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Hard for local housing prices to defy the downward pull of foreclosures

Speed up the foreclosure process? Be careful what you wish for.

As everyone who buys winter parkas in May knows, when a trickle of buyers meets a gusher of sellers, prices take a pounding.

That's why dumping foreclosure homes, while necessary for a housing recovery, could create some serious red tag real estate.

In February, Tampa Bay lenders informed the owners of 2,361 properties that their homes would be sold at foreclosure auction.

That's nearly double the number of Tampa Bay properties receiving such notices in January, according to California-based RealtyTrac. Until February, "notice for sale" filings had run about 1,200 a month for at least a year.

All of the uptick occurred in Hillsborough and Pasco counties, scene of some of the worst overbuilding during the housing boom. Auction notices declined from January to February in Pinellas and Hernando counties.

Though it's too soon to label this a trend, bankers appear to be disgorging some of their backlog of homes sued for foreclosure but left dangling in the courts through 2009.

Banks can't keep sitting on nonpaying properties. People can't keep squatting in homes they no longer legitimately own. I argued as much in last week's column. But that doesn't mean the market won't suffer from the surfeit of fresh foreclosures, particularly in light of a second bit of news this week.

Two Florida legislators introduced versions of a bill that would abolish judicial foreclosures in Florida and let lenders kick defaulting property owners from their homes in as little as three months.

As the Times noted in January, the Florida Bankers Association wrote the nonjudicial foreclosure legislation. It basically cuts the courts out of the home-repossession process. Bankers found two Tallahassee sponsors in Sen. Mike Bennett from Bradenton and Rep. Tom Grady from Naples, both Republicans.

Thirty-seven states already follow the nonjudicial foreclosure handbook. If Florida adopted the same, it would end decades of lenient precedent regarding real estate rights.

It could also leave hundreds of Tampa Bay homes vacant every month, assuming the banks couldn't find fire sale buyers before the fast-track foreclosures concluded.

The bill is probably too politically unsavory to pass. Mortgage bankers rank somewhere between sinkholes and termite infestation on the popularity scale.

Hoard them or dump them: Foreclosures will be our 100-pound ankle bracelet for at least another year. It will be hard for housing prices to defy that gravity.

On the Web

All about housing

James Thorner digs deeper into bay area housing news in his (Un)Real Estate blog at blogs.tampabay.com/realestate.

Among the hot topics: February was a mixed valentine, as the Greater Tampa Association of Realtors said Hillsborough-central Pasco home sales rose 9 percent, but the average sales price dipped 3.2 percent.

Hard for local housing prices to defy the downward pull of foreclosures 03/11/10 [Last modified: Thursday, March 11, 2010 9:47pm]
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