by Susan Lavery

Although default notices were down more than 34 percent through the first three quarters of this year compared with last year, the county’s foreclosure rate was at the top of the nation’s in the third quarter of the year. With 1 in every 63 housing units under a foreclosure cloud of some sort — default notices, scheduled auctions or bank repossessions (REOs), the county had the highest rate in the nation in August, and for the entire third quarter. This is in spite of the fact that in Florida, unlike many states, requires a judicial review and judge’s order to complete the foreclosure process.

The main reason filings of new foreclosure cases declined sharply in the third quarter was a new state law that took effect July 1, which requires plaintiffs to have the necessary documents at the time of filing to prove a foreclosure case against a homeowner, Clerk of the Court Joseph E. Smith said.

The decline in new foreclosure cases is a statewide trend, according to RealtyTrac. Default notices have declined for seven consecutive monthsafter increases in 14 of the previous 16 months.

At the other end of the foreclosure process, bank repossessions in the third quarter were up 28.5 percent in the county during the same period of 2012, but the biggest increase in foreclosure activity was in the middle of the foreclosure pipeline—when there were 1,528 scheduled auctions of properties in foreclosure. That’s up 43.9 percent from the previous quarter, and 60.8 percent from the same period of 2012.

According to Mr. Smith, the increase is the result of efforts to streamline the process in his office, such as scheduling auctions online instead of on the courthouse steps, and printing documents only on demand. Those efforts have reduced the backlog of foreclosure cases in the county by more than 2,000 to 5,110.  

Potential buyers may want to keep in mind that the mortgages on these homes are often more than the property is worth, therefore the auction minimum will be also. The most common scenario is that the first mortgage-holder will “buy” the property back from the judicial auction and then offer it for sale as a REO after having its value assessed by a real estate broker or appraiser. At that point a buyer can sometimes get a bargain – or a nightmare – depending on the condition of the property.

I ALWAYS recommend a thorough inspection prior to purchase. That’s $400-$500 that can save you thousands down the line. Just keep in mind that banks will sell the property As Is and that any repairs will be the buyer’s responsibility. An experienced realtor can advise you and help you through the process, but it’s always wise to do your own homework too!