Published: Thursday, Sep. 03, 2009

Updated: Thursday, Sep. 03, 2009

Manatee foreclosures hitting wealthy homeowners

MANATEE — The surge of foreclosures is increasingly lapping on the steps of some of Manatee County’s priciest homes.

A $2.8 million mansion along the Manatee River, a $1.1 million house in Hawks Harbor and a $975,000 dwelling in University Park’s Warwick Gardens neighborhood were among the properties that lenders sued to foreclose on last month, according to court and tax records.

They join a growing number of more-expensive local homes falling into foreclosure as the mortgage crisis widens to include those with higher incomes and credit scores.

“It started at the low- and middle-income levels and is working its way up the income ladder,” said D. Turner Matthews, a Bradenton lawyer who has represented borrowers in foreclosure cases. “It’s affecting the higher-income people now.”

Many are small-business owners and professionals who have been hit hard by the economy.

“They were able to afford those homes before but their business or income isn’t what it once was,” said James D. Jackman, a Bradenton lawyer who specializes in bankruptcy and foreclosure defense. “So now they’re between a rock and a hard place.”

Local foreclosure suits, in which a lender or servicer contends a borrower has defaulted on a mortgage, have been rising countywide since late 2006. The spike originated among subprime borrowers, who typically had lower incomes and/or spotty credit histories and took out loans with higher, adjustable interest rates.

Now, more borrowers with good to excellent credit are falling behind: Prime, fixed-rate mortgages accounted for one-third of all new U.S. foreclosure starts in the second quarter, up from one-fifth a year earlier, the Mortgage Bankers Association recently reported.

“Subprime adjustable-rate mortgages are no longer driving the problem,” its chief economist Jay Brinkmann said last month. “We’re seeing a national shift away from problems driven by subprime loans to a situation driven by fundamental problems in the economy.”

It took longer to reach more-affluent borrowers because they usually have greater financial resources to stay afloat longer, Jackman said. But many have exhausted those resources or lost access to them, especially as a result of last year’s credit crunch.

“It’s like they’re being punished but they haven’t done anything wrong,” Jackman said.

The rise is apparent in two wealthy Manatee enclaves, where lenders sought to foreclose on two Longboat Key and three University Park properties during a typical month in 2008. So far this year, it’s an average of six and seven, respectively, every month.

Lakewood Ranch’s Greenbrook Village neighborhood had the most foreclosure filings in August, with 11, according to a Bradenton Herald analysis of filings. Next were Covered Bridge Estates in Ellenton with 10 and The Village at Townpark condominium complex in Lakewood Ranch, with eight.

In all, lenders filed 526 foreclosure suits in Manatee County Circuit Court in August, records show. While that’s down from July’s 576 filings, it raised this year’s total to 4,295 — more than 18 percent ahead of the pace set last year, when a record 5,592 cases were filed.