Why Are Foreclosures So Common in Florida?

Loan Lawyers, LLC | September 27, 2021 | Foreclosure Defense

The past two decades, if not longer, have been very difficult for Florida homeowners. The Sunshine State was one of the hardest hit during the housing market crisis in 2008, and anyone in the state knows that it took Florida homeowners years to recover. Just as homeowners, and everyone else in the state, were starting to get back on their feet, the pandemic hit. Even with the federal and state moratoriums, people were losing their jobs at exponential rates and now that those protections have expired, the situation has become dire for some.

One cannot help but wonder why Florida homeowners seem so much more at risk for foreclosure than others. Truthfully though, this state is not the only one that sees so many foreclosures. California and Nevada also have similar conditions that make homeowners in these states more likely to face foreclosure than others. Below are just a few of the factors that make foreclosures so much more common in Florida than in many other states.

Florida’s Economy Relies on Tourism

Florida is the top travel destination in the world and the tourism industry has an economic impact of $67 billion on the state’s economy. Tens of millions of people pour into the state every year, and everyone in the state relies on the revenue this global tourism generates. Just as with any other tourism-based economy, when people stop visiting the Sunshine State, the economy starts to falter.

Many homeowners and full-time residents work in the tourism sector and when visitors stop traveling to the state, jobs are lost and people have trouble paying their bills, including their mortgage. Past trends show that when tourism in Florida slows, for any reason, the local rates of foreclosure climb.

Severe Weather Threatens Floridians’ Financial Security

Florida is no stranger to tornadoes, hurricanes, and tropical storms. Any one of these storms can devastate a home and the belongings inside and without proper insurance, homeowners are left stranded. Many families in the state live paycheck to paycheck and when a storm causes severe damage to the home, it derails the lives of the people living within it. Not only must people go to great expense to repair the home, but they may temporarily be without shelter and may even miss time from work, losing their income, too.

The majority of deductibles in property insurance policies range from five to ten percent. It is not uncommon for homeowners to try and save money on these policies by choosing the higher, and therefore cheaper, deductible without considering the consequences of doing so. If a home sustains $100,000 in repairs during a hurricane, the homeowner still has to pay $10,000, an expense that is simply out of reach for many homeowners.

Some borrowers will just stop paying their mortgage in order to pay for repairs to the home. Worse, others will simply walk away from the home, and the damage sustained, and let the home fall into foreclosure. Sometimes, the structure of businesses are also damaged during severe weather. When that is the case, a business may have to close temporarily, putting homeowners out of work for some time and making it more difficult for them to pay their mortgage.

Florida Ranks Highest for Second and Third Homes

Florida is the vacation home capital of the country. The Sunshine State has more second and third homes than any other state in the nation, according to the National Association of Home Builders (NAHB). Past trends have shown that when people fall into financial difficulty, they will make their first home their priority and will allow their second or third property to fall into delinquency. Second and third properties are also much more likely to become distressed as a result of property taxes, delinquent mortgages, code violations, and other maintenance issues.

The Pandemic Made Things Harder for Landlords and Investors

The pandemic hit hard in every state and Florida was no different. With businesses closed and shelter in place orders issued, it was nearly impossible for tenants to afford their monthly rent. This not only made things difficult for renters but for landlords and investors, too. Property owners had their own bills to pay and when state and federal moratoriums went into effect, it made things even more challenging for landlords.

To make matters worse, many people were at home much more than they would have been otherwise. They were using more utilities such as electricity and water and when these costs were included in the monthly rent, landlords were left paying these additional expenses, as well as their own. All of this at a time when many landlords were out of work themselves. It is no wonder that thousands of landlords fell behind on their own mortgage payments during the pandemic.

The Pandemic is Not Entirely to Blame

The pandemic certainly compounded the financial problems of many, but it is not entirely to blame. Economists were already reporting an increase in foreclosures nearly one year before the pandemic hit, in the summer of 2019. In the majority of cases, the increase was attributed to the same problems associated with the housing crisis of 2008. People were purchasing properties they could barely afford before the costs of HOA fees, property taxes, and insurance rates rose. Many people had already taken out a second mortgage and when those expenses increased, it was simply too much for them to bear.

Homeowners may not find these issues as challenging to overcome when it is a seller’s market and they can sell the home to recover their costs. Unfortunately, that is not the norm and most people end up selling for the amount they paid for the home, or close to it.

Our Foreclosure Defense Lawyers in Florida Can Help with Your Case

If you are facing foreclosure, you are not alone and the situation is not hopeless. At Loan Lawyers, our Florida foreclosure defense lawyers can advise on the possible defenses in your case and give you the best chance of a successful outcome. Call us today at 954-523-4357 or fill out our online form to schedule a free consultation.