Why are there so many foreclosures in Florida? Here's what to know

Melissa Pérez-Carrillo, Sarasota Herald-Tribune
Updated ·4 min read
31

Florida has the third highest number of foreclosures in the country so far this year, according to a foreclosure activity report from ATTOM, a property and real estate data research firm.

The report, which examines the year's first quarter foreclosure activity, shows that there’s been a total of 95,712 U.S. properties with a foreclosure filing, up 6% from the previous quarter and up 22% from a year ago.

While foreclosures have been on the rise nationwide, Florida had the third greatest number of foreclosures in the first quarter of 2023 with 4,724 foreclosure starts. Texas came in second with 6,764 foreclosure starts, and California came in first with 6,867 foreclosure starts.

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Why are there so many foreclosures in Florida?

The study attributed the rise in foreclosures to be from unemployment rates, foreclosure filings making their way through after two years of government assistance and other economic issues.

Sean Snaith, director of the University of Central Florida's Institute for Economic Forecasting, said that although Florida's foreclosure filing numbers are nowhere near the catastrophic 2008 housing market crash, the state – like most of the nation – has seen high cost of living without wages to match. The dramatic rise in housing prices coupled with rising interest rates have added strain to household budgets.

"Checks aren't being mailed out like they were during the pandemic, and people had a fair amount of savings, because of all this government support of the economy in the wake of COVID-19," Snaith said. "I think a lot of that has been drawn down because wages and salaries have just not kept up with the cost of living."

While Snaith said that the labor market in Florida has remained very strong, another element that could be leading to high foreclosure rates is Florida's homeowners' insurance crisis, where owners are finding their premiums are going up two- or three-fold.

What Florida cities led the state in foreclosures?

Florida was a top contender for high foreclosure rates because it had an inflated concentration of large metro areas with elevated foreclosure rates, according to ATTOM.

Between 223 metropolitan statistical areas with populations of at least 200,000, those areas in Florida with the highest foreclosure rates in May were Lakeland with 1 in every 1,361 housing units with a foreclosure filing; Palm Bay with 1 in every 1,647; and Ocala with 1 in every 1,671.

Metro Florida areas with populations greater than 1 million with the worst foreclosure rates in May were: Jacksonville, Florida with 1 in every 1,699 housing units and Orlando, Florida with 1 in every 2,049.

When do homes become foreclosed?

Foreclosure processes are different in every state, but usually mortgage companies start foreclosure processes about three to six months after the first missed mortgage payment.

Here’s a timeline from the Department of Housing and Urban Development:

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  • First month missed payment: The lender will contact the buyer by a letter or phone.

  • Second month missed payment: The lender will begin calling to discuss why payments have been missed. At this point, the buyer might be able to make a payment to prevent further acceleration.

  • Third month missed payment: The lender will send a “demand letter” stating that the homeowner is a delinquent and has 30 days to pay off the missed mortgage payments. If the buyer doesn’t pay the amount or make an arrangement by the given date, the lender may begin foreclosure proceedings.

  • Fourth month missed payment: At this point, the buyer will incur all attorney fees as part of the delinquency.

After this point, an attorney will schedule a sale that can be as quick as two to three months. The buyer has until the date of sale to make arrangements with the lender or pay the total amount owed, including attorney fees. In Florida, the redemption period, where the buyer can reclaim their home by paying off all their balance, ends at the foreclosure sale.

How to avoid getting a home foreclosed?

Seek help early. There are HUD-approved housing counseling agencies that provide free foreclosure avoidance counseling. Call 888-995-HOPE for help.

Avoid scams. HUD suggests that homeowners shouldn't give money to anyone promising to help you avoid foreclosure without a written agreement and until all services are completed.

Recognize predatory lending. A company that asks for a fee in advance or advises you to stop paying your mortgage lender and pay them instead is usually a scam, according to HUD. If you’re unsure, check in with a HUD counselor.

This article originally appeared on Sarasota Herald-Tribune: Florida foreclosure rates ramong highest in US. Here's what to know