The total value of Florida foreclosures repossessed by banks in the state increased by nearly 8 percent in the first quarter to $1.77 billion, based on figures from the Federal Deposit Insurance Corporation.
These properties in bank owned listings also contributed to the downfall of a lot of banks in Florida. On May 7, the FDIC closed the tenth Florida bank to tumble this year and as of March 31, a total of 24 Florida banks were struggling from under-capitalization.
The FDIC has already lost almost $1.3 billion to pay claims arising from Florida bank failures this year, in addition to its $7.3-billion loss in 2008 and in 2009 involving 16 failed Florida banks.
This year, 17 more Florida banks are expected to collapse this year if there is no significant intervention to rescue these distressed banks. Their substantial exposure to Florida foreclosures are tying their hands up, leaving them with no funds to finance their operations.
Based on interviews with Florida bankers, the cost they have to bear to put properties into listings of foreclosure homes so they can resell them has shot up to around $100,000 per one foreclosure case, up from only $40,000 in 2007. The time spent to complete foreclosures has also lengthened from only 6 months in the first months of the crisis to around 18 months this year.
What worsens the situation after all the costs and hassles banks undergo is to be forced to list their repossessed properties as cheap houses for sale, as higher-priced foreclosures languish on the market.
Despite the decline in foreclosure activity in the state in April, Florida moved up from fourth-place to third-place on charts of foreclosure listings by state during the month. It was California which improved by two places from second in March to fourth in April.
To help banks survive the effects of Florida foreclosures, the Florida Bankers Association has proposed in the last state legislature session to speed up the foreclosure process.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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