Banks are repossessing homes across the country at a dramatically higher rate. Believe it or not, that's the good news. The bad news is that in the Tampa Bay area, a bigger share of problem properties are at just the beginning of the foreclosure cycle.
Nationally, bank repossession — the final stage in the foreclosure process — accounted for 30 percent of all foreclosure activity in the second quarter, up from 24 percent in the first quarter and close to triple a year ago.
"There is a progression toward purging the problem loans out of the system — at which point the housing market can regain some sense of normalcy," said James J. Saccacio, chief executive officer of RealtyTrac.
The company's statistics cover homes in various stages of the foreclosure process, from notice of default to actual repossession and ownership by the lender.
However, in the Tampa Bay area, there was less to be encouraged about as far as the foreclosure cycle is concerned. Bank repossessions in the second quarter ranged from 7 percent of the problem properties in Hillsborough County to 18 percent in Hernando, which has been hard hit by the housing crisis.
Many properties end up under bank ownership because banks are reluctant to approve deals that would stave off foreclosure but pay them less than they are owed, said Pat Richard, president of Exit Success Realty in Spring Hill. "They don't want to even listen to the short sale proposal, and then they foreclose and get less," she said. However, she said the bank-owned listings are attracting bargain hunters, which should reduce the number on the market. "There are a lot of multiple offers."
Overall, one out of every 87 Tampa Bay homes was in some stage of foreclosure last quarter, twice the national average and the 17th worst rate in the nation, RealtyTrac said.
The California company reported 14,960 homes in foreclosure in the Tampa Bay area, up 27 percent from the first quarter and 159 percent from the same period a year ago.
In Hernando County, where foreclosures have nearly tripled in the past year, one in every 57 homes is affected. That hurts the entire market, real estate agents say. Derek Brown of RE/MAX Advantage Realty in Spring Hill said it can hurt neighborhood values when foreclosed properties aren't cared for.
Sellers have had to cut prices to compete with all the foreclosed homes on the market, said Marilyn Pearson-Adams, president of Century 21 Alliance Realty in Spring Hill. The bright side: "This, in turn, is affording buyers a larger selection of reasonably priced houses to choose from," she said.
Statewide, foreclosures are up 182 percent from a year ago and one in every 78 homes is affected. Florida was the fourth worst state for foreclosures, following Nevada, California and Arizona. However, the problem is growing just about everywhere.
"Forty-eight of 50 states and 95 out of the nation's 100 largest metro areas experienced year-over-year increases in foreclosure activity in the second quarter," Saccacio said.
As housing prices drop, foreclosures accelerate because many families no longer have any equity in their homes. That means they can't sell their property or refinance unless they have extra money to put into the transaction. It also means they have no equity to lose by walking away from their debt.
The problem is worst in the Stockton, Calif., metro area, where one house in 25 is in foreclosure. Fort Lauderdale has the highest foreclosure rate in Florida, affecting one house in 51. Miami and Orlando also have higher foreclosure rates than the Tampa Bay area.
The housing bill that the House of Representatives passed this week and that the Senate is expected to approve today could help.
The bill is designed to help an estimated 400,000 homeowners escape foreclosure by letting them refinance into more affordable loans backed by the Federal Housing Administration.
Mark Zandi, chief economist at Moody's Economy.com, projects that by the end of 2009, nearly 2.8-million U.S. households will either face foreclosure, turn over their homes to their lender or sell the properties for less than their mortgage's value.
Helen Huntley can be reached at email@example.com or (727) 893-8230.