowd control, but everyone eventually squeezes through.”