Lenders filed 19 percent fewer foreclosure actions in South Florida in February than compared to a year earlier, yet the current pace of defaults for the month still averages out to 239 filings per day in the tricounty area, according to a new report from CondoVultures.com.

Lenders filed 6,680 foreclosure actions in February 2010 compared to 8,200 actions in 2009 and 5,500 actions in 2008, according to the report based on the Condo Vultures® Foreclosure Database™.

"The pace of the foreclosure actions is slowing in 2010 but still remain a huge challenge for lenders and an opportunity for buyers," said Peter Zalewski, a principal with the Bal Harbour, Fla.-based real estate consultancy Condo Vultures® LLC. "Lenders are increasingly coming to the conclusion that short sales - where a property is sold at a price that is short of the existing mortgage amount - are a more financially advantageous method of unloading troubled properties than actually foreclosing out a borrower.

"This realization has come about as the amount of time and cost of a foreclosure has more than doubled to upwards of $100,000 per action with a estimated schedule of 18 months to complete a repossession in South Florida." 

To repossess a South Florida residence, a lender must undertake a lengthy and costly legal process that used to take about six to nine months and cost about $40,000 to $80,000 per property before the avalanche of defaults occurred in 2008 and 2009.

In addition to that, many lenders do not even file the initial foreclosure paperwork until a borrower is at least 90 days late on regularly scheduled mortgage payments.

Once a lender finally does repossess a property, the bank inherits the responsibility of settling up outstanding liens on the property that live on after the foreclosure, such as property taxes, past-due condo association maintenance fees, and open permits.

Compare the foreclosure scenario to a short sale where a borrower who owes more than the property is currently worth brings in a buyer to pay the current market value for the underwater property. This means an immediate loss for the bank but the situation is predictable.

To complete a short-sale, a bank can unload the property in a matter of weeks without having to invest additional dollars as is the case with a foreclosure proceeding.

Miami-Dade County, where Miami Beach, Coral Gables, and Sunny Isles Beach are located, experienced the steepest drop in foreclosure actions, dropping 30 percent to 1,670 in February 2010 compared to 2,376 in 2009.

Broward County, where Fort Lauderdale, Hollywood, and Pompano Beach are located, experienced the slighted decrease, falling only seven percent to 3,188 foreclosure filings in February compared to 3,411 actions in February 2009.

Palm Beach County, where Boca Raton, Delray Beach, and West Palm Beach are located, experienced a 24 percent drop in foreclosure filings in February 2010 to 1,822 compared to 2,413 in 2009, according to the report.  

February is the second consecutive month that foreclosure actions fell on a year-over-year basis. In January, lenders filed 5,800 foreclosure actions compared to 6,200 actions in January 2009 for a seven percent decrease, according to the report.  

In the first two months of 2010, South Florida has experienced 12,426 foreclosure filings, putting the tricounty region on pace for about 77,000 actions, which is about 21 percent less than the 97,000 filings in 2009, according to the Condo Vultures® Foreclosure Database™.

Peter Zalewski of Condo Vultures® can be reached at 800-750-0517 or by email at peter@condovultures.comThis e-mail address is being protected from spambots. You need JavaScript enabled to view it . Don't forget to sign up for our weekly Market Intelligence Report™ for detailed condo reports. Looking for a property at a deep discount? You are encouraged to take a peek at the Vultures Database™ or view our Video Gallery. Looking for bulk projects direct from developers or lenders? Visit the Condo Vultures® Bulk Deals Database. Our new books, the Official Condo Buyers Guide to Miami™ , Miami's Great Condo Crash: A Chronicle of the Boom and Bust™ , and the First-Time Home Buyers Guide To South Florida™ are now available. Want to see every foreclosure filed in South Florida since 2007? Check out our Foreclosure Database™. This e-mail address is being protected from spambots. You need JavaScript enabled to view it This e-mail address is being protected from spambots. You need JavaScript enabled to view it

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