Posted on Wednesday, October 27, 2010
By Paul Owers and Harriet Johnson Brackey, Sun Sentinel
Broward County home prices rose in September, but a long-term recovery hinges on the depth and duration of foreclosure freezes by several big lenders.
The county's median price of existing homes sold last month was $214,200, a 7 percent increase from a year ago, the Florida Realtors said Monday. Sales fell 16 percent to 673.
In Palm Beach County, the median price dropped 7 percent to $225,900, while sales rose 7 percent to 801.
Prices in the two counties have been up and down for most of the year. And that could continue following the recent clamor over foreclosure paperwork.
During the past month, Bank of America, GMAC, JPMorgan Chase and PNC Financial Services halted all or parts of their foreclosure processes in Florida and other states, reducing the number of cases handled in the courts.
A spokesman for the Palm Beach County Clerk said courts there cancelled more than half of the 1,700 sales of foreclosed homes, during the month of October through Monday.
In Broward County, figures for October were not available. But in September, almost 38 percent or 1,411 of the 3,762 scheduled foreclosure sales were cancelled during the month, according to the Clerk of Courts office.
The number of cases moving through the court system "is very light," Broward Chief Judge Victor Tobin said. "Last week was very slow and this week is slow."
If the foreclosure delays spread to other banks and last into next year, the resulting backlog will keep the housing market depressed, analysts say.
Distressed homes, including foreclosures, accounted for 35 percent of sales nationwide in September.
Real estate agents and mortgage brokers expect prices to increase temporarily because fewer foreclosed homes are available for sale. But once the freezes are over, those properties will flood the market, causing prices to fall again, as they have for much of the past five years.
Tom Meyer, chief executive of Kislak Mortgage in Miami Lakes, said many home loans nationwide have been suspended. Loan officers tell him that borrowers now are interested in non-foreclosed homes because they don't want to worry about potential problems postponing or canceling sales.
"I think that indicates that prices will stabilize and increase, albeit for a short period of time," Meyer said. "But that won't be a fundamental reflection of a stronger housing market."
Moody's Economy.com, a West Chester, Pa., research firm, doesn't expect the foreclosure freezes to last long enough to hurt housing's supply and demand. "It may just be a matter of weeks," said Chris Lafakis, an economist covering Florida for Economy.com.
On Monday, which was supposed to be the day Bank of America re-started its foreclosure process, the nation's largest mortgage servicer pulled back from its announced schedule. A bank spokesman said its attorneys had asked courts in the judicial foreclosure states not to proceed with 102,000 cases.
In a statement, he insisted "the bases for our foreclosure decisions have been accurate."
The average borrower in foreclosure in the third quarter was 18 months behind on payments and one in three properties was already vacant, spokesman Dan Frahm said.
Bank of America said it has reviewed its process and has put in place new steps and controls.
Foreclosure defense attorneys are skeptical that the process can be re-started smoothly.
"I can't understand how they can have tens of thousands of foreclosure cases resolved quickly," said attorney Gary Handin of Coral Springs. "I'm a small office and if you asked me to go through every one in my office it'd probably take us a month."