(Carl Cronan is editor of Real Estate Florida.)
MIAMI-The number of residential condominium units being sold through foreclosure auctions in Miami-Dade County appears to be peaking in the second quarter, according to locally based CondoReports.com. But whether that peak holds depends on lenders' willingness to participate in short sales and loan modifications before going the last-resort auction route.
"Banks haven't been pushing the foreclosure process," Cappel tells GlobeSt.com. "Lenders have become much more adept at short sales. They don't want the liability and carrying costs of holding this stuff."
One potential wild card in the drop in foreclosures could be the foreclosure moratorium put in place by Fannie Mae and Freddie Mac in late 2008. Cappel points out that while the moratorium didn't stop lenders from filing early stage foreclosure proceedings, it did curtail the number of auctions taking place.
At least 60% of major condo buildings in Miami-Dade have had units sold at foreclosure auctions within the past two years, Cappel says. Hundres more have had units enter the foreclosure process that have not yet made it to auction.
Foreclosures can take as little as four to six months under normal circumstances, but lately condos are taking more than a year to auction off, Cappel observes. In some cases, he says, borrowers that have stopped making mortgage payments have been able to fight foreclosures for up to two years before the lender has been able to force the sale, putting huge financial strains on condo associations.
"Some delinquent borrowers have no intention of ever paying and are simply using stall tactics to delay the foreclosure process and live for free while their lenders and condo associations are stuck holding the bag," he says. "As an association, you want to replace these zombie owners as fast as possible."
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