Florida is a state situated in the southeastern flank of the US, hedged in by Alabama along its northwest and Georgia towards its northeast. Florida is the fourth most populous state in the US. Florida has naturally had umpteen reasons for figuring in the news, both national and global. However, lately, the state has been in focus for the steep rate of Florida foreclosures filings that its citizens have been subjected to.
What do the figures say?
In February 2009, the state witnessed a stupendous 46,391 homeowners being felled by the foreclosure ogre, if one may almost poetically express it so. Florida ranked next only to California in the government foreclosures. One in every 214 Florida households has been dispossessed of its residential property owing to failure by the owners to repay their mortgage loan installments in time. Besides, in February 2009, foreclosed properties in Florida rose by almost 14 percent over the previous month’s figure.
Silver Lining to Foreclosure Cloud
What does this spell for you, as a potential homebuyer? Relatively good news, for sure. After all, one person’s bane frequently translates into another’s boon, in this world of competing and conflicting interests. So, while the millions of hapless homeowners who have been deprived of their hearth and home agonize, aspiring homebuyers have been generally buoyant. Buyers have rightly perceived in the foreclosure auctions an unusual opportunity of acquiring gorgeous residences at a bare fraction of their customary market prices.
What explains the peculiar discounted pricing of the foreclosed houses? Fairly simple economics. When a homeowner consistently defaults on her mortgage repayments, the lending agency eventually seizes the home. The lender may variously be HUD, VA, Fannie Mae, Freddie Mac, or the Sheriff. Since none of these bodies is into real estate per se, they seek to quickly convert such REO {real estate owned} into liquid resources, especially in the ongoing times of acute shortage of credit supply and consumer spending. Moreover, the auctioneer at the Florida foreclosures is interested only in recovering the pending mortgage amount due from each property, so the listed prices of the homes foreclosed are determined on the basis of the unpaid loan amounts. This usually proves to be at between 10 percent and 50 percent less than the prevailing market prices of the seized homes.
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Written by Alex Rolim.
