Florida Chapter 7 Bankruptcy Attorney Blog

Recently released data reveals that personal bankruptcy filings fell in South Florida for the first time in five years in 2011. Overall, the region saw 34,492 filings for personal bankruptcy, compared to 2010's total of approximately 38,000. Bankruptcies in December fell 9 percent from November to 2,470. While the lower bankruptcy rate might seem positive to some, experts say the drop may not mean that fewer Florida residents require bankruptcy protection. Rather, the decrease more likely signals an increase in South Florida's foreclosure backlog.

One bankruptcy attorney explained that foreclosure and under-employment both significantly contribute to the few number of liquidation bankruptcy filings. A number of homeowners at risk for foreclosure have been able to delay bankruptcy while foreclosures move slowly due to the "robo-signing" scandal and other related issues. Many homeowners facing foreclosure typically look to bankruptcy as a temporary solution, as a filing can delay a foreclosure or lawsuit for six months or even longer.

A new analysis and map from Foreclosure-Response.org shows that foreclosures and mortgage issues are still affecting Florida worse than almost anywhere else in the United States. According to the report, Florida is home to 17 of the 25 metro areas with the highest foreclosure rates. Additionally, 15 of the 25 metro areas with the highest levels of serious delinquency are also home in Florida, each with over 15 percent of its mortgages deemed seriously delinquent. Foreclosure-Response.org defines seriously delinquent mortgages are those that are currently undergoing foreclosure or 90 or more days past due.

The analysis finds that the Miami Fort Lauderdale Pompano area has the nation's highest proportion of homeowners facing foreclosure in the entire nation. As of the report's publication, the area saw a foreclosure rate of 18.5 percent; up from June 2010s rate of 17.8 percent. However, Miami Fort Lauderdale Pompano's rate of serious delinquency has fallen since June 2010 from 25.6 percent to 23.5 percent.

In a move that has left local courts rushing to restore the voluntary consultation process before 2009, the Florida Supreme Court has announced the ending of the state's mandatory mediation program. Homeowners facing foreclosures that have applied for and are currently awaiting mediation will be able to complete the program, but the program will not take on any new applicants. This leaves hundreds across the state with one less possible option for foreclosure defense.

Since it was initiated soon after the recession began in 2008, only 3.6 percent of the 78,076 total Florida foreclosure cases that were eligible for mediation resulted in settlement. Those that did qualify resulted in deed-in-lieu foreclosures, loan modifications or short sales.

While experts warn that bankruptcy should not be seen as a cure-all with the potential to completely resolve debt, filing for bankruptcy may provide homeowners with valuable aid. Florida homeowners facing foreclosure that file for bankruptcy may be able to discharge unsecured debt while forcing lenders into negotiation and obtaining much-needed time to defend against losing their properties.

Bankruptcy can be especially useful for homeowners that do not qualify for the Home Affordable Refinance Program, also known as HARP. This program allows borrowers with loans held by Freddie Mac or Fannie Mae to refinance their homes at lower rates, but borrowers who have not remained current on payments in the past six months are not eligible for enrollment. Additionally, Fannie Mae and Freddie Mac only hold about 50 percent of all mortgages.

Despite the apparent eagerness of South Florida to build new condominiums, the region is still seeing a foreclosure rate that is three times higher than the rest of the United States. For instance, Miami-Dade County saw the highest foreclosure rate in Florida in September at 18.22 percent, an increase of 0.59 percent from 2010. The national foreclosure rate during the month of September was just 3.48 percent.

While the high rates may be a negative sign for homeowners facing foreclosure, some good news was released in a report by CoreLogic. The report found that the state's 90-day delinquency rates were down in September. Still the report was negative overall, finding that actual foreclosure activity did not appear to change in a significant way. Additionally, Miami-Dade County's delinquency rate was still three times higher than the rest of the nation at 25.18 percent. The national delinquency rate is about 7.17 percent.

As discussed in a previous blog, the government is cracking down on banks in order to help homeowners who are facing foreclosure. The issue is moving through the courts, but there has been a recent tragic setback. A 43-year-old woman who planned on testifying against two former co-workers in a "robo-signing" fraud case has been found deceased in her home after she missed a scheduled hearing. Police are not investigating the death as a homicide, but autopsy reports may not become available for several weeks. Investigators currently suspect the woman killed herself.

At the center of the case is a process called "robo-signing" that many banks and lenders used to quickly complete foreclose on distressed properties. However, the process was found to be unfair for homeowners facing foreclosure, leading to government intervention and punishment for some offenders. The deceased witness worked as a public notary at a firm based in Fort Lauderdale that allegedly engaged in robo-signing. The witness had said she validated signatures of people who were not there and estimates that she improperly notarized more than 30,000 foreclosure documents.

A recent report from the Mortgage Bankers Association has led some experts to foresee a national economic improvement within the next three to four years after revealing that nationwide late loans are down. However, an official with the organization said it may be much longer until Florida recovers, citing its large number of delinquent mortgages and foreclosures. As discussed in previous posts, Florida currently sees the highest foreclosure rate in the United States, with 24.5 percent of the nation's foreclosures. Additionally, a total of 18.8 percent of all mortgages in the state of Florida are currently in some state of closure.

The report also suggested that Florida's regulations requiring judges to approve foreclosures contribute to its high inventory of delinquent properties, although this can be a blessing for homeowners facing foreclosure in the immediate future. An executive for a Florida-based holdings group said his company has recently received more than 500 new foreclosures from a major bank, suggesting that lenders are beginning efforts to sell larger numbers of foreclosed homes.

The Top 10 Turnaround Town Report by Realtor.com for 2011 includes six Florida markets, including Fort Lauderdale, suggesting that the state will continue to see a prolonged recovery in the housing economy. All of the six Florida markets have experience positive price growth, lower unemployment rates and reduced inventory costs. Experts say the number of foreign buyers purchasing Florida homes increased by 21 percent between 2007 and 2011, which also likely contributed to the turnaround. However, there are still many Florida homeowners facing foreclosure. Such individuals are advised to seek help legal help on possible ways to avoid foreclosure and preserve their mortgage.

Fort Lauderdale ranked fifth on Realtor.com's report, with data from October showing that inventory in the region increased by nearly 38 percent. The area was previously in poor shape, experiencing a steady decline in prices since the initial downturn in 2006, decreasing by about 46 percent up until 2011. According to the report, however, prices in Fort Lauderdale have now begun to rise. This is a positive sign for homeowners who were previously unable to sell their properties.