Florida has gotten the reputation for being “the foreclosure capital of the nation”. What they don’t tell you is that the basis of this “fact” is the the Lis Pendens filing, which is the first step in the foreclosure process.
A Lis Pendens is file and it can take 6, 8, 12 8, and even 24 months in some cases to actually get to foreclosure. During this time (after the filing of the Lis Pendens and prior to the foreclosure), many of these properties are being sold (either as a short sale or a regular sale), or some of the homeowners are getting loan modifications and restructuring their mortgages or some owners are getting a deferrment of payments. When one of these solutions occurrs, the foreclosure is stopped, thus the number of “foreclosures” in Florida is actually less than what is being reported as fact.
Another piece that is being reported incorrectly is that “there are a disproportionate number of people being left homeless in Florida” due to this “high number of foreclosures”. In some areas of our state, over 70% of the properties on which Lis Pendens are being filed were purchased by speculators as investment properties with the sole intention of selling them fast for a profit. The majority of these speculators are residents of other states who took advantage of exotic loan products (Ie: stated income or no doc). As these products have gone away, so have the speculators.
Due to this distortion of the number of foreclosures in Florida, investors have tighted their guidelines concerning loan to value and property and/or occupancy type that they will finance in Florida. Several years ago, it wasn’t uncommon for investors and banks to allow a mortgage lender or broker to secure 100% financing on a 2nd home or investment property for their clients and we are now limited to 75 – 80%. Some investors, including Chase and Suntrust, have recently gone so far as to make the decision to get out of the condo and investment financing markets altogether in the state. Chase has even ceased financing 2nd home properties in Florida, regardless of the property type (single-family detached, attached, condo, etc.) and are limiting primary home purchases of detached properties to 90% and of attached properties (townhomes, duplexes, etc.) to an 80% loan to value!
While the pendulum on financing properties in Florida has swung in an entirely opposite direction from where it was several years ago, there are still programs available to buyers of ALL property types in Florida and of all occupancy types (primary, 2nd home, or investment) if you work with the right lender or broker. No matter what you may be hearing in the media, 100% financing for primary homes is alive and well (VA Mortgage, USDA Rural Housing Mortgage, Community Assistance Programs, Community Second Mortgages) and there is also an FHA Mortgage, which only requires a 3% down payment (3.5% after December 31, 2008).
With the tax advantages offered with home ownership, as well as the new tax credit created with the signing of HR3221 for up to $7,500 for those individuals who haven’t owned a home in the last 3 years, now is an advantageous time to buy and get the benefits of these tax credits/deductions. Interest rates are still low and purchase prices have dropped. Florida residents who are considering buying a primary home and keeping it for a long time (over 4 years) should jump in with both feet. BUY NOW OR KICK YOURSELF LATER!
